(vii) Offer to government, risk insurances through its newly created agency known
as “Multilateral Investment Guarantee Agency” (MIGA).
18.7 Implementing a BOT Package
Structuring the package for a BOT project is an interdisciplinary exercise which is
complex, and time consuming. It must be understood that BOT projects are more
financially rather than technically driven.
The three main factors in the packaging of a BOT project are momentum,
expertise and timing.
The structuring of a BOT package therefore is a combination of complex interactions taking place on the issues, mentioned hereunder, at all times.
The process from conception to transfer will extend over a number of years, with
the concessionaire being called upon to overcome a series of issues. The goal posts
will undoubtedly be moved, especially in the development phase. The team’s role is
to coordinate the packaging along the way. Some of the pitfalls are:
• inappropriate sponsor/government motivations/expectations
• mismanaged development process
• weak sponsors (corporate, individuals), government disunity
• contractor performance/financial failure, completion delays
• cost overruns
• technical failure or obsolescence
• anaemic (weak) project economics
• uncompetitive cost structure, contractual breakdown
• tax increases, permitting reversals
• force majeure event (physical, political, commercial, economic).
Figure 18.2 shows the complexity of BOT packaging, which the successful
concessionaire has to overcome. But this packaging exercise really shows how
project management will need to come to the rescue.
In the beginning the sponsor’s team is promoting the concept and therefore must
exude all the enthusiasm and vision of good salesmen with a background of
commercial insight and market awareness. As the team moves into the development
phase, a talent for detail with a presence of innovative leadership is required to
ensure that the right element is in the right place at the right time. This development
phase is the most crucial because this is where the project can become bogged down
under the inertia of multidimensional negotiations coupled with sceptical bankers
and hair-splitting lawyers. This requires an experienced team manager with high
organizational capacity together with administrative and communication skills to
overcome the many hurdles. Moving through to the construction and operational
phases mainly requires planning, scheduling and analytical skills to ensure that the
project performs as expected.
18.7 Implementing a BOT Package
511
as “Multilateral Investment Guarantee Agency” (MIGA).
18.7 Implementing a BOT Package
Structuring the package for a BOT project is an interdisciplinary exercise which is
complex, and time consuming. It must be understood that BOT projects are more
financially rather than technically driven.
The three main factors in the packaging of a BOT project are momentum,
expertise and timing.
The structuring of a BOT package therefore is a combination of complex interactions taking place on the issues, mentioned hereunder, at all times.
The process from conception to transfer will extend over a number of years, with
the concessionaire being called upon to overcome a series of issues. The goal posts
will undoubtedly be moved, especially in the development phase. The team’s role is
to coordinate the packaging along the way. Some of the pitfalls are:
• inappropriate sponsor/government motivations/expectations
• mismanaged development process
• weak sponsors (corporate, individuals), government disunity
• contractor performance/financial failure, completion delays
• cost overruns
• technical failure or obsolescence
• anaemic (weak) project economics
• uncompetitive cost structure, contractual breakdown
• tax increases, permitting reversals
• force majeure event (physical, political, commercial, economic).
Figure 18.2 shows the complexity of BOT packaging, which the successful
concessionaire has to overcome. But this packaging exercise really shows how
project management will need to come to the rescue.
In the beginning the sponsor’s team is promoting the concept and therefore must
exude all the enthusiasm and vision of good salesmen with a background of
commercial insight and market awareness. As the team moves into the development
phase, a talent for detail with a presence of innovative leadership is required to
ensure that the right element is in the right place at the right time. This development
phase is the most crucial because this is where the project can become bogged down
under the inertia of multidimensional negotiations coupled with sceptical bankers
and hair-splitting lawyers. This requires an experienced team manager with high
organizational capacity together with administrative and communication skills to
overcome the many hurdles. Moving through to the construction and operational
phases mainly requires planning, scheduling and analytical skills to ensure that the
project performs as expected.
18.7 Implementing a BOT Package
511