PPP Project Model Of Endowment Real Estate Decision Making Based On Monte Carlo Simulation

Nowadays the problem of population ageing in China is becoming worse.And recently the government is focusing on how to effectively handle this old-age care dilemma.There is the phenomenon that family structure has been gradually small,and family pension function is becoming weak with it.At the same time,the old in China are mostly bound by traditional thinking,making them reluctant to leave their home.All of these reasons led China to form the mode of home-based pensions,social pensions and institutional pensions.In order to alleviate the problem of old-age care,the government has vigorously supported the pension industry in terms of policies and funds.However,as a social welfare project,it requires a large amount of money to support.In view of this,the combination of the PPP and the pension project came into being.PPP is a new financing mode connecting government and social investors to cooperate and applied mainly in infrastructure area.In China,the application of PPP in old-age care service industry is still in its infancy,and the investment risk is relatively high.Therefore,this research is written from the perspective of social capital.By identifying risk factors during the project concession period,it can help to determine the ways and categories of sharing risk between government and social capital.After that,build the net present value model and calculate the results through Monte Carlo simulation.Sensitivity analysis is necessary after getting the optimal result.All of these work can be took advantage to make better concession decisions.The current study has been divided into four parts:In the first part,introduce the related theories of pension real estate PPP projects.After reading a large number of articles,firstly defined the definition of the concession period discussed in this research.And sort out the common PPP project concession period decision methods such as net present value,game theory,and Monte Carlo simulation.Secondly,introduce the characteristics and principles of risk sharing between the government and the private sector.Both parties should seek a reasonable sharing plan to control the total project management cost based on the cost proportion of investment and their ability to withstand risks.Finally,discuss the current market of pension real estate in China.It shows the market is vast,but the supply and demand are severely unbalanced.Although there are 119 ongoing PPP projects and 32 among them are national demonstration projects,the application of PPP in the field of pension in China is still in the exploration stage.In the second part,through reading articles and interviewing experts,summarize four first-level risk factors in the pension real estate PPP project.They are construction risk,operational risk,market risk,and macro-environmental risk.And in total there are 19 secondary risk factors.Then determine the ways and categories of risk sharing between government and social capital.The risks that the government needs to share are included 9 risks such as land use risk,policy risk,franchise-recovery risk and so on.The risk shared by the government part is divided into certain factors and non-deterministic factors,which provides a hypothesis basis for the following model.In the third part,introduce the basic idea of Monte Carlo simulation and the common probability distribution.The non-deterministic factors from the government part are quantified as variables.And they are matched with the appropriate probability distribution.In the concession period decision model,net present is calculated as the target value.In the fourth part,based on the established concession period model and the data of one practical project,it can discuss four cases of the government sharing the concession period risk.After getting the results from Monte Carlo simulation,the final scope of the concession period can be calculated.The results show that the most reasonable concession period is between[20.26,21,79]under the condition that the government fully shares the project risks.Under the optimal risk sharing way,sensitivity analysis is carried out among the main variables.All of the analysis work can be used to guild the government and private investors to make better concession period decisions.