BOT Thesis
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This paper is an addition to a thesis that examines the build-operate-transfer BOT method ...... More...
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Paper Abstract:
This paper is an addition to a thesis that examines the build-operate-transfer (BOT) method of building infrastructure as it is used in Kuwait from a qualitative perspective. Questionnaires were administered to a number of individuals in Kuwait using purposive sampling methods. Problems associated with BOT such as wasta, corruption, and unfair bidding practices are among the issues discussed in this thesis. The use of BOT for building the economies of developing nations and transforming them into developed nations is discussed, as are a variety of other issues identified by questionnaire respondents.
Paper Introduction:
Build-Operate-Transfer for Infrastructure Improvement in Developing NationsTable of Contents Introduction Overview Problem Definition Research Objectives Research Questions Research Methodology Data Analysis Method Thesis Structure Literature Review Introduction Structure of BOT Advantages and Disadvantages of BOT Two Cases Why Kuwait Should Use BOT Literature Gap Questionnaire References Chapter One Introduction OverviewOne of the most critical needs for developing nations is the creation ofbasic infrastructure such as electricity paved roadways highways bridges potable water telecommunications and other amenities that arevital to establishing and sustaining
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17. For example, corruption was cited in the responses to numerousquestions, as was the related issues of wasta and bidding unfairness. This would facilitategreater transparency, as many have suggested, as well as ongoing monitoringof the projects. Al-Nisef points outthat this "it happened although these billions were enough to transform ourarid desert into developed populated areas capable of luring the foreigntourists into the country" when he was asked about the Kuwaiti Dinnaroutflow (Taleb, n.d.).This Moreover, this terrible track record for BOT projects has led to anincreased awareness of the risks among potential investors, and thus"financial institutions are now realizing the risk involved could lead tocatastrophic results and are therefore hesitant to issue loans" (Al-Hamad,2 7). For example, BOT canattract investors, but investors will not spend money unless they see thatthe investment is not risky.Others credited BOT with solely positive results. An interpretation of thefindings will be provided. Thegovernment appointed a ministerial committee to conduct a review of BOTprojects that four government bodies had granted to the private sector,those bodies being the Public Authority for Industry, the Public CustomsDeparment, the Touristic Enterprises Company, and the Finance Ministry(Curran, 2 8). The authors define wasta simply as "connections, pull" (Pipes, 1994). One respondent warned that all agreement documentsshould be reviewed for legal issues, and another cautioned, "Know yoursponsors & their intentions." Another pointed out that BOT incurs hightransaction costs and that "BOT projects are successful only whensubstantial revenues are generated during the operation phase." Finally,as one respondent noted, "Heavy reliance on BOT may be counterproductive toa developing nation due to the fact that BOT contracts are stand-alone."Question 15: What is your opinion of the current state of Kuwait'sinfrastructure development, including water treatment plants, highways,bridges, railroad plans, houses, and hospitals?Respondents were virtually unanimous in their opinion that Kuwait'sinfrastructure development is not what it should be. . Since the objective of administering thequestionnaires was not to see whether respondents agreed with each other ornot or to ascertain how much respondents influenced each other's opinions,the group format was eschewed in favour of a one-on-one approach thatallowed each individual to respond to the questions without any pressure toconform or not conform to a group.3.6 DATA ANALYSIS METHODSThe data was analyzed to identify any emergent themes and to see whetherthe patterns identified support or refute the paper's proposition. Other advantages include the reduced timeto construct an infrastructure and the monetary returns that are ensured bysuch investment (Buenavente, 2 8). The questionnaireemployed in the study consisted of 21 questions about BOT in the context ofKuwait, and they were essay-type questions designed to elicit theindividual opinions of the respondents rather than questions that could beanswered with a simple "yes" or "no." These questions addressed the issuesassociated with BOT to ascertain what changes should be made in the BOTprocess to produce success in BOT projects and what factors weresignificant in a successful BOT deployment. 8. In the first question, for example, two of the responses mentionedthe term "wasta," so it was possible to categorize those two responses intoa category of their own. It must be noted, however, that individuals from the non-BOTgroup had a higher than expected level of knowledge about BOT consideringthat they were not directly involved with BOT projects. Given the remarkable and numerous advantagesof BOT in numerous infrastructure projects, it was clear that when usedeffectively, BOT was an outstanding approach. 14. This hypothesis is based upon the fact that developing nationsseldom have the funds necessary to execute large-scale infrastructureprojects, particularly in the beginning. As thisexample illustrates, BOT projects not only help a developing nation achievea healthier economy, they also provide internal stability as skilledworkers are less likely to transfer abroad. In addition, theThird Kuwait Master Plan, KMP3, provides a framework that could be adheredto, as it will continue to lead Kuwait's development until the year 2 3 .Another respondent acknowledged that "Bridging from a developing to adeveloped country would require that a country achieve a significant degreeof industrialization, such as manufacturing, refining, and processing ofraw materials into finished or consumable goods."An increase in the "know-how of the process of BOT" was recommended, andthe encouragement of "idea generation" through copyright protection "topromote creativity" was advised. One respondent adviseddeveloping nations to adapt to the developed countries' style whenimplementing their BOT projects as a means of saving time and eliminating"trial & error efforts." Another respondent recommended "a visibility planfor each project," noting that "BOT projects involves many partiesincluding the government its self, private sector, financiers, equityinvestors, contractors, sub-contactors," creating risk for all the parties. [My understanding is that questionnaires are qualitative] This research isnot intended to establish the typical quantitative boundaries of BOT butrather to improve its quality and determine how it can be used moreeffectively to help Kuwait and the developing Gulf nations grow theireconomy while improving their infrastructure.1.7 Thesis StructureThe thesis will begin in the first section with an introduction thatprovides a brief overview of BOT, including definitions and its varioustypes, followed by the definition of the problem and the researchobjectives. Even therecommendations made to developing countries were an outgrowth of theissues that respondents saw in Kuwait's BOT process. Al-Mubarak (2 5) asserts that"BOT projects are successful only when substantial revenues are generatedduring the operation phase." Another disadvantage in BOT is that thetendered projects are deferred instead of being addressed, resulting inthose problems being transferred to the end-owner (Terengganu, 1999).Moreover, even projects that are turned over to the end-owner in excellentcondition run the risk of breaking down if the ongoing maintenance ispoorly executed (Terengganu, 1999). One response cited an "equal opportunity for all investors," while another commented that Kuwait's banking system is incapable