Study of risk management of private enterprises' involvement in BOT projects: a case study of a sludge treatment project

Abstract

Chinese government actively encourages and guides private capital to enter infrastructure and municipal public utilities sectors. However, risk management of BOT projects is a great challenge for private enterprises when compared with state-owned ones. The study on a sludge treatment BOT project run by a private enterprise shows that there exist risks in coordinating capability with public sectors, payment, project changes, technical innovations and process controls, payments calculation method, etc. Taken into account of risk management theories and characteristics, risk allocation principles and goals, and common weaknesses of private enterprises, the study further reveals the risk management and allocation flaws of private enterprises in political, constructing, operating, marketing, yielding, financial and legal aspects. As a result, some risk management and allocation suggestions are made for private enterprises in developing BOT projects in the future.