Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) is a form of project delivery method

BOT is usually a model used in public–private partnerships. Due to the long-term nature of the arrangement, the fees are usually raised during the concession period

1. BOT

2. Build–operate–transfer   Build–operate–transfer  ( BOT ) or  build–own–operate–transfer  ( BOOT ) is a form of  project delivery method . U sually for large-scale infrastructure projects, wherein a private entity receives a  concession  from the  public sector  (or the private sector on rare occasions) to finance, design, construct, own, and operate a facility stated in the concession contract. The private entity will have the right to operate it for a set period of time. This enables the project proponent to recover its investment and operating and maintenance expenses in the project.

3. Build–operate–transfer   BOT is usually a model used in  public–private partnerships . Due to the long-term nature of the arrangement, the fees are usually raised during the concession period. The rate of increase is often tied to a combination of internal and external variables, allowing the proponent to reach a satisfactory  internal rate of return  for its investment.

4. Build–operate–transfer   Countries where BOT is prevalent Include   Thailand ,  Turkey ,  Taiwan ,  Bahrain ,  Pakistan ,  SaudiArabia , [1]   Israel ,  India ,  Iran ,  Croatia ,  Japan ,  China ,  Vietnam ,  Malaysia ,  Philippines ,  Egypt ,  Myanmar  and a few US state

5. Build–operate–transfer   BOT finds extensive application in infrastructure projects and  public–private partnership . In the BOT framework a third party, for example the public administration, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period, the private party has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facilities. The facility will be then transferred to the public administration at the end of the  concession agreement , [3]  without any remuneration of the private entity involved. Some or even all of the following different parties could be involved in any BOT project:

6. Build–operate–transfer Normally, the government is the initiator of the infrastructure project and decides if the BOT model is appropriate to meet its needs. In addition, the political and economic circumstances are main factors for this decision. The government provides normally support for the project in some form (provision of the land/ changed  laws ). The project sponsors who act as concessionaire create a special purpose entity which is capitalised through their financial contributions.

7. Build–operate–transfer Most BOT projects are funded to a big extent by commercial debt. The bank will be expected to finance the project on "non-recourse" basis meaning that it has recourse to only the special purpose entity and all its assets for the repayment of the debt . The special purpose entity might have other lenders such as national or regional development banks.

8. Build–operate–transfer Because the  special purpose entity  has only limited workforce, it will  subcontract  a third party to perform its obligations under the concession agreement. Additionally, it has to assure that it has adequate supply contracts in place for the supply of raw materials and other resources necessary for the project . In a BOT project the project company or operator generally obtains its revenues through a fee charged to the utility/ government rather than tariffs charged to consumers. A number of projects are called concessions, such as toll road projects, which are new build and have a number of similarities to BOTs

9. Build–operate–transfer In general, a project is financially viable for the private entity if the revenues generated by the project cover its  cost  and provide sufficient  return on investment . On the other hand, the viability of the project for the host government depends on its efficiency in comparison with the economics of financing the project with public funds.

10. Build–operate–transfer Therefore, the private entity bears a substantial part of the risk. These are some types of the most common risks involved: Political risk : especially in the developing countries because of the possibility of dramatic overnight political change. Technical risk : construction difficulties, for example unforeseen soil conditions, breakdown of equipment Financing risk : foreign exchange rate risk and interest rate fluctuation,  market risk  (change in the price of raw materials), income risk (over-optimistic cash-flow forecasts), cost overrun risk

11. Alternatives to BOT Project delivery methods  defines the characteristics of how a construction project is designed and built and the responsibilities of the parties involved in the construction. They are used by a construction manager who is working as an agent to the owner or by the owner itself to carry-out a construction project while mitigating the risks to the scope

12. Modified versions of the "turnkey" procurement and BOT "build-operate-transfer" models exist for different types of public-private partnership (PPP) projects, in which the main contractor is appointed to design and construct the works. This contrasts with the traditional procurement route (the build-design model), where the client first appoints consultants to design the development and then a contractor to construct the work . The private contractor designs and builds a facility for a fixed fee, rate, or total cost, which is one of the key criteria in selecting the winning bid . The contractor assumes the risks involved in the design and construction phases.

13. DBFO Turnkey procurement under a design-build contract means that the design-build team would serve as the owner’s representative to determine the specific needs of the user groups meet with the vendors to select the best options and pricing; advise the owner on the most logical options ; plan and build the spaces to accommodate the function of the project; coordinate purchases and timelines ; install the infrastructure; facilitate training of staff to use the equipment; and outline care and maintenance

14. DBFO DBFO stands for design-build-finance-operate, which also assigns the responsibility to the private organization to design, build, finance, and operate. Financing your competitive project may be easy when there is a high demand for a service and investors will throw money at any project such as opening a new airport in a busy metropolis.

15. BLT & ROT BLT stands for build-lease-transfer, in which the public sector partner leases the project from the contractor and also takes responsibility for its operation. ROT (renovate-operate-transfer) is a procurement method for infrastructure that already exists but is performing substandardly .