Recent from talks
Build–operate–transfer
Knowledge base stats:
Talk channels stats:
Members stats:
Build–operate–transfer
Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) is a form of project delivery method, usually for large-scale infrastructure projects, wherein a private entity receives a concession from the public sector (or the private sector on rare occasions) to finance, design, construct, own, and operate a facility stated in the concession contract. The private entity will have the right to operate it for a set period of time. This enables the project proponent to recover its investment and operating and maintenance expenses in the project.
BOT is usually a model used in public–private partnerships. Due to the long-term nature of the arrangement, the fees are usually raised during the concession period. The rate of increase is often tied to a combination of internal and external variables, allowing the proponent to reach a satisfactory internal rate of return for its investment.
Countries where BOT is prevalent include Thailand, Turkey, Taiwan, Bahrain, Pakistan, Saudi Arabia, Israel, India, Iran, Croatia, Japan, China, Vietnam, Malaysia, Philippines, Egypt, Myanmar and a few US states (California, Florida, Indiana, Texas, and Virginia). However, in some countries, such as Canada, Australia, New Zealand and Nepal, the term used is build–own–operate–transfer (BOOT). The first BOT was for the China Hotel, built in 1979 by the Hong Kong listed conglomerate Hopewell Holdings Ltd (controlled by Sir Gordon Wu).
BOT finds extensive application in infrastructure projects and public–private partnership. In the BOT framework a third party, for example the public administration, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period, the private party has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facilities. The facility will be then transferred to the public administration at the end of the concession agreement, without any remuneration of the private entity involved. Some or even all of the following different parties could be involved in any BOT project:
A BOT project is typically used to develop a discrete asset rather than a whole network and is generally entirely new or greenfield in nature (although refurbishment may be involved). In a BOT project the project company or operator generally obtains its revenues through a fee charged to the utility/ government rather than tariffs charged to consumers. A number of projects are called concessions, such as toll road projects, which are new build and have a number of similarities to BOTs.
In general, a project is financially viable for the private entity if the revenues generated by the project cover its cost and provide sufficient return on investment. On the other hand, the viability of the project for the host government depends on its efficiency in comparison with the economics of financing the project with public funds. Even if the host government could borrow money on better conditions than a private company could, other factors could offset this particular advantage. For example, the expertise and efficiency that the private entity is expected to bring as well as the risk transfer. Therefore, the private entity bears a substantial part of the risk. These are some types of the most common risks involved:
The scale of investment by the private sector and type of arrangement means there is typically no strong incentive for early completion of a project or to deliver a product at a reasonable price. This type of private sector participation is also known as design-build.
Modified versions of the "turnkey" procurement and BOT "build-operate-transfer" models exist for different types of public-private partnership (PPP) projects, in which the main contractor is appointed to design and construct the works. This contrasts with the traditional procurement route (the build-design model), where the client first appoints consultants to design the development and then a contractor to construct the work.
Hub AI
Build–operate–transfer AI simulator
(@Build–operate–transfer_simulator)
Build–operate–transfer
Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) is a form of project delivery method, usually for large-scale infrastructure projects, wherein a private entity receives a concession from the public sector (or the private sector on rare occasions) to finance, design, construct, own, and operate a facility stated in the concession contract. The private entity will have the right to operate it for a set period of time. This enables the project proponent to recover its investment and operating and maintenance expenses in the project.
BOT is usually a model used in public–private partnerships. Due to the long-term nature of the arrangement, the fees are usually raised during the concession period. The rate of increase is often tied to a combination of internal and external variables, allowing the proponent to reach a satisfactory internal rate of return for its investment.
Countries where BOT is prevalent include Thailand, Turkey, Taiwan, Bahrain, Pakistan, Saudi Arabia, Israel, India, Iran, Croatia, Japan, China, Vietnam, Malaysia, Philippines, Egypt, Myanmar and a few US states (California, Florida, Indiana, Texas, and Virginia). However, in some countries, such as Canada, Australia, New Zealand and Nepal, the term used is build–own–operate–transfer (BOOT). The first BOT was for the China Hotel, built in 1979 by the Hong Kong listed conglomerate Hopewell Holdings Ltd (controlled by Sir Gordon Wu).
BOT finds extensive application in infrastructure projects and public–private partnership. In the BOT framework a third party, for example the public administration, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period, the private party has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facilities. The facility will be then transferred to the public administration at the end of the concession agreement, without any remuneration of the private entity involved. Some or even all of the following different parties could be involved in any BOT project:
A BOT project is typically used to develop a discrete asset rather than a whole network and is generally entirely new or greenfield in nature (although refurbishment may be involved). In a BOT project the project company or operator generally obtains its revenues through a fee charged to the utility/ government rather than tariffs charged to consumers. A number of projects are called concessions, such as toll road projects, which are new build and have a number of similarities to BOTs.
In general, a project is financially viable for the private entity if the revenues generated by the project cover its cost and provide sufficient return on investment. On the other hand, the viability of the project for the host government depends on its efficiency in comparison with the economics of financing the project with public funds. Even if the host government could borrow money on better conditions than a private company could, other factors could offset this particular advantage. For example, the expertise and efficiency that the private entity is expected to bring as well as the risk transfer. Therefore, the private entity bears a substantial part of the risk. These are some types of the most common risks involved:
The scale of investment by the private sector and type of arrangement means there is typically no strong incentive for early completion of a project or to deliver a product at a reasonable price. This type of private sector participation is also known as design-build.
Modified versions of the "turnkey" procurement and BOT "build-operate-transfer" models exist for different types of public-private partnership (PPP) projects, in which the main contractor is appointed to design and construct the works. This contrasts with the traditional procurement route (the build-design model), where the client first appoints consultants to design the development and then a contractor to construct the work.