Академический Документы
Профессиональный Документы
Культура Документы
Edited by:
Rick Huijbregts
Contributing authors:
Arjan Bol
Rick Huijbregts
Marjan Klein
Sebastiaan Menheere
Priti Paul
Spiro N. Pollalis
Lotte Verhoeven
Copy-editor:
Penelope Hill
Afshan Bokhari
CONTENTS
TABLE OF CONTENTS
CONTENTS
LIST OF FIGURES
LIST OF TABLES
PREFACE
v
xi
xiii
xv
PART I
FRAMEWORK
0 THE BUILD OPERATE TRANSFER APPROACH
0.1 INTRODUCTION
0.2 BACKGROUND
0.3 DEFINITION
0.4 MAJOR PARTICIPANTS IN BOT PROJECTS
5
5
6
8
9
Concession contract
Financial agreements
Construction contract
Operation contract
12
14
14
14
14
Preliminary study
Selection process
Project implementation
Construction
Operation
Transfer
0.6
0.7
0.8
0.9
FINANCING
DESIGN AND CONSTRUCTION
ENVIRONMENTAL FACTORS AFFECTING BOT
WHEN IS BOT APPROPRIATE?
15
16
16
16
16
16
18
21
21
22
PART II
CASE STUDIES: JAILS
1 PLYMOUTH COUNTY CORRECTIONAL FACILITY
1.1 INTRODUCTION
27
28
vi
CONTENTS
1.2 BACKGROUND
Plymouth County Jail and Correction House
United States Marshals Service
1.3 PROGRAM
1.4 ORGANIZATION
1.5 FINANCING
Certificates of Participation
Assignment Agreement and Trust Agreement
29
30
30
32
33
34
36
37
37
37
38
38
38
40
40
40
Design
Construction
41
43
1.8 OPERATIONS
46
2.3 PROGRAM
2.4 ORGANIZATION
Cornell Cox and Brown & Root join the team
Special legislation
City approval
2.5 FINANCING
Financing problems
The Port Authority steps in
Loan and Trust agreement
49
50
51
52
53
54
54
55
57
57
57
58
58
59
60
Intergovernmental Agreement
The Arthur Andersen report
Design-Build contract
Operators Agreement
Consulting Agreement
61
61
62
63
63
2.8 OPERATIONS
64
65
65
CONTENTS
vii
PART III
CASE STUDIES: ROADS
3 STATE ROUTE 91 EXPRESS LANES
3.1 INTRODUCTION
3.2 BACKGROUND
Assembly Bill 680
Selection process
State Route 91 concession
Previous plans
Orange County attempts to attract AB 680 projects
Riverside opposition
Negotiations with Riverside County
3.3 PROGRAM
3.4 ORGANIZATION
Cofiroute joins the team
CRSS leaves the project
3.6 FINANCING
Financial closing
3.8 OPERATIONS
4 DULLES GREENWAY
4.1 INTRODUCTION
4.2 BACKGROUND
Commission on Transportation for the 21st century
Virginia Highway Corporation Act
Permits and approvals
Commonwealth Transportation Board
State Corporation Commission
Amendments
Environmental issues
Day Permit Extension
4.3 PROGRAM
4.4 FINANCING
Barclays joins the team
Financial closing
Final financial structure
69
70
70
71
71
72
73
74
74
75
76
76
76
78
78
78
79
80
82
82
83
84
85
85
87
88
89
89
90
90
91
92
93
94
94
95
96
97
97
98
viii
CONTENTS
4.5 ORGANIZATION
Project restart
Kiewit leaves the project
New contractor
101
101
102
104
105
Construction
105
4.7 OPERATIONS
106
5.3
5.4
5.5
5.6
5.7
PROGRAM
CONTRACTUAL RELATIONSHIPS
FINANCING
DESIGN AND CONSTRUCTION
OPERATIONS
109
110
111
111
112
113
114
115
116
118
119
PART IV
CASE STUDIES:TUNNELS AND BRIDGES
6 WIJKER TUNNEL
6.1 INTRODUCTION
6.2 BACKGROUND
Private financing uncertainties
Green light for the Wijker tunnel
Selection criteria
Negotiations concession agreement
Response of the National Audit Office
Political collision
Remaining tunnels
6.3 PROGRAM
6.4 ORGANIZATION
123
124
125
125
126