of accommodating too many large-scale loans. This respondent suggested clarification of "legal and agreement issues andpolicies" to minimize or prevent such risks.Question 1 : If a developing country such as Kuwait has used BOT to improveits infrastructure, how can it bridge from a DEVELOPING to a DEVELOPEDcountry? The BOT approach benefitsinvesting nations, as well, since they can keep their own workforce in-house by migrant workers and find good investment opportunities in BOTprojects. One suchunit evident in the answers to Question 1 was the concept of properbusiness procedure, as evidenced in comments regarding the use of "properbusiness plans," "control and delivery issues," and the need to "identifyand prioritise the projects." The recognition of relationships is anotherform of response analysis. Although"BOT has been available for almost 4 years in Kuwait, unfortunately onlyten projects have ever been executed," and in the 199 s, 6 of the 12 BOTcontracts approved by the Ministry of Finance were later cancelled forviolations (Al-Hamad, 2 7). Taking into consideration the BOT projects in this region (Middle East), what issues do you think that need to be considered if BOT is re-introduced in Kuwait? The research questions will be provided and the researchmethodology will be described. In addition, Kuwaitshould review and learn from other Middle Eastern attempts in implementingBOT projects to develop their infrastructure, with successful and failureresults. What can be done to improve the handling of BOT-InfrastructureBOT infrastructure projects so that they can be reinstated in Kuwait and executed successfully there and in other Gulf States? For example, "availability of experts" and"transfer of training" as noted in two different questionnaire responses toQuestion 1 bear a relationship to one another, and relationships such asthese help to identify the structure of the BOT situation, showing howdifferent issues and concepts affect each other. The $131billion development plant will provide "open access scientific andtechnological databases...[to] be set up to provide reliable reference datafor technical problem-solving, research and development" (Sawahel, 2 8).The Middle East Economic Digest, MEED, estimates that over the next 1 years, Kuwait will need to increase its power generation infrastructure ata cost of $3.6 billion to install 5, megawatts of generating capacityover and above the 6,9 watts already available ("Kuwait," 2 8).Likewise, Fari Al-Khidhri, board chairman of Al-Mutakhasses Real Estate,"has called upon relevant authorities to plan up-gradation of nationalinfrastructure to boost construction, capitalizing on the currentlyavailable financial resources" ("Latest Kuwait News"). Onerespondent noted that in certain cases where BOT projects are uncommon,"some employees get fired once the project gets transferred to thegovernment," thus signalling the need for good planning and coordinationbetween the government and the private sector.Some issues have both and up side and a down side. Labor shortages are forecast, aswell, because although BMI values the construction industry at KWD .63billion (US$2.19 billion) in 2 12-1.97% of the GDP-the rapid developmentpace could cause raw material prices to rise and result in labor shortages("Kuwait: Transport and Communications," 2 8). An advantage to the owner is that there is little owner involvementneeded in a BOT project, and there are ways to reduce the time tocompletion by coordinating or overlapping design and construction(Jalaluddin, n.d.).On the other hand, BOT projects are not without its disadvantages. you should use your own language and opinion in the interpretation of the results, of course with the support of the literature. There is a need to ascertain whether your findings are in conformity or contradiction with the extant literature and give further explanation why this is so.4.2 Discussion and Analysis Analysis of the findings shows that many of the issues brought up byrespondents in answer to specific questions were brought up repeatedly byother respondents in answer to different questions. In some countries,such as the United States, DBFO arrangements exist in a wide variety, withdiffrent degrees of financial responsibility actually being transferred tothe private sector ("Innovative Finance," 2 7).The BOO model is one in which "a private company is granted the right todevelop, finance, design, build, own, operate, and maintain atransportation project, owning the project outright and retaining theoperating revenue risk and all of the surplus operating revenue"("Innovative Finance," 2 7). I guess this is your main argument through out the thesis.Chapter 2: Literature Review2.1. What is your impression toward BOT as an approach for helping a nation aggressively compete in the global economy? The loan is "the largest ever Kuwaiti Dinar loan transaction andrepresents an 85:15 debt to equity ratio" ("Sulaibiya WastewaterTreatment," 2 8). 2. 14. This question prompted a wide variety of responses that provided excellent insight into the issues surrounding the use of BOT in Kuwait. What else do they need to know beforedeciding to use BOT?The responses to this question centered on the right use of BOT at theright stage of a country's development. This givesthe nation many years in which to raise the money while the infrastructureis already being built and providing added revenues.The second hypothesis is that using BOT in a developing nation gives it ahead start that allows it to catch up with developed nations faster andbegin growing sooner. Another risk is that the BOT vendors willraise their prices to the investor (Buenavente, 2 8). 6. The final response called for cooperation among all parties, to include the mode of financing for BOT projects. BOT providesan option that allows nations without adequate funding to go ahead andbuild the needed infrastructures up front through private investors'funding and allow the improved infrastructure to pay for itself inoperation.BOT projects promote a healthy economy for the nations that build theirinfrastructure using the BOT process. It is also about benchmarking your results with respect to the results and the finding from the other literatures. Why?Responses to this were divided. The answers to this question fell more neatly into themes than those for Question 1. The operation phase is farmore complex than simply turning on a switch and watching theinfrastructure function. This study points up the valueof bringing in highly skilled contractors along with private investors, aswell as the advantage to investors of building a high-qualityinfrastructure from the start. How can BOT be a powerful tool to help developing economies around the world? "Transparency in bidding" was mentioned again by several respondents. Another suggested "an independent institution" thatwould "regulate and provide oversight between government officials andprivate investors." Still another recommended that BOT projects should behandled "by a professional team, which is well experienced with theimplementation and the feasibility of such projects." These responsesevidenced a trend toward the development of an intermediary of sortsbetween government and BOT developers. While the literature describes projects that have led to suchconsequences, it does not serve as a primer or offer guidelines for doingso. Please add any negative consequences as well, if any. 22. The Telecom Asia communicationnetwork in Thailand is an example of BTO (Al-Mubarak, 2 3). 2.File.v1.1>.Wilmot, A, n.d., 'Designing sampling strategies for qualitative social research: with particular reference to the Office for National Statistics' Qualitative Respondent Register,' viewed 17 December 2 8, . 9. Another labeled the infrastructure "unsatisfactory byall means."Question 16: What additional BOT (infrastructure-concentrated) projects doyou think should be initiated in Kuwait that are not already planned?Respondents offered numerous ideas for new BOT projects in Kuwait, but mostconcerned the transportation infrastructure, and the one suggested mostoften was railway/subway development. People andprocesses must also be transferred to the end-owner ("Build, Operate,Transfer (BOT) Model," 2 5).