Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective
Concession period is decisive in public–private partnership (PPP) projects, particularly for complex projects. A systematic approach incorporating real option analysis (ROA) is proposed to optimise the concession under uncertainty. Options are explored to manage uncertainty in the long concession of...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2022
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/159895 |
| _version_ | 1811684451516678144 |
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| author | Guo, Kai Zhang, Limao Wang, Tao |
| author2 | School of Civil and Environmental Engineering |
| author_facet | School of Civil and Environmental Engineering Guo, Kai Zhang, Limao Wang, Tao |
| author_sort | Guo, Kai |
| collection | NTU |
| description | Concession period is decisive in public–private partnership (PPP) projects, particularly for complex projects. A systematic approach incorporating real option analysis (ROA) is proposed to optimise the concession under uncertainty. Options are explored to manage uncertainty in the long concession of PPP projects and an optimisation principle is proposed for the concession optimisation. Sensitivity analysis and case comparison are suggested to test the validity of the optimised concession. Applicability of the approach is tested with a PPP utility tunnel case, in which options to expand and recoup are investigated. Important findings include: (1) interests of participants are balanced through the optimisation, the investment value of the project is increased; (2) profit-sharing mechanism is identified as the most important factor, and a prudent design of it can effectively manage uncertainty; (3) option to recoup can optimise the concession period without harming private developer's interest. This research's novelty lies in (a) exploring the management flexibility and identifying potential options in the concession period of PPP projects; (b) a hybrid approach with the integration of ROA and Sobal-based global sensitivity analysis is proposed to perform the concession optimisation; (c) the profit-risk allocation between participants in PPP projects is balanced under the optimisation principle. |
| first_indexed | 2024-10-01T04:28:50Z |
| format | Journal Article |
| id | ntu-10356/159895 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T04:28:50Z |
| publishDate | 2022 |
| record_format | dspace |
| spelling | ntu-10356/1598952022-07-05T05:06:03Z Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective Guo, Kai Zhang, Limao Wang, Tao School of Civil and Environmental Engineering Engineering::Civil engineering Concession Period Optimal Design Concession period is decisive in public–private partnership (PPP) projects, particularly for complex projects. A systematic approach incorporating real option analysis (ROA) is proposed to optimise the concession under uncertainty. Options are explored to manage uncertainty in the long concession of PPP projects and an optimisation principle is proposed for the concession optimisation. Sensitivity analysis and case comparison are suggested to test the validity of the optimised concession. Applicability of the approach is tested with a PPP utility tunnel case, in which options to expand and recoup are investigated. Important findings include: (1) interests of participants are balanced through the optimisation, the investment value of the project is increased; (2) profit-sharing mechanism is identified as the most important factor, and a prudent design of it can effectively manage uncertainty; (3) option to recoup can optimise the concession period without harming private developer's interest. This research's novelty lies in (a) exploring the management flexibility and identifying potential options in the concession period of PPP projects; (b) a hybrid approach with the integration of ROA and Sobal-based global sensitivity analysis is proposed to perform the concession optimisation; (c) the profit-risk allocation between participants in PPP projects is balanced under the optimisation principle. Ministry of Education (MOE) Nanyang Technological University The Ministry of Education Tier 1 Grants, Singapore (No. 04MNP000279C120, No. 04MNP002126C120) and the Start Up Grant at Nanyang Technological University, Singapore (No. 04INS000423C120) are acknowledged for their financial support of this research. 2022-07-05T05:06:03Z 2022-07-05T05:06:03Z 2021 Journal Article Guo, K., Zhang, L. & Wang, T. (2021). Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective. Construction Management and Economics, 39(2), 156-172. https://dx.doi.org/10.1080/01446193.2020.1849752 0144-6193 https://hdl.handle.net/10356/159895 10.1080/01446193.2020.1849752 2-s2.0-85097938469 2 39 156 172 en 04MNP000279C120 04MNP002126C120 04INS000423C120 Construction Management and Economics © 2020 Informa UK Limited, trading as Taylor & Francis Group. All rights reserved. |
| spellingShingle | Engineering::Civil engineering Concession Period Optimal Design Guo, Kai Zhang, Limao Wang, Tao Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective |
| title | Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective |
| title_full | Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective |
| title_fullStr | Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective |
| title_full_unstemmed | Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective |
| title_short | Concession period optimisation in complex projects under uncertainty: a public-private partnership perspective |
| title_sort | concession period optimisation in complex projects under uncertainty a public private partnership perspective |
| topic | Engineering::Civil engineering Concession Period Optimal Design |
| url | https://hdl.handle.net/10356/159895 |
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