Identifying risk factors of BOT for water supply projects

In China, urbanisation, industrialisation and increasing population are straining the existing infrastructure facilities, the shortage of which will suffocate economic growth and social development. In order to overcome the 'bottleneck', the Chinese government has explored the mechanism of the build-operation-transfer (BOT) model to encourage infrastructure provisions from the private sector. Using the analytic hierarchy process (AHP) technique, this paper constructs a three-level hierarchy for identifying the critical risk factors for water supply BOT projects in China. By comparing the 28 risk factors, the critical risk factors were short-listed and found to include 'change of taxation policy', 'fluctuation of loan interest rate', 'variation of water resources price', 'fluctuation of foreign exchange rates', 'competitors' and so on. Finally, strategies of risk management were proposed, including risk minimisation, risk transfer, risk allocation and risk retention.