Home / ESTATE MANAGEMENT PROJECT TOPICS AND MATERIALS / PERFORMANCE OF BUILD-OPERATE-TRANSFER PROJECTS: RISKS’COST IMPLICATIONS FROM PROFESSIONALS AND CONCESSIONAIRES PERSPECTIVE.

PERFORMANCE OF BUILD-OPERATE-TRANSFER PROJECTS: RISKS’COST IMPLICATIONS FROM PROFESSIONALS AND CONCESSIONAIRES PERSPECTIVE.

PERFORMANCE OF BUILD-OPERATE-TRANSFER PROJECTS: RISKS’COST IMPLICATIONS FROM PROFESSIONALS AND CONCESSIONAIRES PERSPECTIVE.

TRANSFER PROJECTS

CHAPTER ONE

INTRODUCTION

1.1       Background of the study

BOT (Build/Own/Transfer) projects are public infrastructure projects which employ a particular form of structured financing. The involvement of the private sector in the development of infrastructure in the world by way of BOT projects, alternatively called BOO (build-own-operate) or BOT (build- operate-transfer) is proving to be a challenging exercise. The lead time of a project is very long, and associated up-front costs are significant. Further, there are a number of complex issues which have yet to be resolved by any of the infrastructure projects settled to date. Such projects are complex by virtue of the number of parties involved and the corresponding number of contracts, which must all interlock (Akintoye, Bing, Edwards, and Hardcastle, 2015). Furthermore, each party is dependent upon the performance of not only its counterpart, but also the performance of all parties to the project. BOT projects are generally structured on a project basis requiring all parties to share the risks of the project. Project risk sharing is necessary because the sponsor, a joint venture of one sort or another, will have a limited worth being substantially less than the aggregate net worth of the equity parties (Garry and Creedy, 2018).

According to Odeyinka, Oladapo and Akindele, (2016) the complex nature of BOT is therefore responsible for the uniqueness of the risk involved. The risk is often spread among the concerned parties, while management of the risk is often left to the party that can effectively control the risks. However, the nature of the risk borne by individual will definitely affect the project execution especially if it tends to the negative side. The first step is risk identification; determine the probability of risk occurrence, the risk sharing among the concerned parties and risk implication determination on the project. It is against this back -ground that this research work is geared towards studying implication of risk factors on cost performance of Build-operate-Transfer projects using projects executed in Nigeria.

The build–operate–transfer (BOT) approach for developing infrastructure projects is a technique that allows fast realization of public works in cases of a shortage of public funds. This process is full of risks, due mainly to the complexity and extend of the disciplines, public agencies and stakeholders involved. The identification, classification and presentation of a comprehensive list of this type of risks will provide BOT project practitioners with a useful tool in the effort of setting up successfully a BOT concession agreement (Leiringer, 2017).

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