| Summary: | The goal of this thesis is to show how option valuation techniques can be used to
value managerial flexibility in Build-Operate-Transfer (BOT) toll road projects. It begins
by discussing the dramatic shift towards public-private partnerships and BOTs in the
infrastructure industry. It then looks at how traditional capital budgeting techniques often
fail to capture important sources of value created by flexibility. It discusses real options
and introduces Contingent Claims Analysis (CCA) as a means of valuing flexibility
which takes into account the opportunity to construct replicating portfolios in the market.
It applies CCA to the real options present in each phase of a BOT toll road project.
During the build phase, it looks at the option to abandon, the option to change
scale/technology, and time-to-build flexibility. During the operate phase, it analyzes tollsetting
flexibility, development gain options, and project financing flexibility. At the
transfer phase it considers arrangements with option-like features. In conclusion, this
thesis emphasizes the relevance of real option valuation techniques to BOT toll road
projects and points the way to further research fusing the fields of transport economics
and financial economics. === Business, Sauder School of === Operations and Logistics (OPLOG), Division of === Graduate
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