David B. Ashley

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 countrys 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 Chinas BOT projects. This is especially so after policies were introduced in late 1996 when the first state-approved BOT project, the US

Project management decision making using cross-impact analysis

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.

Foreign exchange and revenue risks: analysis of key contract clauses in China's BOT project

Abstract This paper presents a methodology to evaluate the impact of management decisions on project performance outcomes. This decision-theory based methodology consists of a conceptual qualitative model structure and a mathematical model structure. The conceptual component is a simplified structured model of the variables and interactions that influence the decision being analysed. Influences and interactions assessed by experts or members of the management team are stored in a knowledge base. The mathematical component of the methodology uses concepts of cross-impact analysis and probabilistic inference as the core of the analysis procedure. The paper describes how the cross-impact concepts have been adapted and extended. Among the extensions, a method to combine probabilistic evidence is applied in this model to perform probabilistic inference. The result is a powerful but easy to use modelling and decision making methodology.

Risk Planning and Management for the Panama Canal Expansion Program

Despite the Asian financial crisis, there was still growing international interests by sponsors in Chinas infrastructure projects financed on build-operate-transfer (BOT) concession contracts. With the closure of the Guangdong International Trust and Investment Corporation (GITIC), foreign banks have become cautious towards new loan applications by Chinese companies and they were confused about government support and guarantees. Therefore it is important to analyse and manage the unique or critical risks associated with Chinas BOT projects. This is especially so after new policies were introduced in late 1996 when the first state-approved BOT project, the US

Optimal Allocation of Project Management Resources for Achieving Success

650 million 2 X 350 megawatt coal-fired Laibin B Power Plant (Laibin B), was awarded. The findings are reported from an international survey on risk management of BOT projects, with emphasis on power projects in China, with a discussion of the adequacy of the key contract clauses used in the Laibin Bs concession agreement (CA) in addressing the foreign exchange and revenue risks, which include exchange rate and convertibility risk, financial closing risk, dispatch constraint risk and tariff adjustment risk. Areas for improvements to these contract clauses are suggested.

Evaluation and Management of Political Risks in China's BOT Projects

In April 2006, the Panama Canal Authority formally proposed a major expansion of the canal to increase its capacity and make it more productive, safe, and efficient. This proposal included cost and schedule estimates for completing the expansion and was supported overwhelmingly by the citizens of Panama in an October 2006 public referendum. Given the conceptual level of design at the time of the proposal and the inherent uncertainty in a project of this magnitude at the early stages of engineering, a comprehensive risk analysis was performed to develop a contingency model for the total expansion program cost and schedule. This contingency model is based on a Monte Carlo simulation of the cost and schedule estimates, taking into account the most significant risks identified for the project. The resulting model provides contingency assessments for duration and total cost and sensitivity analysis of the risks; it also allows for multiple scenario planning and ultimately supports overall risk management. This paper presents a project case study that focuses on the contingency model development and the resulting risk management and contingency resolution processes.