Shou Qing Wang

Framework for Critical Success Factors of BOT Projects in China

The impending entry of China into the World Trade Organization is expected to result in immense demand for basic infrastructure. There are great opportunities for project sponsors, especially in the competitive tendering of build-operate-transfer (BOT) projects. However, the road to winning and managing a BOT project successfully in China is not easy. The process is complex, time-consuming, and expensive, and each phases success determines the fate of the next phase. Foreign investors must pay attention to the critical success factors (CSFs) in every phase. This article summarizes a study conducted to identify and analyze CSFs of BOT projects in China and their relative importance. Analysis of these CSFs should help foreign investors improve their decision-making process for investing in Chinese BOT projects.

A fuzzy quality function deployment system for buildable design decision-makings

During the conceptual stage of a building design, major design decisions that have the greatest influence on buildability of a project are taken. Quality function deployment (QFD) is an integrated decision-making methodology that can assure and improve the alignment of elements of design and construction processes with the requirements of customers. On the basis of the enlarged customer concept, QFD has the potential to be developed as a quantitative approach for buildability evaluation. This paper presents the findings of a research effort to adapt House of Quality (HOQ) to meet the needs of buildable designs in the construction industry and to develop a fuzzy QFD system for buildability evaluation. In this system, the fuzzy set theory is integrated into HOQ to capture the inherent impreciseness and vagueness of design-relevant inputs and facilitate the analysis of design-relevant QFD information. An example is presented to illustrate the system, which provides a viable decision-making method for quantitative buildability evaluation at the early design phase.

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

Empirical Study of Risk Assessment and Allocation of Public-Private Partnership Projects in China

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.

Risk Allocation in Public-Private Partnership Infrastructure Projects: Comparative Study

Earlier research studies on public-private partnership (PPP) indicated that an objective, reliable, and practical risk assessment model for PPP projects and an equitable risk allocation mechanism among different parties are crucial to the successful implementation of these PPP projects. However, actual empirical research works in this research area are limited. This paper reports the first stage of a research study, which aims to identify and assess the principal risks for the delivery of PPP projects in China and to address their proper risk allocation between the private and public sectors. An empirical questionnaire survey was designed to examine the relative importance of different risk factors and to analyze the allocation of risk factors to different parties in PPP projects. A total of 580 questionnaires were sent out, and a total of 105 valid responses were obtained for data analysis. The Mann-Whitney U test is employed to investigate whether significant difference in perception existed first between the private and public sectors and second between industrial practitioners and academics in China. The empirical findings show that the three most important risk factors for PPP projects in China are (1) government intervention; (2) government corruption; and (3) poor public decision-making processes. These findings reveal that the Chinese government intervention and corruption may be the major obstacles to the success of PPP projects in China. A major cause for these risks may be attributed to inefficient legislative and supervisory systems for PPP projects in China. After conducting the Mann-Whitney U test on the 105 survey respondents, the empirical findings indicate that the perceptions of all 34 risk factors in China between the private and public sectors were not significantly different. Similarly, there were no significant differences between academics and industrial practitioners except that the former perceived the problem of government corruption to be more severe than did the latter. For risk allocation, the empirical results indicate that the public and private sectors were in general consensus with most of the risks identified. The major risks that the public sector preferred to accept are within the systematic risk category, especially political, legal, and social risks. The private sector preferred to retain the principal risks within the specific project risk category, especially construction, operation, and relationship risks, in addition to economic risks within systematic risk category. The remaining risk, environment risk, is preferred to be shared between the two sectors. This research study enables international construction companies to better understand how risks should be assessed and allocated for PPP projects in China. It also assists in risk response planning and control for future PPP projects in China. DOI: 10.1061/(ASCE)ME.1943-5479.0000049.

