TY - JOUR
T1 - A fuzzy-based evaluation of financial risks in build-own-operate-transfer water supply projects
AU - Ameyaw, Ernest E.
AU - Chan, Albert P.C.
AU - Owusu-Manu, De Graft
AU - Edwards, David J.
AU - Dartey, Frederick
N1 - Publisher Copyright:
© 2017 American Society of Civil Engineers.
PY - 2017/12/1
Y1 - 2017/12/1
N2 - The build-own-operate-transfer (BOOT) scheme is widely used for the provision of new bulk water supply. However, this scheme is complex and carries significant financial risks because of the characteristics of the water sector and the involvement of public-private stakeholders with new and extended responsibilities, large private capital, and long contract duration. Drawing on the Nungua Seawater Desalination Plant (NSDP) in Ghana, this study seeks to identify and assess the critical financial risks associated with BOOT water supply projects and evaluate the financial risk level of the NSDP project. The risks and their relative criticality on the NSDP project are investigated by using a questionnaire survey method. The questionnaire was formulated with a set of 18 risks derived from extant literature and project documentation. Perceived critical financial risks affecting the NSDP project were assessed by a team of experts who had direct involvement in the project. A fuzzy synthetic evaluation suggests that the project is financially risky and that all the risks are critical to the project. Bankruptcy of consortium members, unfavorable economy of the host country, uncertainty in tariff adjustment of water products, rate of return restrictions, and availability problem of private capital are the five most highly-ranked risks. The fuzzy technique is used to represent and model experiential knowledge of the survey participants and to address the fuzziness of their expert judgments. The study's results facilitate prioritization of risks and a comprehensive risk management program during the lifecycle of the case project and future projects. The fuzzy technique is suitable for early phases of BOOT projects to prioritize the risks that require a detailed analysis and to predict the risk level of a project.
AB - The build-own-operate-transfer (BOOT) scheme is widely used for the provision of new bulk water supply. However, this scheme is complex and carries significant financial risks because of the characteristics of the water sector and the involvement of public-private stakeholders with new and extended responsibilities, large private capital, and long contract duration. Drawing on the Nungua Seawater Desalination Plant (NSDP) in Ghana, this study seeks to identify and assess the critical financial risks associated with BOOT water supply projects and evaluate the financial risk level of the NSDP project. The risks and their relative criticality on the NSDP project are investigated by using a questionnaire survey method. The questionnaire was formulated with a set of 18 risks derived from extant literature and project documentation. Perceived critical financial risks affecting the NSDP project were assessed by a team of experts who had direct involvement in the project. A fuzzy synthetic evaluation suggests that the project is financially risky and that all the risks are critical to the project. Bankruptcy of consortium members, unfavorable economy of the host country, uncertainty in tariff adjustment of water products, rate of return restrictions, and availability problem of private capital are the five most highly-ranked risks. The fuzzy technique is used to represent and model experiential knowledge of the survey participants and to address the fuzziness of their expert judgments. The study's results facilitate prioritization of risks and a comprehensive risk management program during the lifecycle of the case project and future projects. The fuzzy technique is suitable for early phases of BOOT projects to prioritize the risks that require a detailed analysis and to predict the risk level of a project.
KW - Build-own-operate-transfer (BOOT)
KW - Financial risk
KW - Fuzzy synthetic evaluation
KW - Water supply
UR - http://www.scopus.com/inward/record.url?scp=85030774829&partnerID=8YFLogxK
U2 - 10.1061/(ASCE)IS.1943-555X.0000390
DO - 10.1061/(ASCE)IS.1943-555X.0000390
M3 - Article
AN - SCOPUS:85030774829
SN - 1076-0342
VL - 23
JO - Journal of Infrastructure Systems
JF - Journal of Infrastructure Systems
IS - 4
M1 - 04017033
ER -