[pic]Figure 2.2 the Complete BOT Model is SPBOTSource: "Build, Operate, Transfer (BOT) Model," 2 52.3. Disadvantages of BOTinclude the scale of BOT projects; BOT is designed for large-scale projectsand is unsuitable for smaller projects as it would not provide a financialadvantage (Shafi, 2 6). The research has investigated the problemsinherent in BOT, how the BOT process might be improved, and how it could bemade less risky for investors. This is possible because the developer bears theinitial cost of development. Why? . Since theprivate sector makes a direct investment in the infrastructure development,public debt is reduced and budget deficits can be easily balanced (Al-Mubarak, 2 3). Forexample, several respondents mentioned the fairness of the bidding processin their answers to the first question, but some talked about it in termsof fair bidding, while others referred to it from the negative side assimply "corruption," and one of the respondents framed it in terms ofproviding a fair opportunity to all investors. A fewrespondents failed to indicate their profession, so this aspect of theresponses cannot be evaluated fully.The sampling method used is purposive sampling of the criterion category.The individuals chosen to receive the questionnaire fulfilled one of twocriteria-either they were involved with BOT in some way or they were simplymembers of the general population with no special BOT expertise. Advantages and Disadvantages of BOT 182.4 Two Cases 2 2.5 Why Kuwait Should Use BOT 222.6 Literature Gap 23Questionnaire 25References 3 Chapter One1. Cunningham and Yasin K. Amid the positiveresponses, there was a negative one that indicated that if local labor werenot used for BOT projects, it could have a detrimental effect on the localeconomy and a response indicating that it would not have a major effect.Question 18: Are there positive effects of using BOT in any society? Anotherrespondent highlighted the importance of relationships. By 1993, "private investment in that country'stelephone system had increased by U.S.$1.1 billion and 85 , new andreplacement lines had been installed" (Levy, 1996). BOT was noted to be contraindicated where therewas no experience in developing rules and where there is no way ofcontrolling quality and equal opportunity.Question 14: What warnings would you offer to developing nations intentupon using BOT?Responses here covered the gamut of problems brought out in previousquestions, such as corruption, favouritism, transparency in the selectionprocess, poor regulation of governing bodies, bureaucratization and redtape, introduction of BOT at the right time, prioritization, and knowledgeof associated risks. The results wereoverwhelmingly in favour of the reintroduction of BOT in Kuwait, with onlytwo respondents giving a negative answer. 2 . . The committee will review and issual approvals as well as beingresponsible for setting BOT policy and administering a sub-committee taskedwith coordinating the technical aspects of all reviews (Curran, 2 8).Under the new law, BOT projects are limited to a lifespan of 3 years,after which "they must be handed back to the State 'without anyconsideration and compensation'" (Curran, 2 8). The study notes that it requires small-scale operatorsto spend "a significant proportion of their investment" on backing up theiroperations, as a result (Adenikinju, 2 5). What issues have surfaced in previous BOT projects that should be addressed before BOT is reintroduced in Kuwait? The plantprocesses 375, m3 input per day and 311,25 m3 output per day, at awater recovery efficiency of 83% overall and has a future expansion designpotential of 6 , m3 per day input feed ("Sulaibiya WastewaterTreatment," 2 8). With BOT, littlecapital needs to be raised to start a project; it is paid for at the end,often after it is already operational and generating revenue. The research willinvestigate how the BOT process can be improved to eliminate the issuesthat have plagued BOT in the past and how the BOT process can be made lessrisky for developers and investors.3.3 RESEARCH OBJECTIVEThe objective of the research was to discover the issues that were found tobe involved in the successful use of BOT and to determine how best todeploy it in Kuwait.3.4 METHODOLOGICAL FRAMEWORKThe methodological framework is qualitative and will be implemented throughthe use of questionnaires administered to 22 individuals, half of whom holdpositions of some expertise related to BOT and the other half of whom aremembers of the general population. This development signals the bursting of the gasprice bubble and heralds dramatic changes in the current roller-coastereconomy that suggest that Kuwait and the other Middle Eastern countriesneed to prepare for heavy fluctuations in gas prices rather than relying onprices to remain high.One way of overcoming the infrastructure funding challenge is to employ theBuild-Operate-Transfer, or "BOT," arrangement, in which private financiers"build the system, operate and receive a percentage of the revenues for aspecified period, and then turn it over to the government" (Hudson, n.d.).The BOT approach "is an option for the government to outsource publicprojects to the private sector," with the private sector designing,financing, constructing and operating the facility and then after "aspecified concession period," transferring ownership of it to thegovernment (Menheere & Pollalis, 1996).The term "BOT" is attributed to Turgut Ozal, who served as the PrimeMinister of Turkey in the 198 s and who "saw the value of the build,operate, transfer project as a way to propel his country into the twenty-first century" (Levy, 1996). Most respondents had a positive impression of BOT in this regard. In this initial stage, the project office should be setup and projected costs should be carefully thought out. The reason forthis was that the subjects' emotions and behavioural reactions were notgermane to the subject as they might be in an ethnographic study in whichobservation is used to determine how an individual is feeling andresponding to a situation based on how he behaves. In a country where all ofthe major infrastructures are strong, their combined support of one anotheradds another dimension of strength to the economy as a whole, while theweakness of one infrastructure can likewise weaken others. An increase in living standards, including freedoms and qualityof life, as well as education, were factors noted by respondents. These arguments are based onseveral propositions that will be investigated in the literature review: . The literaturewould be enlarged by an article that develops a convincing argument on thissubject and supports it with research. Some asserted the BOT failed because therewas no competitive environment, and in some cases the infrastructurepromised was not delivered. The development of an open economy wasanother factor mentioned as bridging to a developed nation. The new law forbids government bodiesfrom entering into a BOT agreement involving land owned by the statewithout first gaining the approval of a new "supreme committee" chaired bythe Minister of Finance and including other ministers such as the Ministerof Public Works and te Minister of Municipality, as well as senioradministrators such as the head ofthe environmental authority (Curran,2 8). However, the questionnaire questions wereconstructed in such a manner that respondents were free to answer byincluding as much relevant information as they chose at whatever lengththey wanted to respond, so while they were not prompted to write more, theywere free to write as much as they chose.A group format was not used for administering the questionnaires becausethis might have skewed the results. Encourage foreign investment, which in reality is BOT." One individual deemed BOT "a very useful approach" but cautioned that it should be "adjusted for greater benefit." In general, respondents favoured BOT as long as its problems were addressed. The first hypothesis is that BOT is anexcellent way