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Acar, E and Göç, Y (2011) Prediction of risk perception by owners’ psychological traits in small building contractors. Construction Management and Economics, 29(08), 841–52.

Henjewele, C, Sun, M and Fewings, P (2011) Critical parameters influencing value for money variations in PFI projects in the healthcare and transport sectors. Construction Management and Economics, 29(08), 825–39.

Hui, E C-M, Ng, I and Lau, O M-F (2011) Speculative bubbles in mass and luxury properties: an investigation of the Hong Kong residential market. Construction Management and Economics, 29(08), 781–93.

Iyer, K C and Sagheer, M (2011) A real options based traffic risk mitigation model for build-operate-transfer highway projects in India. Construction Management and Economics, 29(08), 771–9.

  • Type: Journal Article
  • Keywords: build-operate-transfer; real options; revenue risks; toll roads; traffic risks
  • ISBN/ISSN:
  • URL: http://www.tandfonline.com/doi/abs/10.1080/01446193.2011.597412
  • Abstract:
    Build-operate-transfer (BOT) has been one of the preferred models of public-private partnership (PPP) for attracting private capital in the Indian highway sector. In BOT projects the traffic demand is considered a critical risk. Through a concession agreement called the model concession agreement (MCA) a standardized risk allocation framework has been adopted for BOT highway projects in India. If the actual traffic volume deviates from the projected traffic, the MCA suggests varying the length of the concession period (by a pre-agreed formula) to mitigate the traffic demand risk. This arrangement has the limitation of guaranteeing the concessionaire against the shortfall in traffic demand while it bestows unlimited gain otherwise. Past researchers have also examined only the possibility of revenue guarantees to protect the concessionaire from downside risks due to variation in traffic. Therefore, a traffic band is proposed: a combination of traffic floor and traffic cap - which can ensure certainty as to the revenue streams of the private investor, while preventing him from appropriating windfall gains due to higher-than-expected traffic demand through an equitable risk and revenue sharing mechanism. A traffic band being quite analogous to financial options, the paper suggests use of a 'put' option held by the concessionaire to determine the traffic floor, while a 'call' option held by the government serves as the traffic ceiling. Application of the real options analogy to a real life case study using binomial lattice method indicates enhancement to the net present value of the project.

Tabish, S Z S and Jha, K N (2011) Identification and evaluation of success factors for public construction projects. Construction Management and Economics, 29(08), 809–23.

Tsolas, I E (2011) Modelling profitability and effectiveness of Greek-listed construction firms: an integrated DEA and ratio analysis. Construction Management and Economics, 29(08), 795–807.

Williams, C C, Nadin, S J and Windebank, J (2011) Undeclared work in the European construction industry: evidence from a 2007 Eurobarometer survey. Construction Management and Economics, 29(08), 853–67.