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
2. 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.
3. Build–operate–transfer
• 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.
4. Build–operate–transfer
• Countries where BOT is prevalent Include
Thailand, Turkey, Taiwan, Bahrain, Pakistan,
SaudiArabia,[1]
Israel, India, Iran, Croatia, Japan
, China, Vietnam, Malaysia, Philippines, Egypt
, Myanmar and a few US state
5. Build–operate–transfer
• 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,[3]
without any remuneration
of the private entity involved.
• Some or even all of the following different parties could be
involved in any BOT project:
6. Build–operate–transfer
• Normally, the government is the initiator of the
infrastructure project and decides if the BOT model is
appropriate to meet its needs. In addition, the
political and economic circumstances are main
factors for this decision. The government provides
normally support for the project in some form
(provision of the land/ changed laws).
• The project sponsors who act as concessionaire
create a special purpose entity which is capitalised
through their financial contributions.
7. Build–operate–transfer
• Most BOT projects are funded to a big extent by
commercial debt. The bank will be expected to
finance the project on "non-recourse" basis meaning
that it has recourse to only the special purpose entity
and all its assets for the repayment of the debt.
• The special purpose entity might have other lenders
such as national or regional development banks.
8. Build–operate–transfer
• Because the special purpose entity has only limited
workforce, it will subcontract a third party to perform its
obligations under the concession agreement. Additionally, it
has to assure that it has adequate supply contracts in place
for the supply of raw materials and other resources necessary
for the project.
• 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
9. Build–operate–transfer
• 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.
10. Build–operate–transfer
• Therefore, the private entity bears a substantial part of the
risk. These are some types of the most common risks
involved:
• Political risk: especially in the developing countries because
of the possibility of dramatic overnight political change.
• Technical risk: construction difficulties, for example
unforeseen soil conditions, breakdown of equipment
• Financing risk: foreign exchange rate risk and interest rate
fluctuation, market risk (change in the price of raw materials),
income risk (over-optimistic cash-flow forecasts), cost overrun
risk
11. Alternatives to BOT
• Project delivery methods
defines the characteristics of how a constructi
on project is designed and built and the respo
nsibilities of the parties involved in the constru
ction.
• They
are used by a construction manager who is wo
rking as an agent to the owner or by the owne
r itself to carry-out a construction project whil
e mitigating the risks to the scope
12. • 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.
• The private contractor designs and builds a facility for a fixed fee,
rate, or total cost, which is one of the key criteria in selecting the
winning bid.
• The contractor assumes the risks involved in the design and
construction phases.
13. DBFO
• Turnkey procurement under a design-build contract means
that the design-build team would serve as the owner’s
representative to determine the specific needs of the user
groups meet with the vendors to select the best options and
pricing; advise the owner on the most logical options; plan
and build the spaces to accommodate the function of the
project; coordinate purchases and timelines; install the
infrastructure; facilitate training of staff to use the
equipment; and outline care and maintenance
14. DBFO
• DBFO stands for design-build-finance-operate, which
also assigns the responsibility to the private
organization to design, build, finance, and operate.
• Financing your competitive project may be easy
when there is a high demand for a service and
investors will throw money at any project such as
opening a new airport in a busy metropolis.
15. BLT & ROT
• BLT stands for build-lease-transfer, in which the
public sector partner leases the project from the
contractor and also takes responsibility for its
operation.
• ROT (renovate-operate-transfer) is a procurement
method for infrastructure that already exists but is
performing substandardly.