Design of Concession Period Considering Risk Management for a Road Project

Swapan Kumar Bagui; Ambarish Ghosh

doi:10.12816/0025863

Article Details

Design of Concession Period Considering Risk Management for a Road Project

Authors:

Swapan Kumar Bagui | Ambarish Ghosh

Publisher:

Jordan University of Science and Technology : Deanship of Research

Main Topics:

Engineering and applied operations

Journal:

Jordan Journal of Civil Engineering 2013 Vol.7 Issue 4, pp.401-418

Document Type:

Article

Publication Date:

10/2013

Document Language:

English

Document ID (Org No.):

86114

Frequency:

Quarterly

eISSN:

2225157X

pISSN:

19930461

DOI:

10.12816/0025863

Descriptors:

Keywords:

Abstract:

 The design of concession period for build–operate–transfer (BOT) projects is crucial to financial viability and completion risk management. A systematic analysis shows that concession period design involves the design of concession period structure as well as the determination of the concession period length. The concession period may have a single-period structure or a two-period structure; its length may be fixed or variable. Different designs reflect different risk control strategies for completion time overruns. The single-period concession structure requires the project company to assume completion risk, while the two-period concession structure could, to some extent, reduce the completion risk exposure to the project company, depending on the various parameters. Through Monte Carlo simulation, this paper evaluates the mean net present value (NPV), variance and NPV-at-risk of different concession period structures, so that both the government and the concessionaires can understand their risk exposure and rewards. The paper then analyzes the influence of project characteristics on concession period design to evaluate the feasibility of the design. Expected concession period has been calculated using Monte Carlo simulation method, and expected concession periods have been found to be 28.25 years and 26.46 years based on level of service and 95 % risk consideration.

Article Details

Design of Concession Period Considering Risk Management for a Road Project

Authors:

Swapan Kumar Bagui | Ambarish Ghosh

Publisher:

Jordan University of Science and Technology : Deanship of Research

Main Topics:

Engineering and applied operations

Journal:

Jordan Journal of Civil Engineering 2013 Vol.7 Issue 4, pp.401-418

Document Type:

Article

Publication Date:

10/2013

Document Language:

English

Document ID (Org No.):

86114

Frequency:

Quarterly

eISSN:

2225157X

pISSN:

19930461

DOI:

10.12816/0025863

Descriptors:

RISK MANAGEMENT

ROAD CONSTRUCTION

ROAD SAFETY

TRANSPORT INFRASTRUCTURE

CONCESSIONS

Concession Period Structure

NPV

Privately Financed Infrastructure

BOT

Risk Management

Issues

Article Details

Authors: Swapan Kumar Bagui | Ambarish Ghosh

Publisher: Jordan University of Science and Technology : Deanship of Research

Main Topics: Engineering and applied operations

Journal: Jordan Journal of Civil Engineering 2013 Vol.7 Issue 4, pp.401-418

Document Type: Article

Publication Date: 10/2013

Document Language: English

Document ID (Org No.): 86114

Frequency: Quarterly

eISSN: 2225157X

pISSN: 19930461

DOI: 10.12816/0025863

Descriptors:

Issues

Authors:

Swapan Kumar Bagui | Ambarish Ghosh

Publisher:

Jordan University of Science and Technology : Deanship of Research

Main Topics:

Engineering and applied operations

Journal:

Jordan Journal of Civil Engineering 2013 Vol.7 Issue 4, pp.401-418

Document Type:

Article

Publication Date:

10/2013

Document Language:

English

Document ID (Org No.):

86114

Frequency:

Quarterly

eISSN:

2225157X

pISSN:

19930461

DOI:

10.12816/0025863