Research On Investment Decision And Concession Term Of Toll Road BOT Contract Under Demand Uncertainty

The determination and adjustment of the PPP concession period has always been the key part of the negotiation between the government and private sector.The concession period is highly related to the interests of both the government and the concessionaire,which has always been the focus of research in the BOT academic field.In addition,once the total amount of government investment has been determined,the government needs to decide on which road projects to choose for investment(project selection)and the best investment opportunities of each BOT project within the predetermined planning period,so as to maximize the total travel cost savings.The paper is organized as follows to investigate these two parts,including the investment decision during the preparation stage and the concession period decision during the operation stage:The first part is the investment decision during the preparation stage.The Government may fail to make a one-time investment in all projects to be operated due to the limited investment budget.Besides,it needs to choose the best investment timing for all projects to be operated within the predetermined planning period in the purpose of not only meets the annual budget constraints but also minimizes the present value of total travel cost savings.Therefore,this paper proposes a selection model of toll road BOT projects and a best investment timing decision model to provide a scientific basis for the government to make investment decisions.The second part is the concession period decision during the operation stage.This paper takes the demand uncertainty during the operation stage into consideration and adopts an adaptive dynamic demand forecasting method,and then uses the net present value method in financial analysis to establish the concession period decision model,proposing a decision-making mechanism that make predictions before making decisions.At last,Monte Carlo simulation is used to evaluate the financial risks of existing projects and achieve real-time monitoring of project operating risks,providing a reference for renegotiation of concession periods between the government and private sectors.