Professional Practice & Ethics

Aishuwarya 37210002, Elakya 37210011, Vennila Arulmozhi 37210043,

Sanjeev Sivakumar 37210030, R.S Prem Mohan 37210026
BOT - Built Operate Transfer
INTRODUCTION:

Build-operate-transfer (BOT) is a form of project financing, wherein a private entity receives a

concession from the private or public sector to finance, design, construct, and operate a facility
stated in the concession contract. This enables the project proponent to recover its investment,
operating and maintenance expenses in the project.

Due to the long-term nature of the arrangement, the fees are usually raised during the
concession period. The rate of increase is often tied to a combination of internal and external
variables, allowing the pro reach a satisfactory internal rate of return for its investment.
BOT - Built Operate Transfer
Build-Operate-Transfer (BOT): Definition
BOT:
Build
Set-up the facility and infrastructure, staff the development center, and establish knowledge transfer
Operate Manage the offshore
organization: Program Management,
Development, QA, maintenance, enhancements, and product support
Transfor
Register a new offshore subsidiary for the customer, transfer assets,
and handover operations
 BOT - Built Operate Transfer
BOT Benefits
. BOT offers attractive business benefits over the traditional offshore subsidiary path,
including:

rapid scaling of operations

• Wider service offerings, quickly filling business model gaps • Lower infrastructure
set-up costs • Reduced time to operations through utilization of knowledgeable 3rd
party management resources responsible for:Real Estate Government rules and
regulations
Cultural transition
IT infrastructure procurement
. Security
BOT - Built Operate Transfer
VADODARA HALOL TOLL ROAD PROJECT
The cost of the project was 161 crores.

construction cost accounted 119 crores.

Equity of 67.9 crores was raised from GoG

➤IL&FS also raised debt of 93.2 crores through

various Indian

financial institutions including Industrial

Development Bank of India,
BOT - Built Operate Transfer
ABOUT THE PROJECT

VHTR was an initiative commissioned as a part of the Vision 2010

an infrastructure master plan developed by the Government of
Gujarat(GoG). The project involved widening and strengthening of 32
km of the existing two-lane State Highway (SH 87) connecting
Vadodara to the industrial town of Halol into a four-lane tolled
expressway.

The underlying principle of the vision was to develop infrastructure

projects in Gujarat by attracting private sector participation.
BOT - Built Operate Transfer
DETAILED PROJECT ANALYSIS
The Roads and Buildings Department (R&B), GoG and Infrastructure
Leasing and Financial Services (IL&FS) signed a Memorandum of
Agreement (MOA) to this effect on 31st October 1995.

A special purpose vehicle (SPV) was constituted for this purpose

named the Vadodara Halol Toll Road Company Limited (VHTRL)

The construction of VHTR commenced on 1st March 1999 and

completed on 15th September 2000.

The toll operations commenced on 24th October 2000. VHTRL

manages, operates and maintains the road for 30 years starting from
2000.
 BOT - Built Operate Transfer
DETAILED PROJECT ANALYSIS
It entered into a concession agreement with GoG to design, finance, build,
operate, maintain, and transfer the facility after recovery of a predetermined
return.

Construction

included the design and completion of the road, pavement, cross drainage
system, bridges, toll facilities, medians, separators, road furniture, and
horticultural aspects.
Management, operation and maintenance toll collection, operating the toll plaza,
traffic regulation and maintenance of the facility, special maintenance activities
such as eliminating potholes in the pavements,
The concession is for a period of 30 years
BOT - Built Operate Transfer
DETAILED PROJECT ANALYSIS:

In case VHTRL is unable to recover the total cost of the project, including a 20%
return, within 30 years from the date of operation, the concession period shall, at the
request of VHTRL, without qualification be extended by GoG for a period of two years
at a time until the total project cost and returns have been recovered by VHTRL

The land for the proje between the parties. is leased to VHTRL by GoG through a
lease agreement
DBOT - Design Built Operate Transfer
INTRODUCTION:
Design build operate transfer (DBOT), is generally a form of Public Private Partnership
project (PPP) in which a single (private) contractor is appointed to design, build and operate
a project on behalf of a (public) client before transferring operations and maintenance back
to the client after an agreed period of time.
Operations and transfer:
Once the construction is complete, the contractor is granted the right to own, maintain and
operate the project for a period of time.

Transfer typically occurs once the contractor has recovered its investment (or an agreed
upon period of time has expired). It is common for the time period to be several decades in
the case of large infrastructure projects that carry significant degrees of construction and
operational risk.
DBOT is a variation on the build operate transfer (BOT) contract model, but in DBOT, the
contractor designs as well as builds the project. This model can be attractive to some clients,
as it designates a single point of responsibility for delivering the project and taking it through
to operation.

Bhilai WTP Project:

Zero Discharge 27 MLD Water Treatment Plant for Bhilai
Charoda Municipal Corporation.

PRIVATE COMPANY INVOLVED: Adroit water

infrastructure ltd.

