An option pricing-based model for evaluating the financial viability of privatized infrastructure projects

Privatized infrastructure projects have to demonstrate their financial and technical viability before they are undertaken. Although it is relatively easy to demonstrate the technical viability of an infrastructure project, the evaluation of the financial viability of a privatized infrastructure project is complex and challenging, mainly because of the uncertainties involved due to the project's scale, long concession period and complexity. Traditional methods, such as net present value (NPV) analysis, fall short in reflecting the characteristics of privatized infrastructure projects and the risks involved. This paper presents an option pricing based model, the BOT option valuation (BOT-OV) model, for evaluating the financial viability of a privatized infrastructure project. This quantitative model considers the project characteristics explicitly and evaluates the project from the perspectives of the project promoter and of the government when the project is under bankruptcy risk. Moreover, the model can evaluate the impact of the government guarantee and the developer negotiation option on the project financial viability.     

Evaluation and management of foreign exchange and revenue risks in China's BOT projects

China is actively investigating ways to introduce project financing, specifically through the build-operate-transfer (BOT) scheme to meet the needs for the country's infrastructure and to be attractive to foreign investors and lenders. The advent of concession agreements, backed by new BOT laws, will be a positive move forward to achieving project-financed infrastructure projects. There are thus opportunities especially in the power sector for foreign investors. However, it is important to identify and manage the unique or critical risks associated with China's BOT projects. This is especially so after policies were introduced in late 1996 when the first state-approved BOT project, the US$650 million 2 × 350 megawatt (MW) coal-fired Laibin B Power Plant (Laibin B), was awarded. They include a competitive tendering process and 100% foreign ownership of the operating company. This paper is based on the findings from an international survey on risk management of BOT projects in developing countries, with emphasis on power projects in China. It discusses specifically the criticality of foreign exchange and revenue risks which include exchange rate and convertibility risk, financial closing risk, dispatch constraint risk and tariff adjustment risk. The measures for mitigating each of these risks are discussed also.     

A spatiotemporal database approach to the management of utility work schedules in transportation projects

As more and more utility installation and/or maintenance activities are located in highly congested urban roadways, frequent pavement utility cuts in such areas may cause more traffic disruptions and reduce pavement lifespan and quality. One way to lessen such inconvenience to the traveling public is to combine utility activities together in the hope of reducing unnecessary pavement utility cuts, which requires extensive coordination of the utility owners involved and deliberate management of utility work schedules. In this research, an information model and a system based on spatiotemporal database techniques were proposed to help public road authorities manage utility work schedules better. Issues such as constraints of utility permits, pavement moratorium, and utility clearance restrictions were addressed, and examples showing real utility activities and constraints were elaborated to test the functionality of the proposed model. The model can serve as a new managerial tool to facilitate the utility coordination process between public road authorities and utility owners.     

Effects of project governance structures on the management of risks in major infrastructure projects: A comparative analysis

Large infrastructure construction projects are prone to risks. Using desktop review and interviews with stakeholder organizations in two major infrastructure projects (the Yi-wan Railway Construction Project in China and the Northern Gateway Toll Road (NGTR) Project in New Zealand), this study investigated how different project governance structures affect the management of risks. Comparative analysis shows that project governance provides a structured mechanism to identify and address risks as they occur. Despite varied context, two projects relied upon flexible contractual arrangements to leverage risks among project participants. While a centralized, single-agent governance was adopted in the form of Project Management Headquarters (PMH) in Yi-wan Railway project, an alliance governance structure was used in the NGTR project. The former enabled top-down risk allocation whereas the latter encouraged proactive solutions to risk sharing. The research outcomes will inform the decision making among project stakeholders on establishing appropriate project governance arrangements in order to achieve target risk management outcome. By comparing real-time projects of varied scope, complexity and significance, the findings contribute to an improved understanding of the relationship between project organizations and project risk management.     