127
128
129
131
131
131
132
133
133
Concession agreement
Construction contract
6.6 FINANCING
6.7 DESIGN AND CONSTRUCTION
Construction
Tunnel elements
Sink-procedure
133
135
136
138
139
139
140
CONTENTS
6.8 OPERATIONS
Diverting charge bands
Management and maintenance
Fiscal aspects
7.3 PROGRAM
7.4 ORGANIZATION
Dutch gain membership
Engineering design
Other memberships
7.6 FINANCING
Subsidy Agreement and issue of bonds
Security package
Corporate guarantees and risks
7.7 DESIGN AND CONSTRUCTION
Design
Construction
7.8 OPERATIONS
ix
141
141
141
142
143
144
144
145
145
146
146
147
147
147
148
148
149
149
150
150
151
151
151
153
153
153
154
154
154
156
156
158
158
159
159
160
163
PART V
CASE STUDIES: POWER PLANTS
8 DABHOL POWER COMPANY
8.1 INTRODUCTION
167
168
CONTENTS
8.2 BACKGROUND
India: Privatizing the State and opening the
trade door
Power: The industry shortfalls
8.3 PROGRAM
8.4 ORGANIZATION
8.5 CONTRACTUAL RELATIONSHIPS
8.6
8.7
8.8
8.9
170
171
173
174
175
176
176
178
FINANCING
CONSTRUCTION
OPERATIONS
UNEXPECTED CHANGES
179
180
181
181
Project canceled
Fallout
Renegotiations
Leading changes
REFERENCES
LIST OF ABBREVIATIONS
182
184
185
186
189
193
LIST OF FIGURES
xi
LIST OF FIGURES
THE BUILD OPERATE TRANSFER APPROACH
Fig. 0.1:
BOT and other project delivery organizational forms.
Fig. 0.2:
Public and private involvement.
Fig. 0.3:
Alternative project delivery schemes.
Fig. 0.4:
Typical BOT organizational structure.
Fig. 0.5:
Parties and their goals.
Fig. 0.6:
Balancing costs and revenues to optimize unit price and
profits (revenues minus costs). Arrows indicate the
preferred directions towards an optimal condition.
Fig. 0.7:
Contracts and relationships.
Fig. 0.8:
Stages of a BOT project.
Fig. 0.9:
Stages with Selection Process BOT projects.
Fig. 0.10:
Transfer of a BOT facility.
Fig. 0.11:
Cashflow over the concession period.
Fig. 0.12:
Financial BOT structure.
Fig. 0.13:
Payments and revenues for each stage in a BOT project
(duration of stages not in scale).
6
7
9
10
11
12
13
15
15
17
18
19
20
50
55
56
60
62
64
65
xii
LIST OF FIGURES
70
72
73
77
81
84
85
DULLES GREENWAY
Fig. 4.1:
Loudoun County, Virginia.
Fig. 4.2:
The extension of the Dulles Toll Road.
Fig. 4.3:
Financing structure.
Fig. 4.4:
Organization development scheme.
Fig. 4.5:
Contractual relationship.
Fig. 4.6:
Construction site.
Fig. 4.7:
Dulles Greenway toll-house.
88
95
100
103
104
105
106
110
112
113
114
115
116
117
118
120
WIJKER TUNNEL
Fig. 6.1:
Location Wijker tunnel.
Fig. 6.2:
Organization development scheme.
Fig. 6.3:
Contractual relationship.
Fig. 6.4:
Financing structure.
Fig. 6.5:
Tunnel elements.
Fig. 6.6:
Wijker tunnel.
124
132
135
137
139
141
144
150
152
155
157
159
LIST OF TABLES
Fig.
Fig.
Fig.
Fig.
7.7:
7.8:
7.9:
7.10:
xiii
160
161
162
163
168
169
175
177
180
181
LIST OF TABLES
PLYMOUTH COUNTY CORRECTIONAL FACILITY
Table 1.1: Population and capacity of state prisons in
Massachusetts and of Plymouth County Jail.
Table 1.2: Sources and uses of funds.
Table 1.3: Pods and units.
Table 1.4: Projected operating budget for Fiscal Year 1995.
29
35
42
45
58
64
80
83
DULLES GREENWAY
Table 4.1: Project capitalization.
