Identifying the Pareto-front approximation for negotiations of BOT contracts with a multi-objective genetic algorithm

Fen-may Liou, Chien-hui Yang, Boarliang Chen and Weichi Chen

Construction Management and Economics, 2011, vol. 29, issue 5, 535-548

Abstract: The build-operate-transfer (BOT) project is formulated based upon cooperative partnerships among various public and private parties. Win-win negotiation solutions are especially essential for parties that usually have conflicts of interests. A simulation-based multi-objective genetic algorithm (SMOGA) procedure is developed to address conflicts among the objectives of three parties: government and consumer interests that focus on users' rights and social welfare; the private investor's pursuit of profit maximization; and lenders who want to control the solvency risk of the concessionaire. Taking the Kaohsiung cable car project in Taiwan as an example, the SMOGA procedure is used to seek terms and conditions lying on or near the Pareto frontier for BOT projects with multi-objectives. Monte Carlo simulation is conducted first to determine the project risks and generate the sample data used as the input of the genetic algorithm (GA). The GA subsequently generates a number of combinations of concessional terms and conditions that approximately and simultaneously optimize the three conflicting objectives. The GA-generated approximate Pareto frontier provides a decision space of financial and concessional terms and conditions that satisfies all parties and facilitates the negotiations of BOT contracts.

Keywords: Build-operate-transfer; genetic algorithms; Monte Carlo simulation; Pareto frontier (search for similar items in EconPapers)
Date: 2011
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/01446193.2011.564196 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:conmgt:v:29:y:2011:i:5:p:535-548

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RCME20

DOI: 10.1080/01446193.2011.564196

Access Statistics for this article

Construction Management and Economics is currently edited by Will Hughes

More articles in Construction Management and Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().