of helping developing nations develop their infrastructurequickly. Be specific on the numbers of questionnaires distributedand the responses. In the former USSR, he points out, farmers were able to producegrain harvests but still had to buy large amounts of grain from the UnitedStates because Russia's inadequate storage facilities and poor transportoptions caused most of the Russian grain to rot before it could betransported to consumer markets (Levy, 1996). No effort to make recordings of theconversation between the author administering the questionnaire and therespondents taking the questionnaire was made, nor was verbal or non-verbalbehaviour recorded for analysis. However,since the respondents' answers relate to the questionnaire as given, itwill not be changed in the present study. These included failure of cooperation between thelegislative and executive branches of the government, when the governmentrecognizes an inability to "fully control the process," and when thegovernment lacks sufficient knowledge to implement BOT successfully, theseare warning signals that should initiate an end to BOT.Some respondents, however, viewed warning signs as just a signal thatsomething should be changed rather than as a sign that BOT should bestopped. Other than projects requiringthis type of close control, BOT projects and all their variations are aviable option.This paper deals for the most part with the build-operate-transfer BOTmodel, especially for infrastructure projects. Why should Kuwait consider its use of BOT-InfrastructureBOT infrastructure?What should Kuwait do to promote the use of BOT projects? In addition, BOT "combinesresponsibility for usually disparate functions-design, construction, andmaintenance-under a single entity," which causes efficiencies and economiesof scale ("PPO Options," n.d.). 3. To achieve a successfully executed BOT project in Kuwait, what do you think can be done to improve the handling of BOT? Are there negative effects of using BOT in any society? Your questionnaire is not of a survey format but ratherof an interview format, you need to address this anomaly. Third, the government's managementof BOT has been less than effective, and the new BOT law imposes a 3 -yearlimit on BOT projects regardless of size or complexity, a stipulation thatcould backfire by resulting in hasty, low-quality work-particularly sincethe penalty for not meeting the scheduled deadline is excessively severe-the turning over of the entire project and all payment to the government.The major research question, "How can the use of the BOT infrastructurefollowing the passage of the new BOT law in Kuwait be improved to eliminatethe issues that have plagued BOT in the past and make the BOT process lessrisky for developers and investors?" was amply answered by thequestionnaire respondents, who provided a variety of suggestions andobservations that address the problems that have plagued Kuwait's BOTprocess in the past. The complete questionnaire administeredto the respondents follows.QuestionnaireName (Optional):Degree:Current Employer:Position:Field of work:Total Working Experience:Your involvement in BOT projects:______________________________________________________________________________ 1. In any transfer from one entity-especially an outside or foreign entity-to another, there is always sometype of culture shock, as well. Why? . 16. Cooperation between government and and BOT parties was a key issue, as was the "formulation and implementation of regulation" to ensure the investor's "consistent performance." "Visibility," "trust," and "accountability" between government and BOT parties were important issues, and "credibility" was the stated result in one response, which was also implied in others. Please add any negative consequences as well, if any. In addition, someproblems with BOT were merely issues of degree, such as the level offunding derived from taxpayer money and the relative level of developmentcommitted to non-basic infrastructures to the neglect of the basic ones.Few people would begrudge an occasional shopping mall as long as there wereadequate housing, roadways, parking, and railways, but a shopping malldevelopment erected instead of those basic infrastructures smacks ofirresponsibility.There was much discussion of corruption, wasta, and other wrongdoing,suggesting that ethics is vitally important to Kuwaitis. 1 . Dr.Ibrahim Al-Ghusain, director of product development for Al-KharafiNational, a BOT developer specializing in petroleum, chemical, and powerprojects for both the commercial and industrial sectors, including schools,hospitals, airports, water treatment and distribution networks, operationand maintenance, and facilities management, explained the benefits ofpublic-private partnerships, saying, "The owner gets quality service whilethe private sector may be more efficient and will provide better qualityservice and faster service" (Al-Khaled, 'Karafi National,' 2 8). Introduction 21.1 Overview 21.2 Problem Definition 71.3 Research Objectives 81.4 Research Questions 91.5 Research Methodology 91.6 Data Analysis Method 1 1.7 Thesis Structure 1 2. IntroductionOne of the key factors that differentiates a developing from a developednation is infrastructure. This issue is hinted at in another response that opines that BOT projects should "not become a financial burden on residents," suggesting that rather than prioritizing and choosing projects based on need and available funding, the government may be choosing them based on other criteria and then forcing the citizenry to pay for them. Recently,however, the private sector has come onto the scene to lend its support togovernments in the building of large-scale infrastructure projects, mostnotably in Asia and the developing world ("Infrastructure and PrivateParticipation," n.d.). BOT projects can also create jobs and businessopportunities in the local area's private sector, as well as "facilitatingtransfer of technology by introducing international contracts in the hostcountries" (Al-Mubarak, 2 3). After carryingwater from a stream for their morning shower, catching a chicken to killand battle for food, pulling a wagon on foot to the city to trade theirgoods, and communicating by letter, there is little energy left for higherpursuits. In the planningstage, the entire project should be planned in details, including thefinances, risk management, communications, resources, and quality ("Build,Operate, Transfer (BOT) Model," 2 5). UDC is projected to receive more than $2 billion in revenues over theperiod of the contract ("Sulaibiya Wastewater Treatment," 2 8). What additional BOT (infrastructure concentrated) projects do you think should be initiated in Kuwait that are not already planned? The lower costresults from faster development time and higher quality development thatresults in fewer needs to redo a project or fix problems. The design-bid-build model is at the far left end of the model,denoting that it embodies the greatest amount of public responsibility,while the build-own-operate, or BOO, model is at the far right end of themodel, signifying that it represents the greatest amount of privateresponsibility ("Innovative Finance," 2 7).[pic]1.1.2 - Public-Private Partnership Options, Source - "Innovative Finance,"2 7BOT/DBOM or "turnkey procurement," is an integrated partnership that mergesthe design and construction responsibilities of design-build procurementswith operations and maintenance, so that design, construction, andoperation of a group of assets can be transferred to a private sectorpartner.BOT "helps reduce the pressure on government finances and also brings inprivate sector efficiency to a project through its various phases" (Dahel,1997). However, the fact that BOTprojects could go badly-especially given the fact that BOT was prohibitedin Kuwait for a period of two years-pointed up the contrast between whatBOT can be when implemented correctly and what it can sink to whenimplemented poorly. Question 2: In BOT projects, what factors would lead to maximum success? A third acknowledged that BOT is "not suitablefor smaller projects," and a fourth added "when it is subjective" andgeared toward profiting individuals rather than contributing to thecommunity and the country. 