99
118
119
119
WIJKERTUNNEL
Table 6.1: Daily passing vehicles per alternative through the
Wijker- and Velser tunnel.
128
xiv
LIST OF TABLES
Table
Table
Table
Table
6.2:
6.3:
6.4:
6.5:
Cost-division.
Debt to equity division Wijker tunnel-project.
Construction numbers.
Charge bands without a second Coen tunnel.
136
137
140
142
170
172
178
183
PREFACE
xv
PREFACE
This book is the result of research on the project delivery scheme of Build
Operate Transfer (BOT). Since 1994, research was conducted simultaneously at the Harvard Design School and the Bouwkunde, Technical
University of Delft, resulting in a series of case studies developed on several
BOT projects in various parts of the world. The case studies identify the
different aspects of the BOT project delivery scheme and draw insights from
the organizational structures employed and the risks assumed by the
participants of the studied BOT projects. Eight of these case studies are
included in this book.
to study the BOT project delivery scheme and identify the major
participants and their roles, responsibilities and assumed risks, as well
as their technical and professional expertise.
xvi
PREFACE
and secondly, the level of risks assumed by the private sector. In general, an
effort was made to select cases where the government or other public
organizations did not offer lucrative lease-back options or protective nets
with financial guarantees. Undoubtedly, the case studies are conditioned and
shaped by the points of view of the designers and building professionals,
though, business related issues centered on management, finance and law
are fundamental to BOT and they are given proper consideration.
Although the eight cases are not statistically significant for deriving
general conclusions, they set the stage for how BOT projects work and, as a
result, allow the reader to formulate hypotheses to be tested using additional data. This book therefore can be used as the basis for further research
and as a handbook for those professionals interested in developing BOT
projects. It also provides original material for teaching the BOT project
delivery scheme.
Bas Menheere
Professor of Project Management
Architecture, Delft University of Technology
Spiro N. Pollalis
Professor of Design Technology and Management
Harvard Design School
PART I
FRAMEWORK
0
THE BUILD OPERATE TRANSFER
APPROACH
0.1
INTRODUCTION
for more sophistication and for transfer of design across geographical and
economic boundaries. With turn key contracts, the owner buys a package of
site, design and finished building, while the developer secures financing,
manages the project flow and coordinates the architect and the contractor.
Such contracts are usually limited in complexity1. BOT is closer to total
product delivery where in addition to financing and development, the
supplier is also responsible for the operation of the facility. Fig. 0.1 presents
visually the grouping of responsibilities of the alternative project delivery
schemes.
Fig. 0.1: BOT and other project delivery organizational forms (after A. Bol and R. Geraedts).
0.2
BACKGROUND2
The first official private facility development under the name Build
Operate Transfer was used in Turkey in 1984, by Prime Minister Ozal, as
part of an enormous privatization program to develop new infrastructure
(Beuker, 1988). However, the BOT approach was used as early as 1834 with
the development of the Suez Canal. This revenue-producing canal, financed
by European capital with Egyptian financial support, had a concession to
design, construct, and operate assigned to the Egyptian ruler Pasha
Muhammad Ali (Levy, 1996).
In the second half of the nineteenth century, railways and roads were
developed with the help of private financing in the western world (Mobsby,
1992) and although the privately operated public facilities became financial
successes, they were not devoid of shortcomings. The infrastructure projects
had to be accessible to everybody but optimizing the economic rate of return
conflicted with public interest.
By the mid-twentieth century, the privatization of public facilities had
experienced a downturn as the development of infrastructure projects by
private funds gained popularity throughout the world, particularly in the
United States. The increase in road traffic resulted in an urgent need for
0.3
DEFINITION
0.4
Five major participants are identified in every BOT project and Fig. 0.4
shows the typical structure. Very simply, the principal grants the concession
to the concessionaire. The concessionaire, usually a consortium of
companies, undertakes the financing and development of the project.
10
Financing is obtained from sponsors and lenders. The contractor builds the
facility and the operator runs the facility.
Fig. 0.4: Typical BOT organizational structure (after Walker and Smith, as modified by R. Huijbregts).
Principal
In a BOT project, the principal is usually a government agency, a local or
federal government body that recognizes the need for a public facility but is
unable to financially support the project. The government agency is thus
forced to look for alternative options.
