Design Of Incentive Scheme For BOT Project In The Whole Life Cycle Perspective

In order to improve the quality and efficiency of public services,the government strongly supports and guides social capital to participate in infrastructure and utilities construction operations.In BOT financing model,government department and social capital signed a franchise contract with a certain period of concession granted.Due to the incompleteness of the contract,the concessionaire made short-sighted self-interest decisions to maximize its own interests.Those decisions affected the service quality of utility project and increased the operating risk of the government department after the transfer of the project.In order to solve the self-interest decision of the concessionaire,this paper puts forward the incentive scheme design of the utility project in the whole life cycle of a BOT project.On the one hand,designing continuous operating option,to decrease the self-interest decisions of the concessionaire and encourage it to make operating decisions in the whole life cycle of BOT project.On the other hand,introducing the fairness preference of the concessionaire into the risk and return adjustment scheme to achieve a reasonable allocation of risk and return between the government department and the concessionaire.By analyzing the optimal excess revenue sharing ratio of the government when the concessionaire has different fairness preference,this paper means to provide government a reasonable advice for the risk and return adjustment decision.Through the analysis of a sewage treatment BOT project,the effectiveness of the incentive scheme is proved.Choosing to continuous operating the project can increase the return of the concessionaire and decrease the possibility of its self-interest decisions.The optimal excess revenue sharing ratio can also be determined when concessionaire has different fairness preference.