Determining and Analysing Effective Factors on Water Price in Water and Sanitation BOT Contracts using System Dynamic Simulation

Document Type : review paper

Authors

• Seyed Ali Chavoshian ¹
• Morteza Bayat ²
• seyedhossein sajadifar ³

¹ -

² Iran University of Science & Technology

³ Islamic Azad University

https://doi.org/10.22067/jwsd.v4i1.1.65078

Abstract

Public-pivate partnership contracts are considered as effective tools for taking advantage of the technical, executive, managerial, and financial resources of the private sector potentials in order to construct and develop infrastructures. One of the most important and common types of public-private partnership are BOT contracts. Identifying the decision-making variables in the contractual model appropriately is vital in the contract's success and in achieving the expected objectives of the stakeholders. The price of products in BOT contracts is the main decision-making variable that the project stakeholders have contradictory preferences. The variety of effective parameters that influence product prices in BOT projects, including uncertainty and their dependencies and interactions, complicates the decision making process. This reveals the necessity of a systematic approach and applying a mathematical model for solving the problems. In this paper, the most common methods for determining product prices in BOT projects is reviewed. A new system dynamics model is provided to determine the product price of BOT contracts from the viewpoint of the project investor. The proposed techniques are not limited to water and wastewater sector projects but also could be used in other BOT projects of the industrial sector.

Keywords

• Financial model
• BOT project
• System dynamic simulation
• water and wastewater industry

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