| Summary: | 碩士 === 銘傳大學 === 管理科學研究所 === 89 === The Study for BOT Evaluation Model
under Uncertainty of Incomes
- The Example of Kaohsiung Mass Rapid Transit System -
Student: Chuan-Chuan Ko Advisor: Tyrone T. Lin Ph.D.
Graduate Institute of Management Science,
Ming Chuan University
Abstract
To alleviate the financial burden and attract non-government organization to joint public infrastructure development, the government introduces the BOT (Build-Operate-Transfer) model to build and operate the public infrastructure more efficiently. The BOT models are mainly for long-term infrastructure development, which involve enormous capital expenditure, non-reversible investment and government operating permission. Since it is inflexible to evaluate the project value by traditional “Net Present Value” (NPV) method under such uncertain economic circumstance, the research utilizes the “real options” approach to evaluate the BOT project value.
We catalog the BOT projects into planning stage, building stage and operating stage according to the risks and other considerations. The value of planning stage project is the potential value of waiting for construction. The feasibility of construction and investment depends on the market demands. The value of building stage project is the potential operation value. For the value of operating period, we can calculate base on expected net cash flows. We tried to establish a project valuation model for BOT projects of different stages. To inquire into the valuation of public infrastructure development investment, we utilize the Kaohsiung Mass Rapid Transit System (MRTS) as a case study to explain the decision making model for BOT project. The model bases on ”Financial Benefit Valuation” to provide reference data of best capital investment threshold and best timing of completing a construction for decision making. Base on Real Options approach, we simulate the “Kaohsiung MRTS” case under three different strategic hypothesis.
The result shows that the strategic operating value is higher than the value determined by traditional “NPV” method. The difference is the “management flexibility value”. In the case of construction period of six years, the “management flexibility values” are 15.2779 billion, 30.524 billion and 50.5035 billion under those three hypothesizes. In the case of construction period of four years, the “management flexibility values” are 60.5649 billion, 81.8325 billion and 259.4563 billion under those three hypothesizes. The simulation result also indicates that the key point for BOT project success is “the accuracy of budget allocation”. That means it is crucial to allocate the additional value of “management flexibility values” reasonably.
This research also proposes three different allocation strategies: 1. Adjust total net incomes as the non-government company keeps the same shares. 2. Let the non-government company be responsible for the operating income within the government special permission periods, which is the original purpose of BOT project. 3. Combine both strategy 1 and strategy 2 to adjust the shares and reallocate the net revenues. The research try to provide a model for the government decision maker to calculate the amount government should compensate or collect from the permitted company to optimize the benefits of government, residents and also non-government investors.
Keywords：BOT Model, Irreversibility, Real Options Approach.
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