A Decision-Making Model to Attract Private Sector Investors into BOT and BOO Water and Sanitation Projects

Document Type : Research Paper

Authors

1 MSc Graduate of Project Management and Manufacturing, University of Tehran

2 Assist. Prof. of Project Management and Manufacturing, Faculty of Architecture, University of Tehran

3 MSc Graduate of Civil Engineering, Mazandaran University, Iran

Abstract

Economic development in any country depends on a multitude of factors, among which infrastructure construction projects constitute a major part. Included in this category are large-scale water supply and sanitation schemes that are commonly state-owned and require large allocations from the public funds. Article 214 of the 5th National Development Plan of the Islamic Republic of Iran mandates the Government to employ such public-private partnership tools as BOT (Build-Operate-Transfer) and BOO (Build-Own-Operate) as the means towards attracting private sector participation to ensure enhanced the efficiency and effectiveness of infrastructure projects.
It is the objective of the present study to survey and identify the challenges facing such schemes based on the assessment of the contractual criteria and conditions commonly practiced in water and sanitation projects. The results are expected to lead to the development of a decision-making model that will encourage the private sector’s decision-makers to invest in these projects.
Information was collected in two stages. The first stage involved a review of model contracts and interviews with water and sanitation experts. The data thus obtained was subjected to analysis using the SPSS software, which yielded 14 indices as the major components of the public-private partnership contracts used in the industry. In a second stage, the indices were tabulated and prepared in the form of a questionnaire which was presented to experts who were asked to assign weight scores of 1 to 10 to each of the indices. Ranking and scoring was accomplished using the TOPSIS method. Finally, the Pareto diagram was used to select the 10 more important indices which were further divided into two major and minor categories of indices. A model was then developed for scoring by the private sector investment advisors to help them in their decision-making process regarding BOD and BOO water and sanitation projects.
The model thus developed serves as a guide for private sector investors in making strategic decisions. Moreover, the results indicate that employer-related indices play the more important role in the decisions made by contractors. Finally, it was inferred that the employer’s commitment, cooperation, and vision are the necessary factors that most probably contribute to the fulfillment of the partners’ expectations and that may ultimately guarantee the success of the project.

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References

  1. Latifi, M., and Shakeri, E. (2009). “Qualification of BOT projects model.” The First Conference of Project Management , Ariana Research Group, Tehran, Iran. (In Persian)
  2. The fifth five-year development plan of Islamic Republic of Iran. (2015).

<<http://.rc.majlis.ir/fa/law/show/70196>> (Aug. 2016)

  1. Manzoor, D. (2010). “Fifth development plan and the capacity of public - Private  participation.” National Conference for Public and Private Partnerships in infrastructure development, Ariana Research Group, Tehran, Iran. (In Persian)
  2. Shakeri, E. (2012). Guideline of BOT and BOO proportionate projects in water supply and sanitation sector. National, Water and Wastewater Engineering Company of Iran, Tehran. (In Persian)
  3. Ministry of Power, Management and Planing Organiztion. (2007). Budget Law for 1386, Regulation of the Islamic Republic of Iran, Tehran. (In Persian)

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