Sharing risk through concession contracts

Scandizzo, Pasquale Lucio; Ventura, Marco

doi:10.1016/j.ejor.2010.04.008

Cited by 33 publications

(13 citation statements)

References 20 publications

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“…The method reveals a new insight into the evaluative approaches on both private and public evaluative criteria of PPP infrastructure projects. Some characteristics of PPP infrastructure projects still need to be considered further with the evaluative values, especially for the matching decision cases which are to satisfy the match-degree of participants, decrease matching risks, and produce an optimal matching scheme [44].…”

Section: Discussionmentioning

confidence: 99%

Multi-Criterion Two-Sided Matching of Public–Private Partnership Infrastructure Projects: Criteria and Methods

Liang

Sheng

et al. 2018

Sustainability

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Two kinds of evaluative criteria are associated with Public-Private Partnership (PPP) infrastructure projects, i.e., private evaluative criteria and public evaluative criteria. These evaluative criteria are inversely related, that is, the higher the public benefits; the lower the private surplus. To balance evaluative criteria in the Two-Sided Matching (TSM) decision, this paper develops a quantitative matching decision model to select an optimal matching scheme for PPP infrastructure projects based on the Hesitant Fuzzy Set (HFS) under unknown evaluative criterion weights. In the model, HFS is introduced to describe values of the evaluative criteria and multi-criterion information is fully considered given by groups. The optimal model is built and solved by maximizing the whole deviation of each criterion so that the evaluative criterion weights are determined objectively. Then, the match-degree of the two sides is calculated and a multi-objective optimization model is introduced to select an optimal matching scheme via a min-max approach. The results provide new insights and implications of the influence on evaluative criteria in the TSM decision.

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Section: Discussionmentioning

confidence: 99%

Multi-Criterion Two-Sided Matching of Public–Private Partnership Infrastructure Projects: Criteria and Methods

Liang

Sheng

et al. 2018

Sustainability

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“…Niu et al [32] optimized the BLP for charging, capacity, and franchise period, and they studied the influence of demand uncertainty on BOT contract design. Scandizzo et al [33] used real option theory to establish a bargaining model between government and the private partner, reaching an agreement on the length of the contract and the franchise fee to resolve the balance of interests. In the above literature, the theories of net present value, agency theory, simulation, bargaining game theory, and genetic algorithm were used to optimize and adjust the franchise period.…”

Section: Study Of the Key Parameters Of Rsc Structurementioning

confidence: 99%

Research on the Equilibrium of a Revenue Sharing Contract in a Transfer-Operation-Transfer Project Based on the Theory of Share Tenancy

Du¹,

Fang²,

Hu³

2019

AJIBM

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To solve the transfer-operate-transfer (TOT) project contract model selection, contract structure optimization and the largest revenue of government and private partners, a revenue-sharing contract (RSC) structure equilibrium model of a TOT project is constructed based on the theory of share tenancy. According to the key parameters of RSC structure, the algebraic model is constructed by using the Lagrange multiplier method, and the geometric model is built by adopting the dynamic equilibrium method. The equilibrium conditions of the two models are obtained under the constraints of the maximization of income of both parties, and the equilibrium conditions of two models are verified as completely consistent. The result shows that 1) The RSC structure of the TOT project can achieve Pareto optimality and maximize revenue for both parties; 2) As the proportion of participants' investment or risk sharing increases, their revenue-sharing ratio (RSR) will increase, and vice versa; 3) Regardless of transaction costs, the three contract models are equivalent; considering the transaction costs, the revenue share of the government in the RSC is greater than that in the equilibrium state. 4) Changing the assumptions, the equilibrium model can still provide ideas for revenue sharing contract structure and efficiency optimization.

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“…In this scenario, since the private partner is not a charitable body, it requires a 2 of 19 reasonable return on investment [3][4][5]. Indeed, the royalty fee of a TOT project acts as a substitute for investment cost [6]. The government determines the franchise period based on the payback period under the minimal internal rate of return (IRR) as expected by the concessionaire [7].…”

Section: Introductionmentioning

confidence: 99%

Developing a Revenue Sharing Method for an Operational Transfer-Operate-Transfer Project

Fang

et al. 2019

Sustainability

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The transfer-operate-transfer (TOT) project model is used widely as a commercial framework for public-private-partnerships to support provision of infrastructure and enable the delivery of services. However, operational delivery of such projects can encounter certain challenges, such as the need for improved revenue sharing between governmental and private partners. The purpose of this paper is to design a revenue sharing method (RSM) that satisfies the revenue-sharing forecast in the contract design stage and the realized revenue sharing in the contract execution period for an operational TOT project. This approach identifies the impact of external uncertainty and effort level as well as the input ratio on revenue sharing of participants, distributes and reasonably minimizes the project revenue uncertainty among the participants, and achieves an improved matching of the participants’ revenue sharing with their risk-sharing, resource input and effort level. The paper utilizes the fuzzy-payoffs Shapley value method for revenue distribution for an operational TOT project, where the fuzzy alliance and input ratio coefficient are adopted to gradually optimize the Shapley value and form the RSM of an operational TOT project. The RSM allows prediction of the revenue sharing of participations under uncertain conditions of project revenue and supports improved decision-making by participants.

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Sharing risk through concession contracts

Cited by 33 publications

References 20 publications

Multi-Criterion Two-Sided Matching of Public–Private Partnership Infrastructure Projects: Criteria and Methods

Multi-Criterion Two-Sided Matching of Public–Private Partnership Infrastructure Projects: Criteria and Methods

Research on the Equilibrium of a Revenue Sharing Contract in a Transfer-Operation-Transfer Project Based on the Theory of Share Tenancy

Developing a Revenue Sharing Method for an Operational Transfer-Operate-Transfer Project

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