The Economic Evaluation Method Research Of The Infrastructure Franchising Project Under The Influence Of The Government Guarantee

Infrastructure is an important force to promote the country’s economic development, however, because of high investment, high risk, long construction period, usuallyconstrained by budgetary constraints of government finances, to some extent,restricted the economic development, which contrary to its original purpose. BOT as aprivate capital participation in infrastructure financing, in the case of alleviating thefiscal burden of government, which can attract social capital to participate effectivelyin, can promote an active capital market, and can generate comprehensive benefits. Therefore, BOT model is currently more widely used in the construction ofinfrastructure in our country with its unique advantages. However, in thepre-feasibility study, many BOT projects do not sufficiently financial evaluation whenit begins implementing, or the use of inappropriate evaluation methods causesinaccurate evaluation results, then many hidden dangers are planted for thesubsequent construction, ultimately lead to project failure. Therefore, suitability andaccuracy of financial evaluation has important theoretical and practical significancefor success of the project.By analyzing the characteristics of the infrastructure concession projects, andcompare the similarities and differences in general construction projects andconcession projects, points out that the construction project economic evaluationmethods generally do not apply to infrastructure concession projects, because thegovernment guarantee is special factors need to be considered for such projects, whichwill have a significant economic impact on the results of project evaluation. Thispaper describes the main elements of the government guarantee and scope of varioustypes of government guarantees, it laids the foundation for the investors analysis ofproject cash flow. In the way of quantitative analysis, taking BOT highway project forexample, using dynamic game model under complete information to solve the optimalvalue of government purchases guarantees, and get the optimal value acceptable toboth sides of the government to buy traffic, in the case of government purchasesguarantees identified, the decision making concession period was discussed, byanalyzing the benefits of both functions, the concession of the best ranges wereobtained. Under the impact of government guarantees, investors have the right tochoose the optimum solution, it is similar to the financial markets puts, this is commonly referred to real options. Using binary model and risk neutral Theorem inreal options theory to calculate the value of the government guarantee option. In thispaper, government guarantees value should be considered as an important part offinancial evaluation, and should be included in the net present value.Finally, combining these research results, financial evaluation method applicable toinfrastructure concession projects is proposed innovatively, it combines the bestguarantee purchases of government and best decision making concession period, ultimately reflected in the improvement of calculation for project value, anddemonstrated in detail through case.