Analysis of political risks and opportunities in public private partnerships (PPP) in China and selected Asian countries

It is important for the public and private sectors to establish effective risk allocation strategies for public-private partnership (PPP) projects in order to achieve a more efficient process of contract negotiation and reduce the occurrence of dispute during the concession period. This paper aims first to identify the preferred risk allocation in PPP projects of mainland China and the Hong Kong Special Administrative Region (referred to as China and Hong Kong from here onward) and then to compare these preferences to those in the U.K. and Greece by a questionnaire survey based on the same risk register. The results in China and Hong Kong show that the public sector preferred to retain most political, legal, and social risks, and share most microlevel risks and force majeure risk; while the majority of mesolevel risks were preferred to be allocated to the private sector. The comparative analyses of risk allocation preference among these four countries/jurisdictions indicate that the public sector in the U.K. was most able to transfer the PPP risks to the private sector, followed by Greece, Hong Kong, and China. Respondents from Greece exhibited the greatest degree of support for the public sector to retain the macrolevel risks. All respondents agreed that private investors should take a more active role in managing the mesolevel risks. Respondents from China and Hong Kong considered that majority of the microlevel risks should be shared equally between the public and private sectors, while respondents from Greece indicated that the private sector should take a more active role in managing the microlevel risks. The comparative study provides international investors a better understanding of risk preferences in different countries/jurisdictions so that they could adjust their strategies according to the specific situation and achieve better value for money in running their PPP projects.

Case study of government initiatives for PRC's BOT power plant project

Purpose – The paper aims to provide insight into the opportunities and impact of political risks in China and selected Asian countries on opportunities in infrastructure projects under public‐private partnership (PPP) schemes.Design/methodology/approach – The impact of political risks on PPPs was investigated through an international survey among senior staff of international lenders, investors, insurers, and legal and financial advisors from the public and private sector. The surveyed political risk categories base on the Multilateral Investment Guarantee Agency Convention and literature review. They comprise six categories: currency inconvertibility and transfer restriction, expropriation, breach of contract, political violence, legal, regulatory and bureaucratic risks, and non‐governmental action risks. The survey evaluation uses fuzzy sets and non‐parametric statistics.Findings – The findings comprise rankings of political risk factors within China and Asian countries as well as rankings of these coun...

Understanding the risks in China's PPP projects: ranking of their probability and consequence

Abstract The economic growth in the Peoples Republic of China (PRC) has resulted in more demand for basic infrastructure like roads, ports, and power generation facilities. To meet the development needs, the Chinese government has granted build-operate-transfer (BOT) concessions to attract foreign investment. A few state-approved pilot projects have been awarded since late 1996, the first of which was the Laibin B power project in the Guangxi province. This paper will discuss the government initiatives and guarantees provided for BOT projects in China based on the Laibin B Power Plant project in mitigating the risks. The lessons for investing in future similar BOT projects in China will be drawn.

Total factor productivity growth accounting in the construction industry of Singapore

Purpose – Based on the Chinese governments increased public‐private partnership (PPP) experience in the last decade, they have made a lot of efforts to improve the investment environment. This paper hence aims to conduct a more up‐to‐date evaluation of the potential risks in Chinas PPP projects.Design/methodology/approach – As part of a comprehensive research looking at implementing PPP, a two‐round Delphi survey was conducted with experienced practitioners to identify the key risks that could be encountered in Chinas PPP projects. The probability of occurrence and severity of the consequence for the selected risks were derived from the surveys and used to calculate their relative risk significance index score.Findings – The results showed that the top ten risks identified according to their risk significance index score are: governments intervention; poor political decision making; financial risk; governments reliability; market demand change; corruption; subjective evaluation; interest rate change;...

Risk Management Framework for BOT Power Projects in China

Total factor productivity (TFP) determines long‐term economic growth and is a comprehensive industry‐level productivity measure. This paper proposes Jorgensons method as an appropriate TFP measurement for the construction industry. The method is less restrictive than the conventional Chaus approach, as it does not impose the Hick Neutral Technical Change assumption. Jorgensons method is then applied to estimate TFP growth in the construction industry of Singapore over 1984–1998. TFP growth is found down by 1.53% per annum over this period, indicating that the performance of TFP in the construction industry lags behind the rest of economy. TFP growth is also found to be fluctuating over time and tends to move in tandem with the construction business cycle. As a monitor of progress towards TFP achievement, factors influencing TFP growth in the construction industry of Singapore over 1984–1997 are identified. Seven factors are found to be significantly related to TFP growth. Among them, economies of scale, R&D by the industry, investment allowance granted and labour unions are leading contributors to TFP growth; while foreign worker, construction accidents and pre‐cast are major hampers. The general methodology presented in this study can be applied to other countries. Future studies are required to find appropriate indicators for factors unquantified.