The buildownoperatetransfer (BOOT) type of project has evolved as a means of involving the private sector in the development of the public infrastructure. The concept, in use in some parts of the world for some centuries, requires the private sector to finance, design, build, operate and manage the facility and then transfer the asset to the government free of charge after a specified concession period (Tiong, 1992). The term BOT, for buildoperatetransfer, was first coined by the Turkish Prime Minister in 1984 in connection with the privatisation of that countrys public-sector projects. The terms BOOT and BOT are used synonymously, while terms like DBO (designbuildoperate) and BOO (buildownoperate) imply construction and operation but no transfer (Carson Group, 2000). In Australia, for example, the transfer option is omitted (McMullan, 1995).
Examples of projects that have used the BOOT approach include power stations, toll roads, parking structures, tunnels, bridges and water supply and sewage treatment plants. Consider a parking structure as an example. A municipality may identify a need for such a facility. A project sponsor is selected and the design and construction are carried out under the sponsors overall direction. Upon completion of the structure, the sponsor is responsible for operation and maintenance; income to cover the cost of construction plus ongoing periodic costs is derived from parking fees. At the end of a period of, say, 20 years, the sponsor transfers the facility to the municipality free of charge, with a guarantee that it is in satisfactory condition. Typical concession periods range from about 10 years, not including project development time, for some power station projects to as long as 55 years, including approximately 7 years for construction, for the Eurotunnel project (Tiong, 1992).
It is apparent that such an approach requires a complex organisational structure and carries considerable long-term risk for the project sponsor, while minimising such risk for the governmental owner. In a typical BOOT project, the parties are likely to include the following (Tiong, 1992; McMullan, 1995):
client usually a governmental agency;
constructor often responsible for both design and construction, although the general design will usually be dictated by the client and may be carried out by the client;
operation and maintenance contractor;
offtakers entities that agree to purchase the outputs of the project, such as water or electricity, usually a governmental agency, not always the client as listed above;
suppliers of materials, equipment and so on for both the construction and long-term operation of the facility;
lenders and investors;
sponsor a consortium of interested groups, usually including the constructor, operator and financial institution, that prepares the proposal and, if successful, contracts with the client to carry out the design, financing, construction and operation (note that the sponsor thus includes at least three of entities named earlier in this list).
A BOOT type of project can utilise any of several of the organisational relationships described earlier in this chapter. For example, the sponsor may employ a project manager to oversee the entire designfinancebuild process, a construction manager to advise on construction and/or a designbuild firm as a single entity to accomplish those two parts of the scheme.
