Simulation Research On Decision-making Of Concession For PPP Projects Based On Fuzzy Optimization

As a new mode of project financing, PPP (Public Private Partnership) mode combines public sector's policy support with private sector's relatively abundant capital, advanced management mode and management experience. It not only reduces the pressure on government finances, but also improves the operational efficiency and service quality of infrastructure projects. It is an effective way to accelerate the introduction of foreign capital or private capital investment for infrastructure projects.In view of infrastructure projects adopting PPP mode usually have the characteristics of long payback period, huge investment, numerous participants and complex financial risk, the reasonable decision-making of concession becomes a key element for the success of PPP projects. In order to trade-off interests among government, private sector and final consumers and then to form "multi-win-win" public-private partnership, making decision on concession scientifically and reasonably becomes a prerequisite of stable and healthy development for PPP projects in the concession period.This study starts with outlining the theory of PPP mode, focusing on analyzing its meaning, principle and main advantages. And the basic analysis on decision-making of concession is conducted focusing on its key variables and methods of economic evaluation. Then Monte Carlo simulation method is introduced and two types of factors having impact on decision-making of concession are identified. Based on above work, a simulation model for decision-making of concession is proposed. In the light of the multi-target attribute of concession decision, a fuzzy optimization model is further established based on the simulation results. After that, a simple example has demonstrated how the model works and proved its feasibility and effectiveness. The model provides a feasible idea to solve the problem of concession optimization and is an effective decision-making method to trade-off interests among government, private sector and final consumers.