Concessionaire
After the identification of the need for the facility, the government,
following a due process, will grant a concession to the concessionaire. The
11
the Plymouth prison project the county Sheriff was part of the con-
12
Many contracts and agreements are signed for a successful BOT project
to bridge the differences in incentives and goals among the participants. This
process can be very time consuming as some parties may try to cast off risks
and responsibilities to another. A balance has to be found between cost and
quality, by selecting the proper financial scheme, design, construction
methods, materials, maintenance costs, and operation costs in order to
result in low usage fees and high profits. A major task, therefore, is to guide
the incentives and goals of the individual parties in favor of the project. Fig.
0.5 shows the principal goals of the major participants in a BOT project and
Fig. 0.6 shows graphically the optimization levels to be pursued to make the
project a financial success.
Fig. 0.6: Balancing costs and revenues to optimize unit price and profits
(revenues minus costs). Arrows indicate the preferred directions towards an optimal condition.
Concession contract
The concession contract is signed between the principal and the
concessionaire. This contract runs from the initial design stage through the
final transfer, and includes the allocation of risks. The main issues addressed
within the concession contract are:
13
The length of the concession period; the starting date and the
transfer date.
The structure of the project company (concessionaire).
The financial scheme.
The financial guarantees (principal and concessionaire).
The material guarantees (if the concessionaire is not able to deliver
the facility, the principal has the right to step in and take over).
The financial ceiling of development costs.
The financial ceiling of usage costs.
The construction process.
The completion time of the construction.
14
Financial agreements
The financial agreements are private between the concessionaire and the
equity partners (sponsors) and the lenders (i.e., banks, financial institutions).
The shareholders agreement contains the ratio of debt to equity and a
detailed plan for the distribution of the expected revenues during operation.
The lenders agreement, between the debt providers and the concessionaire,
specifies the various guarantees and the agreed return-on-investment. The
most significant guarantee is provided by the government to step-in in case
of lower than expected revenue levels. One of the extreme guarantees for a
lender is the right to take over the facility in case the concessionaire is
unable to meet financial obligations.
Construction contract
The contract between the concessionaire and the contractor is usually a
fixed price contract or a design-build contract. The concessionaire wants to
delegate risks and, because of the concessionaires responsibilities towards
the principal, the lenders, and the final users of the facility, high fines are
written into the contract for late delivery.
Operation contract
The operation contract is signed between concessionaire and operator.
The rates for usage of the facility are included in the contract, as agreed by
the principal and concessionaire. A major aspect for the operation
agreement is the prognosis of the use of the facility.
All contracts are strictly related to each other and eventually shape the
design, construction and operation of the facility and describe
responsibilities and risks. It is, therefore, crucial to obtain transparent
contracting where all risk and responsibility-bearing parties obligations are
clearly defined. An open information structure and well defined contract
management with agreed risk division will limit misunderstandings.
0.5
15
concession period, the facility transfers to the principal and then state
agencies will own and operate the facility.
Fig. 0.8: Stages of a BOT project.
Preliminary study
The preliminary study usually takes place prior to the involvement of the
concessionaire. This stage is executed by, or on behalf of, the principal (Fig.
0.9). Feasibility studies are necessary to prove the forecasted success of the
project, in order to attract private funding. Alternatively, a private party
may identify a need and initiate the BOT project and in such a case, the
preliminary study is conducted by the private entity with limited government involvement.
16
Selection process
The selection process depends on who initiates the project. In a public
selection process where the initiative is coming from the public sector
(government), a request for qualification is distributed. After receiving
applications, the government selects a few consortia to submit proposals
(request for proposals) and from these a concessionaire is chosen. During
this process, the consortia will group interested parties as required for the
efficient and adequate execution of the project. Alternatively, in a speculative selection process, the private sector initiates the project and contacts
the appropriate government agency for approval. The project is granted
after proper negotiations.
Project implementation
After the selection stage and the foundation of the concessionaire, the
proposal is finalized. Together with all the involved parties, the
concessionaire develops a detailed program and preliminary design, and
applies for permits. This process can be shortened if a government agency is
actively participating. Once permits are issued, the final concession
agreement
is
signed. During the project implementation stage, in addition to the interests
of the involved parties, the interests of the external parties also require
attention. The influential power of politics, the opposition, and
environmental agencies are significant factors and, if not taken into account,
may hinder or even dissolve the project.
