Title: A royalty negotiation model for BOT (build-operate-transfer) projects: The operational revenue-based model
Authors: Kang, Chao-Chung
Feng, Cheng-Min
Kuo, Chiu-Yen
運輸與物流管理系 註:原交通所+運管所
Department of Transportation and Logistics Management
Keywords: BOT project;Royalty;Negotiation;Bi-level programming
Issue Date: 1-Nov-2011
Abstract: Whilst few studies have explored royalty negotiations for build, operate and transfer (BOT) projects, some works have proposed numerous royalty formulas to evaluate royalty amounts or franchise fees for a BOT project. Despite this, the royalty negotiation process is one of the many critical negotiation items of a concession contract. This study not only developed a royalty negotiation model for BOT projects, but also developed the iterative algorithm for the BLP problem for the government and the private sector. In addition, the factors incorporated into the iterative algorithm for the BLP problem include the concession rate, learning rate, and the time value discount rate for both parties. Moreover, this paper conducted a case study of the Taipei Port Container Logistic BOT Project using LINGO and MATLAB programming. The results show that the two parties involved completed royalty negotiation at the sixth negotiation. The objective function value for lower-level programming was 1.062 and the government finance recovery rate for higher-level programming was 11.832. The findings show that the government can receive the royalty, which is calculated by using 0.012% of the operating revenue of this BOT project, from the concessionaire. Therefore, the royalty negotiation model based on the operating revenue developed herein; could be employed to explain the negotiation behavior. (C) 2011 Elsevier Ltd. All rights reserved.
URI: http://dx.doi.org/10.1016/j.mcm.2011.05.042
ISSN: 0895-7177
DOI: 10.1016/j.mcm.2011.05.042
Volume: 54
Issue: 9-10
Begin Page: 2338
End Page: 2347
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