7. Infrastructure is invaluable in anyeconomy, because it not only provides comfort and convenience but the speedand access to information necessary to compete in the global arena. Al-Ghusain noted that "people wonder about the government of Kuwait, which canafford to build infrastructure projects by itself and they question why itcontracts BOT projects" (Al-Khaled, 'Karafi National,' 2 8). Al-Khidri's reportstates that several state departments including the Ministry of Planning,Oil, Public Authority for Housing Care, and the Kuwait Municipality, needto "join hands to work out joint plans for enchancement of infrastructure,housing and property sectors" ("Latest Kuwait News"). There isno literature directed at explaining how a developing nation can implementBOT specifically to improve its infrastructure and achieve a healthyeconomy. (LINK TO KUWAIT) Kuwait as a developed nation needsthis type of modern telecommunications infrastructure if it hopes toachieve sustained economic growth and compete in the advanced technologicalglobal environment along with the EU and the United States. Suraisry identified the Landbridge project as "partof Saudi Arabia's privatisation strategy, the objectives of which includegenerating economic benefits through effective private sector participationin the national economy, creating employment opportunities andrationalising public expenditure" ("Landbridge," 2 5). Moreover, "Europe also hopes that healthyeconomies in countries such as Tunisia will stem the flow of immigrationinto the EU-more jobs will tempt North Africans to stay at home rather thanlook for work in Fortress Europe" ("Looking North," 1996). In the modernize-own-operate-transfer, or MOOT,model, an existing facility is modernized, owned, and operated prior to thetransfer (Badawi, 2 3). Even where a nation's government can afford thecost of infrastructure development such as Kuwait's government can, itoften chooses to contract with highly skilled private developers whose workis superior to that of government workers. First, the selection process was fraught with issues ofcorruption, unfairness, and favouritism, which led to less reliable andknowledgeable parties being awarded the projects. In a BOT project, thedeveloper bears the initial cost, and after the infrastructure is alreadyproviding financial gains, the nation then pays the developer. Some respondents noted that Kuwait'sinfrastructure was better in the past, with one person terming it "thepearl of the Gulf" during the 197 s and 198 s. From a larger standpoint, the issue of aligning public and private interests was noted by one respondent, and "the presence of competition" again reflects a tacit acknowledgment that wasta precludes legitimate competition. What else must developing country do besides using BOT? At what point, if any, do you feel Kuwait should no longer consider BOT? Kuwait could benefit from infrastructure improvements, as theKuwait Infrastructure Report (2 8) states that "The Kuwaiti infrastructuresector has its share of drawbacks." Although it has a good road transportsystem, the Kuwait City area is congested during work hours, and its urbansprawl and dearth of mass transit alternatives are creating a trafficproblem ("Kuwait: Transport and Communications," 2 8). In other words the missing projects that you refer above can be done on a commercial basis without re-course to BOT.[See additions to 2.3]You have not clearly identified the potential problems associated with BOT, especially in Kuwait, which need to be addressed if BOT is to be successful and these should also form the basis of your questionnaire.[See additions to 2.5].My earlier comments have still not been addressed.[What are the earlier comments that have not been addressed?]CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY3.1 INTRODUCTIONThis research will examine the use of BOT in Kuwait and the Middle East,exploring the reintroduction of BOT in the area and identifying the factorsthat make BOT successful or unsuccessful, as well as the advantages anddisadvantages of BOT.3.2 PROBLEM STATEMENTThe problem that the research will address is: The use of BOT for buildinginfrastructure in Kuwait has been very limited despite the multiple reasonsthat Kuwait would benefit from the use of BOT. 21. Introduction1.1 OverviewOne of the most critical needs for developing nations is the creation ofbasic infrastructure such as electricity, paved roadways, highways,bridges, potable water, telecommunications, and other amenities that arevital to establishing and sustaining a healthy economy in the modern world. Here is where BOT provides an advantage. Since Kuwait's BOT initiativesfailed in the past, it would be helpful to identify what went wrong and howKuwait should change its approach from the way it handled BOT before.Kuwait should not re-introduce BOT until it has done this and shouldcarefully evaluate its former approach before developing a new one intendedto resolve those issues and ensure a better result. The table makes clear the fact that the Middle Eastis well behind all other regions in privately funded infrastructuredevelopment, with the only exception of Sub-Saharan Africa ("Infrastructureand Private Participation," n.d.). What are the positive consequences have you seen from BOT around the world? . We aregoing to be hit by inflation...Definitely there will have to be acorrection...Nobody can sustain such high prices, whether it is the $1 agallon in Europe or $5 and $6 in the USA-it is not sustainable" (Al-Khaled,2 8). However, those that answered the question emphasizedbetter communication between state officials and private investors and aBOT governing body for oversight. Advantages and Disadvantages of BOTThese examples demonstrate that BOT has much to recommend in thedevelopment of basic infrastructures in developing nations and that theseinfrastructures are necessary to support and grow a healthy economy. Section 3 will detail the research design andmethodology, including the methodological framework to be followed. How can BOT be a powerful tool to help developing economies around the world? What are the positive consequences you have seen from BOT around the world? What are the steps should a developing nation strongly follows if it wants to use BOT to improve its infrastructure and its economy? Another stated, "BOT seems to be a very practicalway of financing and operating major/critical projects that relievesgovernments' budgets, especially when they are short on cash." Onerespondent noted that BOT projects are positive where areas areagriculturally underdeveloped and the government partners with companies todevelop "efficient irrigation systems that will allow local farmers to growtheir business and plant crops more effectively." On the negative side, afew issues were noted-reduction of local domestic industries and problemsrelated to mismanagement were cited.Question 9: What are the steps that a developing nation should follow if itwants to use BOT to improve its infrastructure and its economy?Few respondents answered this question with a list of steps to be followedin succeeding order. This simplifiedstructure is not all there is to the BOT life cycle, however. One respondent discussed the Failaka bridge as a way ofexpanding Kuwait's tourism by building resorts. The questionnaires will solicit therespondents' opinions on the use of BOT, how it should be implemented, howit can be improved, and what positive effects it can have, as well as onother aspects of BOT use.3.4.1 Major Research QuestionThe major research question is "How can the use of the BOT infrastructurefollowing the passage of the new BOT law in Kuwait be improved to eliminatethe issues that have plagued BOT in the past and make the BOT process lessrisky for developers and investors?" This question was reached through areview of the literature, which detailed the suspension of BOT in Kuwaitand the subsequent reintroduction of BOT two years later, as well as themany advantages of BOT as