A Decision Method of Concession Period for Build-Operate-Transfer Projects of Sewage Treatment

Concession period is a key parameter in build-operate-transfer (BOT) contract. Previous studies have provided effective methodologies and theory for the development of decision methods of concession period. Nevertheless, it appears that risk and uncertainty has been little considered in studying the way to determine the concession period of BOT projects. This paper proposes a decision method of concession period for BOT projects of sewage treatment by using NPV and Monte Carlo simulation, and discusses a list of deterministic and uncertain parameters in BOT projects of sewage treatment. A case study is given that indicates how the simulation technique is applied to determine the concession period.