Monday, April 22, 2019

Construction contract

1)    Build-Operate-Transfer Contract
What is a 'Build-Operate-Transfer Contract'
A build-operate-transfer contract is a model used to finance large projects, typically infrastructure projects developed through public-private partnerships. 
BREAKING DOWN 'Build-Operate-Transfer Contract'
Under a build-operate-transfer (BOT) contract, an entity – usually a government – grants a concession to a private company to finance, build and operate a project. The company operates the project for a period of time – perhaps 20 or 30 years – with the goal of recouping its investment, then transfers control of the project to the government. BOT projects are normally large-scale, greenfield infrastructure projects that would otherwise be financed, built and operated solely by the government. Examples include a highway in Pakistan, a wastewater treatment facility in China and a power plant in the Philippines. 
In general, BOT contractors are special-purpose companies formed specifically for a given project. During the project period – when the contractor is operating the project it has built – revenues usually come from a single source, an offtake purchaser. This may be a government or state-owned enterprise. Power Purchase Agreements, in which a government utility acts as offtaker and purchases electricity from a privately owned plant, are an example of this arrangement. Under a traditional concession, the company would sell to directly to consumers without a government intermediary. BOT agreements often stipulate minimum prices the offtaker must pay.
A number of variations on the basic BOT model exist: under build-own-operate-transfer (BOOT) contracts, the contractor owns the project during the project period; under build-lease-transfer (BLT) contracts, the government leases the project form the contractor during the project period and takes charge of operation. Other variations have the contractor design as well as build the project: one example is a design-build-operate-transfer (DBOT) contract.

2) BOOT (build, own, operate, transfer)
Build, Own, Operate, Transfer (BOOT) is one type of operator model used in international project management. Operator models are project forms within which the actual investor delegates the building, operation and maintenance of a plant to another company for a limited time and thus is de facto a “customer” of the operating company. 
The umbrella term Build, Operate, Transfer (BOT) is an acronym for the three phases that traditionally constitute an operator model: The construction phase, the concession phase during which the plant is operated by the operating company, and the transfer, in which the plant is transferred to the customer. Because normally the customer has no interest in operating the plant himself following the concession phase, the operation is usually left to the operating company afterwards as well. 
Originally, such operator models were developed for public-sector projects, where they are referred to as public-private partnerships (PPP). In these projects the plants are transferred into state ownership following the operational phase. In the mid-1990s they were also introduced in industrial sectors such as the automotive industry or tank terminal construction. Beyond the financial aspects, reasons for using an operator model often include the reduction in the customer’s business risk by involving a specialist, especially since payment is usually “pay-on-production.” 
The special feature of the BOOT model is that unlike in the classic BOT model, the customer has no early buyout option that would allow him to prematurely become owner of the plant.
Because tank terminals, especially in certain countries such as India, are often built under BOT models, the tank-storage company Oil tanking, and especially its subsidiary IOT Infrastructure & Energy Services, builds and operates many of its sites under these forms.
Sky tanking provides aviation fuelling services and operates its own airport tank terminals and hydrant systems based on BOOT contracts.

3) Build-Own-Operate (BOO)
A project delivery mechanism in which a government entity sells to a private sector party the right to construct a project according to agreed design specifications and to operate the project for a specified time. Unlike the build-own-operate-transfer (BOOT) or the build-operate-transfer (BOT) structure, the private sector party owns the project and does not have to transfer it to the government entity at the end of the term. 
If the Consortium is committed to building, ownership and exploitation (BOO) projects, after a certain period of time, the project will be sold to the government in exchange for a payment to the government, such as the construction, acquisition, sale and sale of Equity (and Sell Operate own, Build ) Is used.
In this type of Contract, under certain conditions which will be defined later,
the Contractor will finance, Design, Build and Retain the rights of the facility
for a stipulated period of time.
In this type of Contract, Owner leases the project for operation for a set
period of time and at the end of this period and once all the lease amount has
been settled the project’s rights are transferred back to the owner.
The BLT Bidder will have to provide Financing for the project through a
Structure that is acceptable to Mokran Ab Niroo Co,(MAN).
 MAN is willing to pay to the BLT Bidder an amount equivalent to 5% of the
built price as a prelease for as long as this amount is required by the BLT
Bidder for the realization of the Financing Structure
 Upon construction, while maintaining the legal title of the facility, the
investor will lease the facility to MAN for operation for a period of five years.
During the five years lease period, MAN will guarantee the repayment of the
investor’s expenses plus profit in the form of rent on a predetermined
 At the end of the five year lease period and once all the financed amount has
been settled , the investor returns the legal title to the facility back to MAN.

6) Construction, Transmission and Exploitation Contracts (B.T.O):
If, in a BOT contract, the parties want to emphasize that the ownership of the project as well as the ownership of the facility will be transferred to the government as soon as it is completed, and then the government grants the consortium the exclusive use of the project for a specific period, the term construction, transfer and exploitation The translation statement is "Transfer and operate, Build". The use of the aforementioned method has the advantage of the government that the facilities and technology created are transferred to the host state after being built, but an important part of the contract for operation and use after the transfer. In this case, the project company will have the right to redeem the facility after the transfer of ownership and operation of the project. The benefit of this transfer can be seen well in the company's portfolio. However, due to the transfer of ownership of the project to the host state, third parties that have a significant share in the financing of the project (ie, the lenders) may not agree in such a arrangement when the bail is repaid for the grant of the facility to all the assets of the project company. 

7) Reconstruction, Utilization and Transfer (R.O.T) Contracts:

If the existing project and facilities are available, it will be transferred to the private sector to be restructured by the private sector and, alternatively, for a period to be used by the private sector, and then transferred to the state, the term "reconstruction, operation and transfer" (R.O.T) will be used.
7) Reconstruction, Utilization and Transfer (R.O.T) Contracts:

If the existing project and facilities are available, it will be transferred to the private sector to be restructured by the private sector and, alternatively, for a period to be used by the private sector, and then transferred to the state, the term "reconstruction, operation and transfer" (R.O.T) will be used.


8) Modernization, operation and transfer contracts (M.O.T):
If the existing infrastructure project is transferred to the private sector to convert it into a modern project and instead to operate it for a while and then transfer it to the state free of charge, from the term modernization, operation and transfer, the translation of the term (Transfer operate and modernize, is used. What is evident from the diversity of these contracts is the structural variety of construction contracts, all of which are common in which the government entrusts the construction (or reconstruction or modernization) of the privilege of exploiting and maintaining a project to the private sector, so that the private sector of the duty Funding the project and building it and taking advantage of the project's privilege for a while.

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