An Institutional Approach to Analysis of State Capacity in Housing Systems in the Developing World: Case Studies in South Africa and Costa Rica

Mutually balanced roles and activities within state, market and society are needed to underpin effective and equitable housing systems. How these develop and interact necessitates negotiation, which in itself requires certain basic structures to be in place and certain capacities to be available. In the developing world this is often not the case, leading to theories based on the limitations of the command economy, market failure, or promoting state-market partnerships. While it draws on a political economy analytical framework, the paper is grounded in the application of new institutionalism to the study of housing systems, which it argues provides a more relevant theoretical framework for housing system analysis than previous structural analyses. The paper focuses on the constraints that state capacity can have on state-society relationships within the broader context of negotiations between the state, the market and society on housing policy and delivery issues. The empirical experience of state capacity vis-à-vis housing policy development and delivery is investigated in South Africa and Costa Rica, which, despite being very different in many respects, display a number of striking similarities in the analysis.     

Investigation of a static and a dynamic neighbourhood methodology to develop work programs for multiple close municipal infrastructure networks

Interventions on infrastructure networks in cities cause disruptions to the services provided by those but also to other networks that have to be at least partially shut down for the interventions executed. Due to these effects, there is substantial benefit to be obtained by grouping interventions on networks that are spatially close to one another. This benefit is principally due to reduced costs of intervention and reduced service disruption. In this paper, two intervention grouping methodologies to develop work programs for infrastructure networks are investigated. The first is based on static, the second is based on dynamic grouping. The two methodologies are investigated by developing work programs on multiple infrastructure networks in an urban area and compared against the same methodologies, albeit without coordination. In the example, interventions on the objects of five different infrastructure networks are grouped based on failure probability of the objects and their closeness. It is found that the dynamic grouping methodology results in work programs that result in a better consideration and prioritisation of objects that are in urgent need for an interventi, while accounting for the synergies that can be created due to efficient coordination. The advantages, disadvantages and future research directions are discussed.     

What risks are common to or amplified in programmes: Evidence from UK public sector infrastructure schemes

The management of risk is critical in organisations that work in multi-project environments. Project risk management is relatively mature. However, the programme risk management body of knowledge is still evolving. This paper presents empirical evidence from the UK public sector highlighting the risks that are common to or amplified by working in programmes. In the main, these risks are associated with changes in government policy, diverse stakeholder aspirations and the challenges of multiple project procurement. These risks relate to the role of programme management in providing the link between individual projects and their strategic context.     

The potential of public participation to facilitate infrastructure decision-making: Lessons from the German and European legal planning system for electricity grid expansion

The article examines the potential role that public engagement and participative pro-cesses to play a role in effective infrastructure planning in the context of energy policies. For example, by 2050, at least 80% of Germany’s electricity has to be derived from re-newable energy sources if Germany is to meet the goals of its own energy policy. This includes the comprehensive and accelerated extension of the electricity grid. As a result of the magnitude of these changes, the German energy transition is not proceeding without debate and controversy. Public engagement is certainly no panacea for en-hanced social acceptance, yet it offers substantial potential to facilitate the energy tran-sition. The paper draws together social science and legal expertise in order to investi-gate the role of public participation in legal planning processes concerning energy infra-structures. The paper not only focuses on the extension of the German power grid, but also deals with participative policy at the European level. To this end, the paper analyzes the potential role of the German legal planning system in grid expansion and in the Eu-ropean processes of nominating Projects of Common Interest (PCI) and of drawing up the Ten Year Network Development Plan (TYNDP).     

Auto-generated site layout: an integrated approach to real-time sensing of temporary facilities in infrastructure projects*

The use of computational algorithms is popular in method studies, especially in the aspects of knowledge that relates to construction site layout modelling. However, extant approaches in these seldom support automated tracking of construction resources and available spaces. As a result, it is often time-consuming and subjective to autogenerate site layouts. This paper describes the development and implementation of a component-level system that is capable of generating site layouts automatically. The system involves the integration of building information models, genetic algorithm and a radio frequency identification system that has the capability to report object locations in real time. System and software architectures are presented to illustrate the enabling technologies, subsystems and software that are required to facilitate the developed system. A case study is also presented to demonstrate the functionality of the developed system. The practical implication of this research is such that the reported findings builds on gaps in previous scholarly work to develop a system that models site layouts and the associated costs automatically. Findings from the study also facilitate both early signalling of pending delays and their immediate recovery protocols.     

