International Conference on Construction and Real Estate Management 2020
Financial Impact Assessment of Construction Delay in BOT Infrastructure Projects
Publication: ICCREM 2020: Intelligent Construction and Sustainable Buildings
ABSTRACT
In Thailand, a PPP arrangement called build-operate-transfer or BOT is commonly employed for large-scale infrastructure projects. The life cycle of BOT arrangement can be divided into three phases: the design phase, the construction phase, and the operation phase. In this paper, the focus is on the construction phase since it appears to be the phase with the highest level of risk. Several studies have also found that many large-scale infrastructure projects experienced a chronic problem of construction delay, some of which even led to contract termination. In a PPP setting, the consequences of construction delay can be more acute and thus worth studying. The objective of this research is therefore to evaluate financial impacts resulting from construction delay. Financial model of a hypothetical BOT infrastructure project will be employed in this study. Risk analysis using Monte Carlo simulation will also be performed in order to identify level of risk exposed by the project sponsor. The results of this study may provide an insight into how construction risk shall be mitigated and managed by both the public sector and the private sector so as to create a fair and robust BOT contract in the future.
Get full access to this article
View all available purchase options and get full access to this chapter.
REFERENCES
Bing, L., Akintoye, A., Edwards, P.J. and Hardcastle, C. (2005). “The allocation of risk in PPP/PFI construction projects in the UK.” International Journal of Project Management, 23(1), 25-35.
Budayan, C. (2018). “Evaluation of delay causes for BOT projects based on perceptions of different stakeholders in Turkey.” Journal of Management in Engineering, 35(1), 04018057.
Cruz, C.O. and Marques, R.C. (2013). Infrastructure public-private partnerships: decision, management and development, Alexander, America.
Dailami, M., Lipkovich, I. and Dyck, J.V. (1999). Infrisk: a computer simulation approach to risk management in infrastructure project finance transactions, World Bank, Washington, D.C.
Devan, D. (2005). Public Private Partnerships-risk Management in Engineering Infrastructure Projects, University of Johannesburg, Johannesburg, North Africa.
Hampton, G., Baldwin, A.N. and Holt, G. (2012) “Project delays and cost: stakeholder perceptions of traditional v. PPP procurement.” Journal of Financial Management of Property and Construction, 17(1), 73-91.
Hamzah, N., Khoiry, M.A., Arshad, I., Tawil, N.M. and Ani, A.I.C. (2011). “Cause of construction delay: theoretical framework.” Procedia Engineering, 20(2011), 490-495.
Hassanein, A. and Moselhi, O. (2005). “Accelerating linear projects.” Construction Management and Economics, 23(4), 377-385.
Hoffman, S. (2008). The law and business of international project finance, New York, America.
Ke, Y., Wang, S.Q., Chan, A.P.C. and Lam, P.T.I. (2010). “Preferred risk allocation in China’s public–private partnership (PPP) projects.” International Journal of Project Management, 28(5), 482-492.
Kraiem, Z.M. and Diekmann, J.E. (1987). “Concurrent delays in construction projects.” Journal of Construction Engineering and Management, 113(4), 591-602.
Le-Hoai, L. Lee, Y. D. and Lee, J.Y. (2008). “Delay and cost overruns in Vietnam large construction projects: a comparison with other selected countries.” KSCE Journal of Civil Engineering, 12(6), 367-377.
Roe, P. and Craig, A. (2004). Reforming the private finance initiative, London, England.
Sweis, G., Sweis, R., Hammad, A.A. and Shboul, A. (2008). “Delays in construction projects: the case of Jordan.” International Journal of Project Management, 26(6), 665-674.
Wojewnik-Filipkowska, A. and Węgrzyn, J. (2019). “Understanding of public–private partnership stakeholders as a condition of sustainable development.” Sustainability, 11(4), 1194.
Zhang, X. (2005). “Critical success factors for public–private partnerships in infrastructure development.” Journal of Construction Engineering and Management, 131(1), 3-14.
Information & Authors
Information
Published In
ICCREM 2020: Intelligent Construction and Sustainable Buildings
Pages: 425 - 434
Editors: Yaowu Wang, Ph.D., Harbin Institute of Technology, Thomas Olofsson, Ph.D., Luleå University of Technology, and Geoffrey Q. P. Shen, Ph.D., Hong Kong Polytechnic University
ISBN (Online): 978-0-7844-8323-7
Copyright
© 2020 American Society of Civil Engineers.
History
Published online: Oct 14, 2020
Published in print: Oct 14, 2020
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.