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Article: A simulation model for optimizing the concession period of public-private partnerships schemes

TitleA simulation model for optimizing the concession period of public-private partnerships schemes
Authors
KeywordsConcession period
Public-private partnership
Simulation
Toll/tariff regime
Issue Date2007
PublisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/ijproman
Citation
International Journal Of Project Management, 2007, v. 25 n. 8, p. 791-798 How to Cite?
AbstractPublic-private partnerships (PPP) are becoming an increasingly popular option of project delivery. Under the concession-based PPP arrangement, the private partner is responsible for funding the scheme, while their capital investment will be recovered through the operation revenue over the concession period. Therefore, calculating an appropriate investment return over the concession period becomes a very important aspect that influences success of the PPP project, particularly so as the concessionaire may be tempted to increase their toll/tariff should the revenue fall short of their expected. However, due to the difficulties in estimating the long-term uncertainties and wider-risk profiles at the tendering stage, the government would conduct the traditional net present value and payback period analyses to determine the concession period. In this paper, a simulation model which aims to assist the public partner to determine an optimal concession period is proposed. A hypothetical example is worked through to illustrate the concept of the simulation model. The results show that the risks and uncertainties, such as a change in inflation rate, traffic flow and operation cost, could influence the decision on the concession period. With the help of the simulation model, the impact of risk can be taken into account when establishing an ideal concession period. © 2007 Elsevier Ltd and IPMA.
Persistent Identifierhttp://hdl.handle.net/10722/70872
ISSN
2014 Impact Factor: 2.436
2014 SCImago Journal Rankings: 1.508
References

 

DC FieldValueLanguage
dc.contributor.authorNg, STen_HK
dc.contributor.authorXie, Jen_HK
dc.contributor.authorCheung, YKen_HK
dc.contributor.authorJefferies, Men_HK
dc.date.accessioned2010-09-06T06:26:52Z-
dc.date.available2010-09-06T06:26:52Z-
dc.date.issued2007en_HK
dc.identifier.citationInternational Journal Of Project Management, 2007, v. 25 n. 8, p. 791-798en_HK
dc.identifier.issn0263-7863en_HK
dc.identifier.urihttp://hdl.handle.net/10722/70872-
dc.description.abstractPublic-private partnerships (PPP) are becoming an increasingly popular option of project delivery. Under the concession-based PPP arrangement, the private partner is responsible for funding the scheme, while their capital investment will be recovered through the operation revenue over the concession period. Therefore, calculating an appropriate investment return over the concession period becomes a very important aspect that influences success of the PPP project, particularly so as the concessionaire may be tempted to increase their toll/tariff should the revenue fall short of their expected. However, due to the difficulties in estimating the long-term uncertainties and wider-risk profiles at the tendering stage, the government would conduct the traditional net present value and payback period analyses to determine the concession period. In this paper, a simulation model which aims to assist the public partner to determine an optimal concession period is proposed. A hypothetical example is worked through to illustrate the concept of the simulation model. The results show that the risks and uncertainties, such as a change in inflation rate, traffic flow and operation cost, could influence the decision on the concession period. With the help of the simulation model, the impact of risk can be taken into account when establishing an ideal concession period. © 2007 Elsevier Ltd and IPMA.en_HK
dc.languageengen_HK
dc.publisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/ijpromanen_HK
dc.relation.ispartofInternational Journal of Project Managementen_HK
dc.subjectConcession perioden_HK
dc.subjectPublic-private partnershipen_HK
dc.subjectSimulationen_HK
dc.subjectToll/tariff regimeen_HK
dc.titleA simulation model for optimizing the concession period of public-private partnerships schemesen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0263-7863&volume=25&issue=8&spage=791&epage=798&date=2007&atitle=A+simulation+model+for+optimizing+the+concession+period+of+public-private+partnerships+schemesen_HK
dc.identifier.emailNg, ST:tstng@hkucc.hku.hken_HK
dc.identifier.emailCheung, YK:hreccyk@hkucc.hku.hken_HK
dc.identifier.authorityNg, ST=rp00158en_HK
dc.identifier.authorityCheung, YK=rp00104en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.ijproman.2007.05.004en_HK
dc.identifier.scopuseid_2-s2.0-36049036883en_HK
dc.identifier.hkuros142793en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-36049036883&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume25en_HK
dc.identifier.issue8en_HK
dc.identifier.spage791en_HK
dc.identifier.epage798en_HK
dc.publisher.placeUnited Kingdomen_HK
dc.identifier.scopusauthoridNg, ST=7403358853en_HK
dc.identifier.scopusauthoridXie, J=18438839800en_HK
dc.identifier.scopusauthoridCheung, YK=7202111065en_HK
dc.identifier.scopusauthoridJefferies, M=9845925700en_HK

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