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Article: Design of build-operate-transfer contract for integrated rail and property development with uncertainty in future urban population

TitleDesign of build-operate-transfer contract for integrated rail and property development with uncertainty in future urban population
Authors
KeywordsBOT contract
Integrated rail and property development
Real options
Population uncertainty
Poisson jump
Issue Date2019
PublisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/trb
Citation
Transportation Research Part B: Methodological, 2019, v. 130, p. 36-66 How to Cite?
AbstractThis paper proposes a novel model of the design of a build-operate-transfer (BOT) contract for integrated rail and property (R + P) development when the size of future urban population is uncertain. A real-option approach is adopted to accurately capture the potential economic value of a BOT investment project under uncertainty and its externality effects on urban spatial structure. The proposed model is formulated as a two-stage problem. The first stage of the model optimizes the concession period and rail line parameters (including rail line length, and number and locations of stations) through a Nash bargaining game between a private investor and the government. The second stage determines the headways and fares during the private operation and after transferring the BOT project to the government. The private investor's objective is to maximize its own net profit received during the concession period, whereas the government aims to maximize social welfare over the whole life-cycle of the project. The proposed model is extended to explore the effects of future population jumps due to non-recurrent random events and station deployments with even and uneven station spacings. The results show that compared with the rail-only scheme, the R + P scheme can lead to a win-win situation for the government and private investor. In the BOT contract design, ignoring the effects of population jumps and using an average (or even) station spacing as an estimate of actual station deployment can cause a large bias of the parameter values designed in the contract and an underestimate of project values in terms of expected net profit and expected social welfare.
Persistent Identifierhttp://hdl.handle.net/10722/279976
ISSN
2019 Impact Factor: 4.796
2015 SCImago Journal Rankings: 3.905
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorSang, J-
dc.contributor.authorLi, Z-C-
dc.contributor.authorLam, WHK-
dc.contributor.authorWong, SC-
dc.date.accessioned2019-12-23T08:24:28Z-
dc.date.available2019-12-23T08:24:28Z-
dc.date.issued2019-
dc.identifier.citationTransportation Research Part B: Methodological, 2019, v. 130, p. 36-66-
dc.identifier.issn0191-2615-
dc.identifier.urihttp://hdl.handle.net/10722/279976-
dc.description.abstractThis paper proposes a novel model of the design of a build-operate-transfer (BOT) contract for integrated rail and property (R + P) development when the size of future urban population is uncertain. A real-option approach is adopted to accurately capture the potential economic value of a BOT investment project under uncertainty and its externality effects on urban spatial structure. The proposed model is formulated as a two-stage problem. The first stage of the model optimizes the concession period and rail line parameters (including rail line length, and number and locations of stations) through a Nash bargaining game between a private investor and the government. The second stage determines the headways and fares during the private operation and after transferring the BOT project to the government. The private investor's objective is to maximize its own net profit received during the concession period, whereas the government aims to maximize social welfare over the whole life-cycle of the project. The proposed model is extended to explore the effects of future population jumps due to non-recurrent random events and station deployments with even and uneven station spacings. The results show that compared with the rail-only scheme, the R + P scheme can lead to a win-win situation for the government and private investor. In the BOT contract design, ignoring the effects of population jumps and using an average (or even) station spacing as an estimate of actual station deployment can cause a large bias of the parameter values designed in the contract and an underestimate of project values in terms of expected net profit and expected social welfare.-
dc.languageeng-
dc.publisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/trb-
dc.relation.ispartofTransportation Research Part B: Methodological-
dc.subjectBOT contract-
dc.subjectIntegrated rail and property development-
dc.subjectReal options-
dc.subjectPopulation uncertainty-
dc.subjectPoisson jump-
dc.titleDesign of build-operate-transfer contract for integrated rail and property development with uncertainty in future urban population-
dc.typeArticle-
dc.identifier.emailWong, SC: hhecwsc@hku.hk-
dc.identifier.authorityWong, SC=rp00191-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.trb.2019.10.003-
dc.identifier.scopuseid_2-s2.0-85074222464-
dc.identifier.hkuros308722-
dc.identifier.volume130-
dc.identifier.spage36-
dc.identifier.epage66-
dc.identifier.isiWOS:000498898200003-
dc.publisher.placeUnited Kingdom-
dc.identifier.issnl0191-2615-

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