Bayat, M; Khanzadi, M and Nasirzadeh, F (2020) Bargaining game model to determine concessionary items in build-operate-transfer contracts. Journal of Construction Engineering and Management, 146(2): 04019109, ISSN 0733-9364
Abstract
The parties involved in build-operate-transfer (BOT) projects have conflicting financial interests regarding the value of concessionary items, including concession period length and equity to debt ratio. Determining the value of these items has a crucial role for successful implementation of BOT projects, especially in BOT projects with direct-negotiation procurement. In this research, first, a financial model of BOT projects is developed according to a real-world situation of bargaining. Then, a finite-horizon alternating-offers bargaining game, as a conflict-resolution tool, is chosen and applied. Uncertainties and risks are taken into account. Based on the sponsor's and government's share of the project's financial benefit, the value of concession period length and equity to debt ratio are determined taking into account the lender's requirements. Finally, the proposed model is implemented in a real-world BOT project to evaluate its applicability and performance. The proposed model enables one to predict the final agreement on concession period length and equity to debt ratio and prevents an unsuccessful negotiation or costly renegotiations.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bargaining theory; build-operate-transfer; capital structure; concession period; finite horizon |
| Index terms: | implementation, resolution, negotiation, capital structure, bargaining, build-operate-transfer, concession period |
| Subjects: | contractual arrangements, economic analysis, contract structure, economics, conflict resolution |
| Topics: | Supply Chain Management, Stakeholder Management, Procurement, Business Strategy |
| Descriptive scope: | 2 PC |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here