OPTION DESIGN STRATEGIES FOR INFRASTRUCTURE PROJECTS

Since the 1980s, Build-Operate-Transfer and its variations have become a common approach to develop large-scale infrastructure projects. Despite the slight variations in contractual settings, the key issue for all parties concerned is to assess the risks and uncertainties inherent in a project. The risk factors studied and highlighted by past researchers are very diverse. This paper starts with an objective to compare the risk factors in different sectors of infrastructure, and then categorize them into two kinds: general and specific. Following this classification, risk mitigation strategies should be adopted differently at the corporate and project levels. A few short cases have also been used to illustrate the flexible measures or "options" that some project participants have designed to address risks and uncertainties at the two levels.