Go/No-Go decisions for BOT projects

The use of Public Private Partnership (PPP) for the delivery of infrastructure projects has been on the rise in recent years. This can be attributed to the increasing demand for improved and expanded public facilities and services and the insufficient government funds needed to meet such demand. This paper presents a methodology that assists decision makers in evaluating BOT projects in general from the perspective of investors. It integrates economic analysis and evaluation methods along with a decision-tree type analysis to derive the expected value or utility, which measures the degree of satisfaction of investor in relation to an established threshold. The developed methodology was implemented in Excel spreadsheet application linked to multi-attributed decision support software. The Jiangsu highway BOT project in China is utilized as a case study to demonstrate the analytical aspects of the developed methodology and its application. The project was financed by the World Bank and its relevant data was extracted from the literature. A total of 16 decision variables and their relationships were identified, to represent multiple concerns in evaluating the project from the investor's perspective. The relative weights of the variables considered, satisfaction limits as specified by the user, and related probability values, needed for the analysis, are assigned based on historical data of similar projects. The analysis results are then used to recommend go/no-go decision for that project.