Government Supports in Public–Private Partnership Contracts: Metro Line 4 of the São Paulo Subway System

Brandão, Luiz Eduardo Teixeira; Bastian-Pinto, Carlos de Lamare; Gomes, Leonardo Lima; Labes, Marina

doi:10.1061/(asce)is.1943-555x.0000095

Cited by 46 publications

(20 citation statements)

References 13 publications

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“…This superstructure accounted for approximately one-third of the project cost. This type of arrangement -infrastructure by the public sector and superstructure by the private -was later adapted by metro line 4 of São Paulo in Brazil (Brandao et al, 2012). Pros n Efficiency in operation n multiple participation expected n Efficiency in construction and operation n Creativity in design and construction n Save public budget n Efficiency in construction and operation n Creativity in operation system design and construction n reduced initial budget n Competition expected…”

Section: Project Delivery Methodsmentioning

confidence: 99%

Books

2013

Proceedings of the Institution of Civil Engineers - Civil Engin

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Section: Project Delivery Methodsmentioning

confidence: 99%

Books

2013

Proceedings of the Institution of Civil Engineers - Civil Engin

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“…With a focus on toll road infrastructure, the implications of PPP agreements for the execution of expansion options were examined by Krüger (2012) to promote a social optimal outcome. Treating traffic as the underlying asset from a real option perspective, an estimate of the minimum traffic guarantee value can be obtained (Galera & Soliño, 2010); and subsequently, the risk-allocation mechanisms can be formulated (Brandão et al, 2012). Moreover, the binomial lattice has proven to be a valid tool to obtain a more robust and comprehensive model for PPP projects (Jeong et al, 2015).…”

Section: Real Option Theorymentioning

confidence: 99%

Value of Investors’ Escalation of Commitment in PPP Projects Using Real Option Thinking

Gao

Liu

2020

International Journal of Strategic Property Management

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Escalation of commitment (EOC) is a common behavior among investors who receive negative feedback (NF) in public-private partnership (PPP) projects, and this behavior typically leads to sizable losses. Recognizing this, investors set a mental threshold and track investments for escalation. Once losses reach the threshold, investors will terminate the escalation behavior, namely, they will transfer projects to governments to obtain compensation or residual asset value. This paper analyzes the maximum amount of NF that investors can sustain based on a belief-adjustment model, followed by the analysis of the greatest loss degree. Then, a threshold model for EOC is constructed using real option thinking. Different from the usual judgment criteria of the traditional option method, the threshold is less than zero in the EOC scenario. The results show that the threshold correlates with the initial generative cognition, the sunk cost level, the degree of the government guarantee and investors’ behavioral preferences as well as with total investment and return on investment. These findings serve as a reference for governments to de-escalate investors’ commitment in PPP projects.

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“…Fleksibilitas ini dapat divaluasi dan dikuantifikasi untuk menjadi bagian kelayakan proyek investasi infrastruktur. Banyak studi yang pernah dilakukan untuk valuasi opsi dalam investasi infrastruktur yang pada umumnya mengadopsi model analitik Black-Scholes (Black-Scholes model, BSM; e.g., Almassi, McCabe, dan Thompson, 2013;Brandão et al, 2012;Huang dan Chou, 2006;Sing, 2002) atau diskrit binomial (binomial options pricing model, BOPM; e.g., Ho dan Liu, 2002;Iyer dan Sagheer, 2011;Kim, Ashuri, dan Han, 2013;Kitabake, 2002;Yiu dan Tam, 2006).…”

Section: Valuasi Opsi Terminasiunclassified

Untitled

2015

jts.

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Tulisan ini menawarkan opsi bagi pemegang konsesi untuk melakukan terminasi prematur kontrak sebagai alternatif dukungan pemerintah yang selama ini ada untuk proyek infrastruktur kerjasama Pemerintah dan badan usaha dengan skema Build-Operate-Transfer (BOT). Instrumen ini bermanfaat untuk proyek-proyek BOT dengan risiko tinggi yang tidak dapat dikendalikan dan diprediksi dengan pasti oleh para pihak, seperti ketidakpastian permintaan pada infrastruktur yang bersifat ritel. Instrumen ini memunyai elemen dukungan dengan mereduksi risiko permintaan dan, mengingat karakteristik aset yang berderajat spesifisitas tinggi, memberikan pemegang konsesi fleksibilitas terbatas atas keputusan mereka untuk tetap bertahan atau tidak saat proyek ternyata tidak layak finansial. Keuntungan lainnya menerapkan opsi ini adalah kewajiban kontijen pemerintah mudah diukur, yang tentunya memudahkan penyusunan anggaran berisiko. Dites pada sebuah proyek jalan tol hipotetik menggunakan simulasi Monte Carlo, instrumen ini terbukti mampu meningkatkan atraktivitas proyek yang dievaluasi meski seberapa besar opsi terminasi mampu meningkatkan kelayakan proyek sangat tergantung pada tingkat risiko proyek: semakin tinggi risiko justru akan meningkatkan nilai opsi ini. Tulisan ini juga menyajikan beberapa kelemahan dalam valuasi opsi ini dan beberapa pertanyaan penelitian terbuka yang dapat menjadi penelitian lanjutan dalam ranah ini.

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Government Supports in Public–Private Partnership Contracts: Metro Line 4 of the São Paulo Subway System

Cited by 46 publications

References 13 publications

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Value of Investors’ Escalation of Commitment in PPP Projects Using Real Option Thinking

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