Predicting the Conditional Viability of Build-Operate-Transfer Contracts for Transportation Facilities without Forecasting Revenues

As an alternative to public funding of transportation infrastructure, public private partnerships (PPPs) are gaining acceptance at both the federal and state levels. There are challenges to creating PPPs in which there is true equity between the public and private sectors in infrastructure delivery. Differences between the two sectors , for example, may result in difficulties relating to validation assumptions, validation process transparency, and ethical and legal contractual conditions, and lead to adversarial relations between the partners. Problems may be passed on to both public and private partner stakeholders. Challenges may be of particular concern in large transportation facility construction. Build-Operate-Transfer (BOT) contracts award a private partner in a PPP a transportation infrastructure franchise. Demonstrating the viability of individual proposals by the competing consortiums submitting them is usually necessary to award a BOT agreement. This may be done through voluminous franchise application revenue forecasts, as well as cost estimates. Conditions for BOT agreement proposal assessment may be specified by the public partner, in effect rendering viability a demonstration of acceptable rate of return based on revenue cash flow and annual cost over the life of the project. The author discusses being able to conduct facility operation long-term viability assessment without needing proprietary forecasting model assessment.


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  • Accession Number: 01045389
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Mar 8 2007 10:46AM