evidenced by its use in countries in the MiddleEast and around the world. The contract was awarded by the Ministry of PublicWorks to the Utilities Development Company, UDC, and Ionics, with a 3 -yearconcession period consisting of 3 months of design and build and 27.5years of operation and management ("Sulaibiya Wastewater Treatment," 2 8). [Omit] 4. Those capabilities are keyto a healthier economy because they can be leveraged to engage inactivities that make money and/or enable workers to subsist so that theycan make money.The fourth and final hypothesis is that the use of BOT in Kuwait should befurther developed to enhance its success and promote its use. Could it be that BOT has been suspended in Kuwait andyou are arguing for a continued case for the use of BOT? The project design can be easily tailoredto fit the types of construction equipment and materials that will beutilized, and since the BOT team must set up a long-term maintenanceprogram and estimate associated costs at the beginning of the project, theycan anticipate and address needs as they occur, facilitating maintenance,lowering costs, and reducing the risk of overlooking issues that could growinto more complicated problems ("PPP Options," n.d.). Because many of the respondents had timeconstraints, the use of face-to-face interviews with probing, repetition,and elucidation was not used, although this would have been preferable asit would have enabled some respondents to answer questions that they didnot know how to answer and might have encouraged others to respond toquestions that they left blank. This response refers to but does not cite the new BOT law restricting all BOT projects to 2 years. BOT projects in Kuwait could be accomplished withoutrecourse to BOT, but they would not be accomplished as cost-efficiently,and so would end up costing more over the term of the project. How is thisimpoverished worker to gain an improved infrastructure? al al-Bu??th al- ?Arab?yah, (Eds.), Arab Business: The Globalisation Imperative, Kogan Page Publishers, London, U.K., viewed 1 September 2 8, .Pipes, D 1994, Wasta: the Hidden Force in Middle Eastern Society, by Robert B. Why? One respondent affirmed thatBOT could only stop "when the Governmetn has within its capacity theability to develop the infrastructure and the community on its own, whichis not the model that any Government should move towards." Anotherindicated that BOT commissions "help bring specialized design firms, mostimportantly in the railway and transportation projects in general."Thus, overall, the opinion toward BOT is favourable in that most felt itshould not be stopped, but some noted problems that should be resolved.The benefits of BOT are perceived to outweigh its weaknesses, and many weremore interested in fixing BOT's problems than in just abandoning thepractice.23. The other 5 % of the data will be collectedfrom the same questionnaire that will be sent to various developers,expertise and real estate personnel in the region The purpose of gaininginput from a varied group of people with different experience on BOT is toobtain a realistic perspective on the BOT process as well as some ideas forimproving it that might not have been conceived before by those thoroughlyfamiliar with BOT. His village cancontract with a private investor that provides the funding forinfrastructure development and then turns the infrastructure over to thevillage at completion for ongoing operation.Traditionally, it has been the public sector that funded infrastructureinvestment within nations, aided by a few multilateral agencies such as theWorld Bank ("Infrastructure and Private Participation," n.d.). This enables it to catch up with developed nationsfaster because it does not have to wait until it can fully afford to buildinfrastructure.The third hypothesis is that BOT leads to a healthier economy in adeveloping nation because infrastructure is essential to support adeveloping economy. A BOT project andthe first of its size funded solely by domestic banks, the project's totalcost was KD13 million ($43 million), with a KD114.25 million ($377million) loan extending over 25 years ("Sulaibiya Wastewater Treatment,"2 8). Arethere negative effects of using BOT in any society?Respondents identified both positive and negative effects of using BOT inany society, i.e., these effects were not just pertinent to Kuwait. What isimportant is to learn from the lessons and build on them. It iswell known that the culture in any country is a powerful force affecting agamut of issues and that some of these cultural adaptations are so embeddedin the culture that they are difficult to circumvent or change. Eithereventuality skews the response. A few respondents feltthat the infrastructure was both good and bad or good but moving backwarddue to poor upkeep. The rail networkwill connect the three largest ports in Saudi Arabia-Jeddah Islamic Port inthe west, Riyadh's Dry port, and Dammam's King Abdul Aziz Port in the east,which handle 2.4 million, .25 million, and .75 million twenty-footequivalent units each, respectively ("Landbridge," 2 5). 15. While thenew BOT law enables the use of BOT again in Kuwait, it also imposes strictlimitations on its use in an effort to prevent irregularities, scheduleoverruns, and other problems that existed prior to the suspension of BOT.It would be advantageous for Kuwait to enhance its use of BOT by developingbetter BOT frameworks and guidelines, specially designed projectapproaches, and other mechanisms for improving the use of BOT so that withor without government limitations, the BOT approach is more effective.This will not only encourage BOT developers to undertake BOT projects butwill also encourage BOT customers to use the BOT approach as one that hasbeen streamlined and made more reliable so that it involves less risk toboth customer and developer.You talk of hypotheses or propositions in chapter 1, but there are none in this chapter. Kuwait can develop a primer on BOT for use inits own country but that can also be used by other countries seeking todevelop their infrastructure and economy through BOT.2.7 Hypotheses AddressedChapter 1 introduces several hypotheses regarding the use of BOT, and thesebear further exploration here. 11. Inaddition, a concept will be formulated to best implement BOT in developingnations so as to ensure a healthy economy and gain competitive stature inthe global market. He added that the crash would "hit hard the economies of everyone,whether it is the oil producers or the oil consumers" (Al-Khaled, 2 8).What Al-Harami forecast came to pass exactly as he predicted; in late 2 8,oil prices began declining, hitting lows of just over $1.4 per gallon atthis writing, making them even lower than 2 levels ("Gas prices bystate/province," 2 8). One respondent answered that the regulations are in placeand it is the enforcement that is lacking.Question 5: What issues have surfaced in previous BOT projects that shouldbe addressed before BOT is reintroduced in Kuwait.This question raised many of the same concerns raised in previous questionssuch as political corruption and unfairness in selection, but there were afew new or revamped issues such as more rapid allocation of land,encouragement of high-tech industries, the development of a central tenderscommittee for handling all tenders and bids for BOT projects, and thebureaucratic red tape involved in obtaining building permits and producingdelays from various authority sectors.Question 6: How can BOT be a powerful tool to help developing economiesaround the world?Many of the responses to this question focused on the promotion of healthyeconomic growth and development and the influx of foreign investment andtechnological knowledge and experience into Kuwait, as well as theimprovement of such economies' infrastructure. Anotherrespondent touted the Marina mall projects as having brought many jobopportunities to Kuwait as well as becoming a landmark and generatingyearly income for the government.Question 2 : What are the changes that Kuwait should consider in itsmethodology toward BOT before it reintroduces BOT, and why?Most of the