To address water shortage, Bhilai has got administrative

approval for a Rs 243 crore drinking water project- Atal
Mission for Rejuvenation and Urban Transformation
(AMRUT).
 BOOT
BOOT - Build Own Operate Transfer
INTRODUCTION:
● The concession, or build-own-operate-transfer(BOOT), is a type of procurement
strategy utilising project finance to fund infrastructure projects.
● Although the term BOOT is relatively new, privatised infrastructure projects have been
around for severalcenturies.In a BOOT project, a project company, normally a special
project vehicle (SPV), is given a concession to build and operate a facility that would
other wise be built by the public sector.
● The facility might be a power station, toll road, airport, bridge, tunnel, water supply
and sewerage system, railway, communication or manufacturing plant.

CONDITIONS FOR SUCCESSFUL IMPLEMENTATION OF BOOT PROJECTS :

1) Country economic stability Project will to carry out the project Stock and capital
markets Legislative or judicial process
2) Project.
3) Client.
CASE STUDY - Express way routes in malaysia
INTRODUCTION:

In 1977, the Malaysian Ministry of Works received official

instructions to draw plans of an expressway from the
Malaysia-Thailand border (Bukit Kayu hitam) to the Johor
Causeway. In 1980, the Malaysian Highway Authority was
established to monitor all the work progress of the first
national expressway. The 30-year concession contract was
awarded in 1998 to the United Engineers (Malaysia)
Berhad, who then formed another project company called
Project Lebuhraya Utara Selatan Berhad (PLUS) todesign,
construct, finance and operate the expressway.
CASE STUDY - Express way routes in malaysia
ADVANTAGES:

● BOOT projects offer the possibility of realising a

project that would otherwise not be built.
● The willingness of equity investors and lenders
to accept the risk indicates that the project is
commercially viable.
● A BOOT project will help in a government’s
policy of infrastructure privatisation.
● The efficiency of the promoter and its economic
interest in the design, construction and
operation of the project will produce significant
cost efficiencies to the principal when the
concession period ends.
CASE STUDY - Express way routes in malaysia
DISADVANTAGES:
● BOOT projects offer the possibility of realising a project that would otherwise not
be built.
● The willingness of equity investors and lenders to accept the risk indicates that the
project is commercially viable.
● A BOOT project will help in a government’s policy of infrastructure privatisation.
● The efficiency of the promoter and its economic interest in the design, construction
and operation of the project will produce significant cost efficiencies to the
principal when the concession period ends.
CONCLUSION:
The process of privatization and liberalization in Malaysia has been motivated more by
economic pragmatism than ideological considerations.Mostly importantly, Malaysia
embarked on a process of restructuring the relationship between the public sector and the
private sector as a response to unsustainable domestic and external conditions.The poor
performance of public enterprises and the high levels of budgetary deficits acted in concert
with a reversal of the buoyant prices for Malaysian exports to usher in an era of change.
BOLT - Build Own Operate Transfer
INTRODUCTION:
● It is a non-traditional procurement method of project financing whereby a private or
public sector client gives a concession to a private entity to build a facility (and possibly
design it as well), own the facility, lease the facility to the client, then at the end of the
lease period transfer the ownership of the facility to the client.
● As a system of project financing this procurement method has a number of advantages
the major one being that the private entity, contracted by the client, has the
responsibility to raise the project finance during the construction period.
● What this does is to remove the burden of raising the finances for the project from the
client (i.e.the public enterprise) and places it on the private entity. This way the BOLT
developer assumes all the risk, the risk of raising the project financing and the risk
during the construction period.
● Of course such risk is not undertaken for free by the developer but comes at a cost,
which is passed onto the client. The operational and maintenance responsibility for the
facility is the developer’s, as the facility is owned by them until the lease period ends.
BOLT - Build Own Operate Transfer
● The lease period will see the client who in essence becomes the tenant of the facility,
paying the developer a lease (monthly or annually) for the use of the facility at a
predetermined rate for a fixed period of time. The lease payment becomes the method
of repaying the investment, and ultimately rewarding the developer’s shareholders. At
the end of the lease period, ownership of and the responsibility for the facility are
transferred to the client from the developer at a previously agreed price.
CASE STUDY - Toll Booths
INTRODUCTION :
A leading provider of integrated solutions to toll authorities in the USA was looking for a
vendor to manage its development, post-development, and defect-resolution needs of their
automated product suite. The client is a systems integrator, systems consultant, operations
provider, and maintenance services provider for several toll authorities in the United States.
CHALLENGES FACED :
The client was facing resource-related challenges, one of which was high cost of hire in
Dallas that was inflating the total resource costs. Another major issue was a yearly employee
attrition rate of 30%, mostly due to a resource-skills mismatch. The client was unable to
source cost-efficient talent in Dallas to suit project requirements. The high cost of onshore
full-time employees, mismatch of skills and roles, and inability of the inhouse team to handle
operations were driving up overall costs. Fixed-bid partnerships were an expensive option
given the client’s smaller scale of operations. The client needed a nimble partner who could
absorb the shocks of scaling up and down fast while providing qualitative, cost-effective
solutions.
CASE STUDY - Toll Booths
XTGlobal, a proven developer and
provider of IT solutions, created a
detailed governance model to oversee
engagement management. An optimized
onshore-offshore team was created with
resources at the client’s location as well
as at XTGlobal’s offshore location in
Hyderabad, India.