Build-Operate-Transfer in Infrastructure Projects in the United States
Publication: Journal of Construction Engineering and Management
Volume 133, Issue 10
Abstract
While the infrastructure in the United States is in need of large and immediate investment, the funds provided by public agencies are not nearly sufficient to face such a challenge. Build-operate-transfer (BOT) is a delivery/financing system that can be a solution to this problem. In this system, a private sponsor finances the design, construction, maintenance, and operation of a public project for a specified concession period, at the end of which it transfers ownership to the government agency, hopefully after recouping its costs and achieving profits. A questionnaire survey of large municipalities and state departments of transportation was conducted to determine the extent to which they are using BOT in their large projects, to investigate the implementation of BOT, and the reasons why some government agencies avoid using BOT. The findings indicate that very few agencies use BOT. The reasons why most do not use BOT were reported by the respondents to be the availability of proven alternatives and enough funds, the existence of political barriers, and resistance to change both on the part of government agencies and private sponsors. When government agencies and private sponsors explore the use of BOT, they should avoid the pitfalls perceived by the respondents in this study.
Get full access to this article
View all available purchase options and get full access to this article.
References
Ahadzi, M., and Bowles, G. (2004). “Public-private partnerships and contract negotiations: An empirical study.” Constr. Manage. Econom., 22(9), 967–978.
ASCE. (2005). “The 2005 report card for America’s infrastructure.” ⟨http://www.asce.org⟩ (Aug. 5, 2005 ).
Ashley, D., Bauman, R., Carroll, J., and Finlayson, F. (1998). “Evaluating viability of privatized transportation projects.” J. Infrastruct. Syst., 4(3), 102–110.
Augenblick, M., and Custer, S. (1990). “The build, operate, and transfer (BOT) approach to infrastructure projects in developing countries.” Working Paper No. 498, The World Bank, Washington, D.C.
Bennett, E. (1998). Public-private co-operation in the delivery of urban infrastructure services (water and waste), UNDP/Yale Collaborative Program, United Nations Development Program, New York.
Cohen, N. (1995). “Current issues in infrastructure financing.” Financing Tomorrow’s Infrastructure Challenges and Issues, Proc. of Colloquium, National Academy Press, Washington, D.C.
Frillet, M. (1997). “Some universal issues in BOT projects for public infrastructure.” Int. Constr. Law Rev., 14(4), 499–512.
Isr, W. (2001). “Alternative financing strategies for build-operate-transfer projects.” MSc thesis, Univ. of Washington, Seattle.
Jones, S. A., Houghtalen, R. J., Jones, D. T., and Niblick, B. (2004). “Privatization of municipal services: Sustainability issues of production and provision.” J. Infrastruct. Syst., 10(4), 139–148.
Konchar, M., and Sanvido, V. (1998). “Comparison of U.S. project delivery systems.” J. Constr. Eng. Manage., 124(6), 435–444.
Kumarasawamy, M. M., and Morris, D. A. (2002). “Build-operate-transfer-type procurement in Asian megaprojects.” J. Constr. Eng. Manage., 128(2), 93–102.
Levy, M. S. (1996). Build operate transfer: Paving the way for tomorrow’s infrastructure, Wiley, New York.
Li, B., Akintoye, A., Edwards, P. J., and Hardcastle, C. (2005). “Critical success factors for PPP/PFI projects in the UK construction industry.” Constr. Manage. Econom., 23(5), 459–471.
Liao, C. L. (2000). “Private participation for infrastructure projects.” Proc., 6th Construction Congress, ASCE, Orlando, Fla.
Miller, J. B., Garvin, M. J., Ibbs, C. W., and Mahoney, S. E. (2000). “Toward a new paradigm: Simultaneous use of multiple project delivery methods.” J. Manage. Eng., 16(3), 58–67.
National Academy of Sciences (NAS). (2002). Privatization of water services in the United States: An assessment of issues and experiences, National Academy Press, Washington, D.C.
Nevitt, P. (1980). Project financing, Euromoney Publication Limited, London.
Ngee, L., Tiong, R. L. K., and Alum, J. (1997). “Automated approach to negotiation of BOT contracts.” J. Comput. Civ. Eng., 11(2), 121–128.
Qiao, L., Wang, S. Q., Tiong, R. L. K., and Chan, T. S. (2001). “Framework for critical success factors of BOT projects in China.” J. Project Finance, 7(1), 53–61.
Reinhardt, W. (1993). “Private financing for infrastructure.” Worldwide Projects, 1(1), 21–24.
Schaufelberger, J. E., and Wipadapisut, I. (2003). “Alternate financing strategies for build-operate-transfer projects.” J. Constr. Eng. Manage., 129(2), 205–213.
Shen, L. Y., Lee, R. K. H., and Zhang, Z. (1996). “Application of BOT system for infrastructure projects in China.” J. Constr. Eng. Manage., 122(4), 319–323.
Shen, L. Y., and Wu, Y. Z. (2005). “Risk concession model for build/operate/transfer contract projects.” J. Constr. Eng. Manage., 131(2), 211–220.
Sweeney, N. (2001). 2001 Construction law update, Aspen Law and Business, New York.
Tiong, R. L. K. (1996). “CSFs in competitive tendering and negotiation model for BOT projects.” J. Constr. Eng. Manage., 122(3), 205–211.
Uhlik, F. T., and Eller, M. D. (1999). “Alternative delivery approaches for military medical construction projects.” J. Archit. Eng., 5(4), 149–155.
Xenidis, Y., and Angelides, D. (2005). “The financial risks in build-operate-transfer projects.” Constr. Manage. Econom., 23(4), 431–441.
Yang, H., and Meng, Q. (1998). “Highway pricing and capacity choice in a road network under a build operate transfer scheme.” Transp. Res., Part A, Elsevier, 34, 207–222.
Yates, J. K., and Mukherjee, S. (1994). “Increasing role of privatization in engineering and construction.” J. Manage. Eng., 10(2), 57–65.
Zhang, X. (2004). “Improving concessionaire selection protocols in public/private partnered infrastructure projects.” J. Constr. Eng. Manage., 130(5), 670–679.
Zhang, X. Q., and Kumaraswamy, M. M. (2001). “Procurement protocols for public-private partnered projects.” J. Constr. Eng. Manage., 127(5), 351–358.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 133 • Issue 10 • October 2007
Pages: 728 - 735
Copyright
© 2007 ASCE.
History
Received: Aug 25, 2005
Accepted: Dec 19, 2006
Published online: Oct 1, 2007
Published in print: Oct 2007
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.