Risk management in BOT project

Abstract

With the growing demand of public services and the tight budget on government, BOT is one of the best alternatives to solve this problem. However, in order to create a successful BOT project, it is necessary to clearly identify, evaluate and manage the risk associated with the project. First, the concept of risk and the risk management system is introduced. The first main objective is to create a risk management model. By applying this model, the risk associated with BOT project is identified by different phases of the project and the methods used to allocate and mitigate the risk from different parties' perspectives are also proposed. Two case studies are discussed in the order that the first one, Hong Kong Cross Harbor Tunnel Project, is the base case to verify and reexamine our model. The second one, Taiwan High Speed Rail Project, is an on-going project but fails to meet its requirement at the initial stage. Based on the two case studies, the answer to the creation of a successful BOT project is that an active participation of government in risk sharing is necessary.