Research On Concession Period Decision Of PPP Project Based On Real Option

With China’s economy entering the new normal and economice growth slowing down,the contradiction between urbanization and local government debt is increasing day by day.In order to resolve the government debt and financing needs of urban public infrastructure construction,the Public-Private-Partnership(PPP)model has been vigorously promoted by government.As an innovative financing model to attract social capital and technology,PPP model can solve the problem of government financing and improve the efficiency of public infrastructure construction and service.The concession period is an important parameter of the PPP project investment decision,which is related to whether the social investors can recover the investment cost and get a reasonable return.Whether the concession period setting is scientific and reasonable is directly related to the success or failure of the PPP project.In view of the shortage of the traditional single cash flow discount method,this thesis constructs a PPP decision model based on the real option in perspective of social investors’ strategic investment.The main contents of this thesis are as follows:Firstly,this thesis analyzes the research background of the topic and the domestic and international research status of the concession period decision-making.Secondly,this thesis introduces the basic theory of public infrastructure PPP project investment and financing model,and analyzes the advantages of real option theory and its applicability in this thesis.Thirdly,this thesis focuses on the analysis of the factors that influence the uncertainty of PPP project concession period.Then based on the the traditional NPV decision model,this thesis constructs the decision model of concession period of PPP project based on real option.Finally,the Monte Carlo simulation is used to calculate the project investment value based on the guarantee option and expansion option in combination with the practical case of the PPP project of the sewage treatment plant of Xianning High-tech Zone the third phase.This thesis combines real option theory with Monte Carlo simulation to construct the PPP decision-making model of concession period based on the real option,and uses the Monte Carlo simulation to realize the calculation of the concession period.This research can provide guidence for social investors to participate in the PPP project strategic investment Decision-making,and enrich and deepen the research field and application value of real option.