suggestions in this section had to do with the government andits manner of regulating BOT. Buttery notes that 9 % of theU.K.'s projects are design-and-build and that the approach is becomingincreasingly popular in Dubai, but he also points out that there is animportant caveat (Sell, 2 7). Section 4 will include the data analysisand findings and will include discussion on both. For a developing economy to try to save enough money tobuild its own infrastructure is in many cases self-defeating, since astruggling economy cannot produce sufficient funds due to its inadequateinfrastructure. BOT leads to a healthier economy in a developing nation because infrastructure is essential to support a healthy economy. Buttery adds that benefits include the ability to provide benefitsmuch earlier to the client (Sell, 2 7). Interestingly, the rank of the regionsin the table roughly corresponds to the strength of each region's economy,as well, highlighting the connection between economy development andinfrastructure development.The primary reason for private investment in public infrastructure isfunding, but there is another significant reason as well which is quality-the degree of excellence manifested in the building of the infrastructure.Explain quality here!!! In this age ofincreased telecommunications use, the quality of the infrastructure and itsability to evolve with changing technology are key.Given the importance of properly built infrastructure to either adeveloping or developed economy, the value of BOT in making infrastructuredevelopment available in countries where economic constraints wouldotherwise delay or prevent such development is clear. In addition, as onerespondent pointed out, depreciation is a constant that erodes the value ofBOT.Question 19: Do you feel that the concept of BOT, considering the fewattempts in Kuwait, has failed? In addition, the importance of BOT-InfrastructureBOT infrastructure for helping developing nations improvetheir economies is discussed, along with reasons that Kuwait should revisitits policy on BOT and allow BOT once again.The research is supplemented with data from 22 questionnaires distributedto various audiences. In addition, ways that BOT could beimplemented in developing countries to develop a healthy economy and gaincompetitive stature in the global market were examined.The major findings of the study were that BOT in Kuwait has been beneficialin developing the country's infrastructure but that it has been mismanagedin several ways. The issue now is whether BOT contractors will be willingto undertake BOT projects in Kuwait given the threat of turnover to thegovernment without pay should the project exceed the 3 -year limit for anyreason.2.6 Literature GapThe literature on BOT has demonstrated the issues inherent in BOT andaddressed matters such as its effect on taxation and capital markets.Where the literature leaves a gap is in the area of instruction. On the other hand, another model is the Private Contract-Fee Services model that transfers responsibility for public agencies' usualservices to private-sector companies as a means of "tapping technical,management, and financial planning expertise readily available to theprivate sector" ("Innovative Finance," 2 7). Thispresupposes that BOT has been suspended but you have not explained thereasons behind that. Al-Mubarak (2 3) states that "private firms are moreefficient, hence project or service can be delivered at a lower cost." (Dr.David's Comment Is it cost or the ability to raise capital). One respondentadded two final factors-"a miracle and a strong belief in God."Question 11: If you were to establish a primer for developing nationsinterested in using BOT to improve their infrastructure and develop ahealthy economy, what procedures, guidelines, and warnings would youinclude?Respondents answered this question in a variety of ways, approaching itfrom the standpoint of needed infrastructure such as bridges, sewagesystems, road systems, and neighbourhood units and the opposite standpointof refraining from total reliance upon "an established infrastructure fordevelopment." Other recommendations reiterated those made in precedingquestions, such as a proper legislative framework, providing an open marketwith equal opportunities to local and foreign investors, and reduction ofbureaucratic red tape. Denton, M. Kuwait recentlyunveiled a plan for improving its science and technology capabilities, forexample-a plan that requires the government's strengthening of the researchinfrastructure of Kuwait University to encourage further "scientificstudies in the state's economic and social development by promotingcollaboration with science-based companies" (Sawahel, 2 8). Are there positive effects of using BOT in any society? Each of the two groups constitutes 5 % of the targetpopulation. The primaryadvantage is lower development cost to the government or end-owner of theinfrastructure. Improved roadways meanfaster and better transport of raw materials and finished goods. 13. The delivery process is separatedinto "three phases: (1) Design, (2) Bid, and (3) Construction" ("InnovativeFinance," 2 7). Moreover, while the Third World peasant exhausts himselfaccomplishing all of these daily responsibilities, his counterpart in adeveloped nation has conducted business from a comfortable desk at a muchhigher rate of income and enjoyed access to partners and customers anywherein the world in a moment's time. Inaddition, non-BOT projects executed by government developers tend to belower in quality, so Kuwait would have a lower-quality infrastructure if itforegoes the use of BOT. Department of Transportation Federal Highway Administration, viewed 1 September 2 8, .'Kuwait,' 2 8, Encyclopedia of the Nations, viewed 17 December 2 8, .'Kuwait: Transport and Communications,' 2 8, Business Monitor, viewed 11 September 2 8, .'Kuwait: Transport and Communications,' 2 8, Zawya, viewed 11 September 2 8, .'Latest Kuwait News,' Visit-Kuwait, .'Looking North' 1996, The Free Library by Farlex, viewed 11 September 2 8, .'Massive Investments in Railway Infrastructure,' 2 5, Ameinfo, viewed 11 September 2 8, .'PPP Options,' n.d., FHWA, viewed 1 September 2 8, .'Sulaibiya Wastewater Treatment and Reclamation Plant, Kuwait,' 2 8, Water- technology.net, viewed 11 September 2 8, .'Water Kuwait,' 2 8, (March), viewed 11 September 2 8, .Adenikinju, A 2 5, 'Analysis of the cost of infrastructure failures in a developing economy: The case of the electricity sector in Nigeria,' University of Ibadan, viewed 11 September 2 8, .Al-Hamad, F 2 7, 'An Investigation into the Insufficient Approach of the Build Operate Transfer (BOT) Scheme in the Kuwaiti Property Sector,' August.Al-Khaled, A 2 8, "Karafi National Explains Benefits of BOT,' Kuwait Times, February 13, viewed 17 December 2 8, .Al-Khaled, A 2 8, 'Oil Prices to Collapse by Year's End,' Iraq Updates, March 13, viewed 17 December 2 8, .Al-Mubarak, S 2 3, 'Build, Operate and Transfer (BOT) Project Delivery System in Saudi Arabia.'Badawi, IM 2 3, 'Globalization of the B.O.T. For example, many respondentsdecried the corruption in Kuwait's BOT process and stated that it should beeliminated, but there was virtually no suggestion as to how this could bedone effectively. -4.2Here you have to compile and link your research results with your research objectives, in order to answer your research questions. What are the changes should Kuwait consider in its methodology towards BOT before it re-introduces BOT, and why? The build phaseincludes the setup of key activities-infrastructure, management, process,recruitment and training, HR policy formulations, and quality system("Build, Operate, Transfer (BOT) Model," 2 5). If reinstating BOT projects in Kuwait becomes reality, what effect will it have on the country and its economy? ("Build, Operate, Transfer (BOT) Model," 2 5). Not onlywould BOT permit the construction of infrastructures that the governmentsthemselves could not yet afford to invest in, the small or nonexistentcapital markets typical of developing countries need large publicinfrastructure projects in order to develop and produce