Research On Risk Management Of Water Treatment Franchising BOT Projects

Recent years, high developing speed of our society is raising more and more requestson high quality of municipal facilities. However, the traditional way, which only relieson government investments, cannot satisfy the new requests already, due to thedrawback of lacking capitals, low efficiency, ect. Thus, more advanced financingmodel is strongly needed, such as BOT, TOT ect.During the1^st round of BOT investment practicing waves, many projects suffereddifferent kinds of problems, so that there is a say about ‘BOT trap’. The reason ismainly due to not very familiar with BOT model and did not pay enough attention onrisk identification and control.Based on understanding of the difference of BOT project financing and generalfinancing, as well as the theory of risk management, this thesis analyzes the advantageand drawback of BOT financing model and then establishes a matrix to decide if theproject is suitable for BOT model or not.Water treatment franchising project, as an important part of municipal projects, has itsown unique characteristics. By application on ‘Brain Storm’ method, this thesis triesto identify the risks during the whole project life, from initial planning, financing,building, operating to the end transferring. And further investigates the principle andprocedure to well share the risks. Then the practical manners to control the risks aresummarized. Especially, a water price adjustment formula is offered to control the riskof market, CPI and even exchange rates.In the end, by case study on ‘Tianjin JieYuan WTP BOT project’, introducing moredetails on their risk control methods and makes assessment on its achievements andfailures. The main target of this thesis is to develop a full practicing risk managementsystem on BOT projects, based on theory research and experience summary. Hope canbring some references to water treatment project managers and implementators.