Stakeholder involvement and public participation: a critique of Water Framework Directive arrangements in the United Kingdom

Expert consensus regarding public consultation and participation on environmental matters favours a multilevel approach: the process is much more likely to succeed when those consulted can relate to the boundaries, scale and the local nature of the issues. The Water Framework Directive requires those with the responsibility for river basin management planning to engage with stakeholders and the general public when such plans are being developed. Examination of the arrangements for public participation in the regions of the United Kingdom shows a marked variation in the interpretation of the Directive that may leave the general public residing in England and Wales at a significant disadvantage. In both Scotland and Northern Ireland involvement by the general public is planned at a much more local level through groups established specifically for that purpose. Arrangements at local level in England and Wales are focused on narrower existing liaison arrangements in place before the implementation of the Directive.     

Implementation as more than installation: a case study of the challenges in implementing green infrastructure projects in two Australian primary schools

ABSTRACT

Green infrastructure delivers a range of benefits for urban water management, amenity, human well-being, and ecosystem health. However, the implementation of green urban infrastructure can be challenging, whether in private or public spaces. In Australia and elsewhere, there is increasing investment in green infrastructure projects in schools. To date, the implementation issues experienced in schools have not been investigated. This article reports on a case study of the range of factors influencing implementation of green infrastructure projects in two primary schools in Melbourne, Australia. Interviews with diverse stakeholders in these projects revealed four key areas of concern for implementation: 1) professional roles and relationships; 2) planning and design; 3) value to the school community; and 4) engagement of the broader community. We conclude that successful implementation is not simply the installation of well-functioning green infrastructure; rather, it is an ongoing achievement that is as social as it is technical.     

Escalation of commitment in troubled IT projects: Influence of project risk factors and self-efficacy on the perception of risk and the commitment to a failing project

Past studies have indicated that project managers may be less likely to continue failing IT projects if they are able to perceive project risks accurately. Using the scenario of a failing IT project, a computer simulation-based experiment investigated the influence of individual self-efficacy and project risk factors on the perception of risk. Participants played the role of a project manager and managed a simulated IT project. The results suggest that project managers are likely to underestimate the risks of a project with endogenous risk factors as compared to a project with exogenous risk factors. Results of this study point to a ‘self-efficacy bias’ where project managers with higher self-efficacy may underestimate the risks of a troubled IT project as compared to project managers with lower self-efficacy. Further, risk perception mediated the influence of self-efficacy on the commitment to a failing IT project.     

The meaning of participation in school ground greening: a study from project to everyday setting

School ground greening has many acknowledged benefits for play, learning and health, but less is known about the outcomes of such projects from children’s perspectives. This study aims to investigate the process, and children’s participation, at two Swedish schools over four years of planning, planting, management and maintenance, using short interviews and observations. There was a large general interest among the children to participate in the development and maintenance of their school grounds, but different participatory and pedagogical approaches were used. The participation of children in the planning stage appears to be of specific importance for the functionality of school grounds, while long-term participation in management and maintenance can affect children’s experiences from, and perspectives on, greening areas and projects positively over time. The results point to the large impact that greening projects with continuity in participation can have on children’s activity and meaning-making.     

An ensemble wavelet bootstrap machine learning approach to water demand forecasting: a case study in the city of Calgary,Canada

This paper explores a hybrid wavelet, bootstrap and neural network (WBNN) modeling approach for daily (1, 3 and 5 day) urban water demand forecasting in situations with limited data availability. This method was tested using 3 years of daily water demand and meteorological data for the city of Calgary, Alberta, Canada. The performance of the WBNN method was compared to that of three other methods: traditional neural networks (NN), wavelet NNs (WNN), and bootstrap-based NN (BNN) models. While the hybrid WBNN and WNN models equally provided 1-day lead-time forecasts of greater accuracy than those obtained with other methods, for longer lead-time (3- or 5-day) forecasts the WBNN model alone outperformed the other models. The confidence bands generated using the WBNN model displayed the uncertainty associated with the forecasts.     

基于区域统筹视角下的城镇型风景名胜边界划定方法初探

边界划定是风景名胜区保护规划的关键环节,合理划定城镇型风景名胜区边界尤为重要。本文摆脱传统边界划定仅从风景区保护出发的单一视角,提出基于区域统筹视角下的城镇型风景区边界划定新方法,即力场分析法,并重点探讨了风景名胜区与城镇建设区相交区域边界的划定。