Financial Risk Analysis of Project Finance in Indonesian Toll Roads

Wibowo, Andreas; Kochendörfer, Bernd

doi:10.1061/(asce)0733-9364(2005)131:9(963)

Cited by 51 publications

(26 citation statements)

References 11 publications

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“…Currently, financial issues in traditional construction projects have been adequately addressed [101][102][103][104]. Various financial issues in traditional construction project, such as inflation and fluctuation, shortages of investment capital, poor credit ability, interest rate, liquidity, currency exchange restriction, have been comprehensively investigated [105][106][107][108]. However, similar research efforts have not been made in sustainable construction projects.…”

Section: Identification Of Financial Issues In Sustainable Constructimentioning

confidence: 99%

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

2017

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Despite the increasing investment in sustainable development over the past decade, a systematic review of sustainable construction project financing is lacking. The objectives of this paper are to conduct a systematic review to examine the policies, practices, and research efforts in the area of sustainable construction project financing, and to explore the potential opportunities for the future research. To achieve these goals, this paper first reviewed the sustainable construction project financing practices implemented by four representative developed economies including the United Kingdom, the United States, Singapore, and Australia. Then, this paper reviewed the efforts and initiatives launched by three international organizations including the United Nations, the Organization for Economic Co-operation and Development, and International Finance Corporation. After that, this paper reviewed the research efforts of sustainable construction project financing published in peer-review journals and books. This paper identified four major research themes within this area, which are the review of financial stakeholders and market of sustainable construction, benefits and barriers to sustainable construction project financing, financial vehicles for sustainable construction projects, innovative models and mechanisms for sustainable construction project financing. Additionally, this paper revealed five directions for the future research of sustainable construction project financing, which are the identification of financial issues in sustainable construction projects, the investigation of financial vehicles for sustainable construction projects in terms of their strengths, limitations, and performances, the examination of critical drivers for implementing sustainable construction project financing, the development of a knowledge-based decision support system for implementing sustainable construction financing, and the development of best practices for implementing sustainable construction project financing. This paper contributes to the body of knowledge by reviewing existing policies, practices, and research efforts in the area of sustainable construction project financing. Meanwhile, the findings from this paper benefit the industry as well, because they are able to provide the practitioners with a holistic view of sustainable construction project financing, thereby enhancing their knowledge and skills in this regard.

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Section: Identification Of Financial Issues In Sustainable Constructimentioning

confidence: 99%

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

2017

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“…And interest on debt ( j INT ) to be paid in the th j year is represented by Eqn (7). In consistent with previous research, only the effects of income tax ( j TAX ) is considered in the calculation as shown in Eqn (8) (Wibowo, Kochendörfer 2005):…”

Section: Revenue Functionmentioning

confidence: 87%

Balancing Public and Private Interests Through Optimization of Concession Agreement Design for User-Pay PPP Projects

Feng

Wang

et al. 2018

Journal of Civil Engineering and Management

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Abstract. In user-pay public private partnership (PPP) projects, private sectors collect user fees to cover cost and reap revenue. For projects that cannot be self-financed, public sectors usually invest public funds to make them financially feasible. The concession agreement allocates revenues and risks, and lies in the center of balancing public and private interests. However, stakeholders may have contrary opinions regarding the optimization of concession agreement. While private sectors are concerned about earning money, public sectors pay more attention to the efficient use of public funds. To address this challenge, this paper firstly identifies several key concessionary items, including concession period, concession price, capital structure and government subsidy. Then, a multi-objective optimization model is presented using discounted cash flow method, in which key concessionary items act as decision variables and public and private interests are represented by two sub-objectives. Subsequently, the model is solved using non-dominated sorting genetic algorithm-II (NSGA-II). Furthermore, a numerical case based on Beijing No. 4 Metro Line is provided to demonstrate the application of the model. Results show that the proposed model can produce a series of viable combinations of concessionary items that balance public and private interests, which provides practical references for relative decision making activities.

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“…In terms of project evaluation, the NPVaR is presented as the decision-making criteria; although previous studies have been limited to the VaR decision-making process [8,10,20,35,36]. The authors of this current study noticed that the decision-making criterion for project investment is more conservative as it reflects the profitability impact factors of the project risks.…”

Section: Probabilistic Alternative Approachmentioning

confidence: 93%

“…In fact, a Monte Carlo simulation can be easily applied to explain numerous types of practical assumptions regarding the probability distributions of the profitability impact factors of the cash-flow model. The probability distribution for each profitability impact factor of the NPVaR method is determined based on a number of literature researches [15,35,36].…”

Section: Improved Decision-making Process For the Var Modelmentioning

confidence: 99%

A Probabilistic Alternative Approach to Optimal Project Profitability Based on the Value-at-Risk

Kim

2018

Sustainability

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This paper focuses on an investment decision-making process for sustainable development based on the profitability impact factors for overseas projects. Investors prefer to use the discounted cash-flow method. Although this method is simple and straightforward, its critical weakness is its inability to reflect the factor volatility associated with the project evaluation. To overcome this weakness, the Value-at-Risk method is used to apply the volatility of the profitability impact factors, thereby reflecting the risks and establishing decision-making criteria for risk-averse investors. Risk-averse investors can lose relatively acceptable investment opportunities to risk-neutral or risk-amenable investors due to strict investment decision-making criteria. To overcome this problem, critical factors are selected through a Monte Carlo simulation and a sensitivity analysis, and solutions to the critical-factor problems are then found by using the Theory of Inventive Problem Solving and a business version of the Project Definition Rating Index. This study examines the process of recovering investment opportunities with projects that are investment feasible and that have been rejected when applying the criterion of the Value-at-Risk method. To do this, a probabilistic alternative approach is taken. To validate this methodology, the proposed framework for an improved decision-making process is demonstrated using two actual overseas projects of a Korean steel-making company.

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Financial Risk Analysis of Project Finance in Indonesian Toll Roads

Cited by 51 publications

References 11 publications

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

Balancing Public and Private Interests Through Optimization of Concession Agreement Design for User-Pay PPP Projects

A Probabilistic Alternative Approach to Optimal Project Profitability Based on the Value-at-Risk

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