Construction
Once the necessary permits are obtained, construction begins. Often BOT
projects are fast track projects where the design is not complete when
construction starts. This is feasible because of congruent financial interests
within the members of the consortium and the pressing need to complete
construction and start collecting revenues. Less controversial designs allow
a quicker construction period with fewer uncertainties.
Operation
During the operation stage, the facility is operated and maintained by the
operator who is paid by the concessionaire. The concessionaire, as the
owner of the facility during the operation period, is obligated to operate the
facility in a manner that adequately services the public user. The
concessionaire is also responsible for maintaining the facility in working
condition. Both the concession and operation agreements specify the
condition of the facility at the time of transfer to the principal.
Transfer
17
Due to the external and internal particularities of every BOT project, the
actual organization and process may be different to the presentation in the
previous paragraphs. The starting and completion period of each stage in a
BOT project can change due to a variety of factors, both external and
internal to the project. Among them are the complexity of the development
18
0.6
FINANCING
One of the primary features of BOT is private financing which infers the
concessionaire is fully responsible for acquiring the necessary funds to
develop and operate the facility. The concessionaire will raise the required
funding in debt and equity. The return of investment is realized during the
operational stage of the facility (Fig. 0.11).
Fig. 0.11: Cash flow over the concession period.
19
part of the debt. Most of the financial issues important to shareholders are
also crucial to lenders in order to forecast the financial outcome. The
expected interest and repayment schedule is established prior to closing the
deals and contracts and gives investors a certain reassurance of security. In
addition, lenders often ask for guarantees to minimize their risks and the
government usually provides the larger and most welcomed guarantees.
The equity to debt ratio is determined by the principal and depends on
the financial capacity of the equity partners and their ability to secure long
term loans. The debt to equity ratio is usually established at 1 to 4 (20%
equity, 80% debt). Due to the higher risks assumed by the sponsors
(consortium), a comparably higher return on investments (ROI)
compensates the risks. Average ROIs in the studied cases were 15-20% for
equity and 8-10% for debt. The latter was based on the ROI of state bonds
and
interest,
compensating for the perceived higher risk level.
In most cases, the government retains a financial influence over the
proceedings of a BOT project. In cases where no government is involved, it
20
Firstly, the governments wish not to lose primary control over the
development of the public facility. In the Wijker tunnel project for example,
t
h
e
government made a 15% subsidy available towards the cost of developFig. 0.12: Financial BOT structure.
ment. The second reason may be attributed to the government being forced
to allocate public money to make the project more interesting for the private
sector. In the Strait Crossing Bridge project, the government annually pays
C$ 41 million to lighten the financial burden. The criteria for selecting the
concessionaire for this project were structured to obtain a minimum
required subsidy.
As a tenant. A second approach which enables the government to get
financially involved is to support the off-take, the product, of the facility. In
the Dabhol Power Company project, the state assumed the responsibility to
distribute the produced energy to the final users, charging different regions
different rates for political reasons. In both the prison projects (Plymouth
and the Donald Wyatt), the government entered an agreement to take over
the off-take of the facility where the government (state, federal and local)
would be charged per personday for the prisoners and detainees.
The revenues for a project are generated during operation from the final
users. In the direct payment method, like in toll roads, the end-user directly
pays the operator. In the indirect payment method, the government pays in
favor of the final user, like in the prisons and the Wijker tunnel. The
revenues are allocated to repay the debt plus the interest due within the
concession period as well as the dividends to the shareholders. Fig. 0.12
shows a typical financing structure for a BOT project, with both investment
and revenue streams.
Fig. 0.13 shows schematically the payments (development, construction,
maintenance and operations, interest) and the revenues for each stage in a
21
BOT project. At the time when the present net worth of the accumulated
revenues is the same as the present net worth of the accumulated payments,
the concessionaire will have realized the projected investment return that
includes the required interest and profits. Of course, that time depends on
the projected return on investment of the equity holders and lenders. After
that period, the facility will produce net profits for the equity holders.
Fig. 0.13: Payments and revenues for each stage in a BOT project (duration of stages not in scale).
0.7
22
unknown factors.
0.8
23
carefully consider establishing the usage fees, especially if the local economy
is poor and devaluation of the local currency a possibility.
0.9
SOURCES
[1]
24
[2]
[3]
[4]
[5]
[6]
[7]
[8]