IDEAS home Printed from https://ideas.repec.org/a/ers/journl/vxviiy2014i2p32-40.html
   My bibliography  Save this article

Residual Value and its Importance in Concession Agreements for Infrastructure Problems

Author

Listed:
  • Evgenios Tassopoulos
  • Sotirios Theodoropoulos

Abstract

Major and less important parameters affecting the efficiency of the Public Private Partnerships (PPPs) in Infrastructure development have been discussed and analyzed thoroughly in International research. Issues related to the Residual Value factor are under consideration recently, mainly from countries and organizations that have implemented PPPs years ago and now they have to manage risks associated with Residual Value. Efficiency in Residual Value is close related with the proper quality of the provided services by the infrastructure, ensures Value for Money and maximizes the returns on investment. The specific risk is more important to the concession projects where the infrastructure returns to the beneficial owner after the expiration of the contractual period. The paper examines the influence, importance and treatment of the Residual Value parameter in leasehold concession agreements, since this type of concessions have been analyzed less that the schemes related to Built Operate Transfer (BOT) contracts. Residual value risk and its management is an issue that should be taken into consideration from the tendering phase of the project during the optimal selection of the preferred bidder.

Suggested Citation

  • Evgenios Tassopoulos & Sotirios Theodoropoulos, 2014. "Residual Value and its Importance in Concession Agreements for Infrastructure Problems," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 32-40.
  • Handle: RePEc:ers:journl:v:xvii:y:2014:i:2:p:32-40
    as

    Download full text from publisher

    File URL: http://www.ersj.eu/repec/ers/papers/14_2_p3.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Massimo FLORIO & Silvia VIGNETTI, 2003. "Cost-benefit analysis of infrastructure projects in an enlarged European Union: an incentive-oriented approach," Departmental Working Papers 2003-13, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Grout, Paul A., 2005. "Value-for-money measurement in public-private partnerships," EIB Papers 7/2005, European Investment Bank, Economics Department.
    3. Bitsch, Florian & Buchner, Axel & Kaserer, Christoph, 2010. "Risk, return and cash flow characteristics of infrastructure fund investments," EIB Papers 4/2010, European Investment Bank, Economics Department.
    4. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 707-727.
    5. Flyvbjerg,Bent & Bruzelius,Nils & Rothengatter,Werner, 2003. "Megaprojects and Risk," Cambridge Books, Cambridge University Press, number 9780521009461, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blanc-Brude, Frederic & Goldsmith, Hugh & Valila, Timo, 2007. "Ex Ante Construction Costs In The European Road Sector: A Comparison Of Public-Private Partnerships And Traditional Public Procurement," Economic and Financial Reports 2006/1, European Investment Bank, Economics Department.
    2. Abraham Park & Chen Yu Chang, 2013. "Impacts of Construction Events on the Project Equity Value of the Channel Tunnel Project," ERES eres2013_97, European Real Estate Society (ERES).
    3. Massimo Florio & Silvia Vignetti, 2013. "The use of ex post Cost-Benefit Analysis to assess the long-term effects of Major Infrastructure Projects," Working Papers 201302, CSIL Centre for Industrial Studies.
    4. Andrea MAIRATE & Francesco ANGELINI, 2006. "Cost-benefit analysis and EU cohesion policy," Departmental Working Papers 2006-34, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    5. Harry Clarke, 2007. "Conserving Biodiversity in the Face of Climate Change," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 14(2), pages 157-170.
    6. Frédéric Blanc-Brude & Hugh Goldsmith & Timo Välilä, 2009. "A Comparison of Construction Contract Prices for Traditionally Procured Roads and Public–Private Partnerships," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 19-40, September.
    7. Oscar Gutiérrez & Francisco Ruiz-Aliseda, 2011. "Real options with unknown-date events," Annals of Finance, Springer, vol. 7(2), pages 171-198, May.
    8. Arve, Malin & Zwart, Gijsbert, 2023. "Optimal procurement and investment in new technologies under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    9. Ahsan Nawaz & Xing Su & Qaiser Mohi Ud Din & Muhammad Irslan Khalid & Muhammad Bilal & Syyed Adnan Raheel Shah, 2020. "Identification of the H&S (Health and Safety Factors) Involved in Infrastructure Projects in Developing Countries-A Sequential Mixed Method Approach of OLMT-Project," IJERPH, MDPI, vol. 17(2), pages 1-18, January.
    10. Tan Wang & Tony S. Wirjanto, 2016. "Risk Aversion, Uncertainty, Unemployment Insurance Benefit and Duration of "Wait" Unemployment," Annals of Economics and Finance, Society for AEF, vol. 17(1), pages 1-34, May.
    11. Song, Dandan & Wang, Huamao & Yang, Zhaojun, 2014. "Learning, pricing, timing and hedging of the option to invest for perpetual cash flows with idiosyncratic risk," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 1-11.
    12. Cantarelli, C.C. & Flyvbjerg, B. & Buhl, S.L., 2012. "Geographical variation in project cost performance: the Netherlands versus worldwide," Journal of Transport Geography, Elsevier, vol. 24(C), pages 324-331.
    13. Gabriel J Power & Charli D. Tandja M. & Josée Bastien & Philippe Grégoire, 2015. "Measuring infrastructure investment option value," Journal of Risk Finance, Emerald Group Publishing, vol. 16(1), pages 49-72, January.
    14. Lotfaliei, Babak, 2018. "Zero leverage and the value in waiting to have debt," Journal of Banking & Finance, Elsevier, vol. 97(C), pages 335-349.
    15. Alan Carruth & Andy Dickerson & Andrew Henley, 2000. "What do We Know About Investment Under Uncertainty?," Journal of Economic Surveys, Wiley Blackwell, vol. 14(2), pages 119-154, April.
    16. Wong, Kit Pong, 2008. "Does market demand volatility facilitate collusion?," Economic Modelling, Elsevier, vol. 25(4), pages 696-703, July.
    17. John P. Small & Henry Ergas, 1999. "The Rental Cost of Sunk and Regulated Capital," Econometrics Working Papers 9908, Department of Economics, University of Victoria.
    18. Miao, Jianjun & Wang, Neng, 2007. "Investment, consumption, and hedging under incomplete markets," Journal of Financial Economics, Elsevier, vol. 86(3), pages 608-642, December.
    19. Zhao, Na, 2019. "Managing interactive collaborative mega project supply chains under infectious risks," International Journal of Production Economics, Elsevier, vol. 218(C), pages 275-286.
    20. Lund, Diderik, 2006. "Valuation, leverage and the cost of capital in the case of depreciable assets," Working Papers 03-2003, Copenhagen Business School, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:journl:v:xvii:y:2014:i:2:p:32-40. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ersj.eu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.