Although the Suez Canal ultimately cost £18 million when the 10-year construction time ended, it proved to be a bargain. By the end of the first decade of the
twentieth century, Great Britain’s investment had increased in value tenfold.
18.3.2 Lessons from This Example
Between the lines, the example of the Suez canal shows all the hurdles, delays and
risks associated with BOT projects, namely: cost and time overruns, among others.
18.3.3 Recent BOT Projects
Several countries have gone through the experience of BOT projects. Hong Kong’s
East Harbour Crossing, a combined rail and rail tunnel under Victoria Harbour was
financed entirely through the private sector. Observers attribute Hong Kong’s
success in organising BOT projects to careful project appraisal, competitive project
bidding, and the government’s willingness to bail out the project in case of financial
difficulties. But then, is it still BOT?
Still, some projects that were expected to make flash news opened in near silence.
The original estimate for building and equipping the Channel Tunnel was £5bn but
by 1993 the figure had been revised to £10bn (i.e. double the initial estimate). Such
escalations in costs are typical of large construction projects. In the case of the
Channel Tunnel, factors such as price increases in materials, increased wages,
unforeseen technical difficulties in boring the tunnel, specification changes to
improve safety, and legal disputes over costs between Eurotunnel and the construction company Trans-Manche Link (TML) have all added to the increased costs.
The first of the new public/private toll road ventures to become operational in the
United States was the Dulles Greenway in Fairfax County, Virginia. The Greenway
opened to the public on September 29, 1995, and this project in which the public
pays to avoid congestion on existing highways has been attracting an average 10,500
drivers daily - far short of its projected 34,000 per day for the first year.
These are risks which have to be taken by somebody, either the Promoter who
stands to lose his investment or the Client (government) who then stands to lose
money reimbursing the Promoter, when it did not want to invest in the first place.
18.3 The History of Build, Operate, Transfer
503
twentieth century, Great Britain’s investment had increased in value tenfold.
18.3.2 Lessons from This Example
Between the lines, the example of the Suez canal shows all the hurdles, delays and
risks associated with BOT projects, namely: cost and time overruns, among others.
18.3.3 Recent BOT Projects
Several countries have gone through the experience of BOT projects. Hong Kong’s
East Harbour Crossing, a combined rail and rail tunnel under Victoria Harbour was
financed entirely through the private sector. Observers attribute Hong Kong’s
success in organising BOT projects to careful project appraisal, competitive project
bidding, and the government’s willingness to bail out the project in case of financial
difficulties. But then, is it still BOT?
Still, some projects that were expected to make flash news opened in near silence.
The original estimate for building and equipping the Channel Tunnel was £5bn but
by 1993 the figure had been revised to £10bn (i.e. double the initial estimate). Such
escalations in costs are typical of large construction projects. In the case of the
Channel Tunnel, factors such as price increases in materials, increased wages,
unforeseen technical difficulties in boring the tunnel, specification changes to
improve safety, and legal disputes over costs between Eurotunnel and the construction company Trans-Manche Link (TML) have all added to the increased costs.
The first of the new public/private toll road ventures to become operational in the
United States was the Dulles Greenway in Fairfax County, Virginia. The Greenway
opened to the public on September 29, 1995, and this project in which the public
pays to avoid congestion on existing highways has been attracting an average 10,500
drivers daily - far short of its projected 34,000 per day for the first year.
These are risks which have to be taken by somebody, either the Promoter who
stands to lose his investment or the Client (government) who then stands to lose
money reimbursing the Promoter, when it did not want to invest in the first place.
18.3 The History of Build, Operate, Transfer
503