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Privatisation: Build, Operate and Transfer &

Design, Build, Finance and Operate Partnering Fast Tracking


BOT: private services provider finances the project, 1) Strategic alliance between two or more
Main Activities

designs it, undertakes the construction, owns and organisations, the key objective is for mutual benefit. 1) A method of reducing the overall time
operates it over the concession period and upon its from inception until completion by
expiry transfer the beneficial ownership of the project 2) A contractual relationship between a contractor and overlapping certain activities while
back to the government/public sector an employer that is intended to maximise the benefit to maintaining an overall control over the
2) Contractor under a DBFO contract is responsible to both in terms of reliability of outcome and efficiency in project.
the design, building, construction and operation aspects the use of expertise and other resources, fostering
of the project. teamwork, trust and innovation
1) It involves large public sector projects involving
utilities, infrastructure (highways, water supply, and 1) A project management approach geared
When To Use

power supply). to very rapid project completion to reduce


the overall project life cycle time.
2) It can generate a reliable revenue over a long period
of time. 2) For instance the contract is awarded as
soon as sufficient works has been designed
3) There are availability of suitable financiers, competent
and ready to commence on site.
private companies conversant with and having the
resources to undertake the contract.
1) Realization of projects without increased 1) Win-win solution for both parties 1) Shorter project life cycle and early
spending 2) Greater certainty of the outcome in cost and time completion.
2) More private sector initiative/involvement
3) More innovative and efficiently managed 3) Product meeting requirements in cost effective 2) Earlier realization of the employers
projects manner and less wattage. return on investment and reduced finance
Strengths

4) Better value for money charges.


5) Less risk burden on public sector 4) Continuity of work at satisfactory pricing level
6) Single point responsibility for all aspects 5) Comfort of planning resources 3) Efficient use of resources.
of project 6) Better quality finished product
7) Maximum incentive on private sector 7) Conducive working environment 4) Optimal and cost effective end product.
8) Ultimate beneficial ownership free of 8) Disputes and claims minimised
debt
9) Less risk burden on public sector 9) Integrated core team sharing common objectives
and vision.
1) More political gimmicks. 1) Communication problems due to
2) Do not lessen but merely transfer financial burden 1) Lack of time tested model evidencing benefits overlapping of critical stages.
3) Susceptible to abuse/favouritism
2) In practise, arms length dealing and being on par 2) Coordination problems within tight
Weakness

4) Inefficient and far from being cost


effective difficult, tendency to be biased to one side. programme constraint.
5) Users have no direct redress against
3) Breakdown of relationships, harmonious and non-
concessionaire 3) Higher number of variations, disputes
adversarial working environment not realised.
6) Higher incidence of poor planning, bad and claims.
design and unsatisfactory maintenance 4) Commitment from parties may wane through time.
4) Cost overruns.