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BUILD OPERATE TRANSFER (BOT) PORJECTS DECISION, RISK, AND SUCCESS FACTORS

BUILD OPERATE TRANSFER (BOT) PORJECTS DECISION, RISK, AND SUCCESS FACTORS. Presented by: Alaa Albesher. Outline:. Introduction. Decision Factors. Risk Factors. Critical Success Factors. Conclusion. Introduction:. BOT. BOT types. Different variations depending on occasions or countries.

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BUILD OPERATE TRANSFER (BOT) PORJECTS DECISION, RISK, AND SUCCESS FACTORS

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  1. BUILD OPERATE TRANSFER (BOT) PORJECTS DECISION, RISK, AND SUCCESS FACTORS Presented by: Alaa Albesher

  2. Outline: • Introduction. • Decision Factors. • Risk Factors. • Critical Success Factors. • Conclusion.

  3. Introduction: • BOT. • BOT types. • Different variations depending on occasions or countries. • BOT need. • BOT is especially popular in developing countries. • BOT advantages.

  4. Decision Factors: • Decision under uncertainty. • Decision sequence. • Multiple alternatives. • Multiple interests.

  5. Risk Factors: • Political risk. • Financial risk. • Operation risk. • Construction risk. • Market risk.

  6. 1. Political Risk: • The source is the potential of political events to occur such as war or revolution. • This risk is more significant in developing countries.

  7. 2. Financial Risk: • The source is the oscillations in exchange rates between currencies, interest rate, and inflation. • This risk is more significant in developing countries.

  8. 3. Operation Risk: • The source of this risk is the probability of actual operation and maintenance costs to exceed planned costs.

  9. 4. Construction Risk: • The risk is related to the delays of project completion and cost overruns. • Delays causes are technical problems, poor management, or both combined together. • Operation and Construction risks are more manageable.

  10. 5. Market Risk: • Demand risk from doubts of demand regarding the project products. • Price risk related to the probability of price change for the project products.

  11. Critical Success Factors: • Entrepreneurship and leadership. • Right project identification. • Strength of the consortium. • Technical solution advantage. • Financial package differentiation. • Differentiation in guarantees.

  12. 1. Entrepreneurship and Leadership: • Defined as the pursuit of opportunities beyond the financial and technical resources that the entrepreneur currently possesses. • There are three sub factors: • Risk taker. • Cultivating goodwill with host government. • Leadership of a key entrepreneur.

  13. 2. Right Project Identification: • Choosing the right project to pursue is very essential factor for successful BOT project. • This factor include accurate prediction of need and lack of funds by host government.

  14. 3. Strength of the Consortium: • The consortium must be strong to win the BOT project contract by having financial strength and multinational team.

  15. 4. Technical Solution Advantage: • Having technical solutions that provide cost reduction will generate a competitive advantage and attractive proposal. • Other ways of having solution advantage could be by shorter construction period, good environmental impact, and public safety.

  16. 5. Financial Package Differentiation: • Financial package will provide cost advantage and make the proposal unique. • Cost advantage requires low construction cost, acceptable tariff levels, reasonable equity to dept ratio, and short concession period.

  17. 6. Differentiation in Guarantees: • Special features or guarantees differentiate a proposal from others. • Special features should demonstrate the humanity of the project and ensure fears the host government might have. • Less guarantees requirements are preferable by governments.

  18. Conclusion: • A viable mechanism for infrastructure was needed resulted in BOT. • There are many factors affect the decision making of taking a BOT project or not. • Risks involved in BOT projects must be considered and assessed. • Six critical success factors are common in success BOT projects.

  19. Thank you for listening Any Questions!

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