economic growth(Mustapha, 2 ).Kuwaiti columnist Ahmad Al-Dayeen, writing for the Alam Al-Yawm daily,clarifies the difference between Kuwait's situation and that of thedeveloping countries that could also profit by building theirinfrastructure via BOT:A country like Kuwait, which normally experiences constant financialabundance and whose budget doesn't suffer from any shortages and whosepopulation is less than one million and spread over just more than fivepercent of the total area...a country like this with little planning and afew efficient people at the wheel of politics who are in social harmonywith each other can work wonders towards the development of the countrywithout having to face any severe barriers (Taleb, n.d.).Al-Dayeen's observation is well taken and highlights the fact that if awealthy, developed nation like Kuwait can benefit from the use of BOT tofurther develop itself, less fortunate nations with infrastructure gaps andinsufficient government funding to fill those gaps can benefit even more.Dr. What warnings would you offer to developing nations intent upon using BOT? Why?This question ignores the fact that BOT has already been reintroduced forthe sake of drawing out opinions on the advisability of reintroduction,inviting a yes-no answer with additional comment. Another suggested "smartand green residential cities."Question 17: If reinstating BOT projects in Kuwait becomes reality, whateffect will it have on the country and its economy?Most respondents felt that reinstatement of BOT would have a positiveimpact on Kuwait's economy, and one noted that infrastructure improvementswould also improve tourism, which would boost the economy even further.Another respondent stated that it would "improve the pace at which projectsare being developed and will empower the private sector to participate inthe country's development," leading to better services. 7 of 2 8, "seeking to establish and clarify a structure for theBOT model in Kuwait" (Curran, 2 8). For example, some were employed in IT,oil and gas, planning, or other fields that would lend themselves togreater knowledge of BOT than the average person on the street. In China, the distribution of the country's main power plantfuel, coal, was affected by transport shortages, resulting in a 2 % powershortfall by 1989-a shortfall that some estimates hold responsible for a 1%reduction in the country's gross national product (Levy, 1996). BOT-InfrastructureBOTinfrastructure can best be utilized in developing countries to enable themto develop both their infrastructure and their capital markets. In the finalstage, the transfer of the infrastructure to its end-owner, theestablishment of a new subsidiary takes place and the transfer of assets isincluded. What can BOT developers and investors do to ensure that their BOT projects succeed within the specified timeframe and do not default to the government without payment?From the above objectives, it follows that certain problems have beenencountered, which have led to the suspension of BOT ptojects in Kuwait.Your thesis ought to address these. What problems were encountered? In the BTO model, aprivate-sector concession company builds the facility and then transfersownership to the government, but the concessionaire then operates thefacility under contract (Al-Mubarak, 2 3). In this model, competitivebidding is followed by the award of the project to the bidder that providesthe best pricing and technical value (Innovative Finance, 2 7).The design-build model "combines two usually separate services into asingle contract as a method of project delivery" ("Innovative Finance,"2 7). If a developing country, such as Kuwait, has used BOT to improve its infrastructure, how can it bridge from a DEVELOPING to a DEVELOPED country? 5. It should then use that revision to mend its own approach to BOTso that when it re-introduces the BOT approach can be assured of fargreater success than before. There were some special influences that may haveaffected the results, such as the fact that the questionnaire wasadministered in English, which may have introduced some terminology issuesas it was not the first language for most of the respondents, and that somerespondents had only a limited timeframe in which to answer the questionsdue to scheduling constraints. Government "has begun to acknowledge that some of itsservices can be performed with greater efficiency and, consequently, atless cost by the private sector" and that the private sector will be happyto cooperate as long as it can gain a reasonable return on its investment(Levy, 1996).The BOT approach has both advantages and disadvantages. It was suggested that BOT be deployed under"a highly ordered framework that regulates and limits each individualparty" and that the government should "open more doors for the privatesector and allow it to play a bigger and [more] positive role in theeconomy." One respondent indicated that BOT should be discussed first inthe parliament before formulation of project selection criteria, and thenthe selection should be conducted via the Central Tender Committee "in atransparent manner." Another individual asserted that wasta should bestopped and that projects should only be awarded to companies able tohandle the projects. What are the changes that Kuwait should consider in its methodology toward BOT before it reintroduces BOT, and why? What else must a developing country do besides using BOT? It isbecoming increasingly employed in Dubai, for example, where its potentialfor reduced overall cost, faster completion and occupancy, and "eliminationof the traditional liability gap through a straightforward procurementmodel" is gaining it greater notice and favour (Sell, 2 7). As Figure 2.2 indicates, the BOT process is really an SPBOTprocess-strategize, plan, build, operate, and transfer ("Build, Operate,Transfer (BOT) Model," 2 5).Strategizing is the initial research necessary to ensure that the projectis feasible, including such tasks as selecting an appropriate site,identifying the key drivers, prioritizing the project's processes accordingto the corporate strategy and risk management plan, and deciding which typeof BOT to implement in the project at hand ("Build, Operate, Transfer (BOT)Model," 2 5). How can BOT projects be structured or executed differently to eliminate the problems that led to the discontinuance of BOT? BOT/DBOM, or "turnkey procurement"consists of "an integrated partnership that combines the design andconstruction responsibilities of design-build procurements with operationsand maintenance, so that design, construction, and operation of a facilityor group of assets can be transferred to a private sector partner"("Innovative Finance," 2 7).[pic]Figure 1.1.1 - BOT Diagram , Source - "PPP Options," n.dVariations of BOT Models - add some example, if any, in the region"BOT" is a generic term that encompasses not only the build-operate-transfer model but also DBOM and a number of other public-private BOTpartnership models that can be used for infrastructure development (Fig.1.1.2). 16. The effective management of funds as well as the availability of funding were additional issues noted by multiple respondents. One respondent, forexample, pointed out that BOT offers "only positive effects with propermanagement, and another indicated that "It makes societies more productiveand business oriented." Although negative results do occur, as onerespondent pointed out, "Every new idea has a learning curve. You must also refer to the literature in chapter 2, in order to support your findings. Individuals tend to be influenced bygroup opinions, and some individuals tend to go along with a group ratherthan independently stating their own opinion. One response cited structural organization as an issue, and two mentioned the concept of "wasta," which neither respondent defined but which is explained in the book Wasta: The Hidden Force in Middle Eastern Society by Robert B. In addition, BOT is not cost-effectivefor smaller projects (Al-Mubarak, 2 5). Sarayah (1993) as a pervasive force in Arab countries' culture (Pipes, 1994). One of the most important aspectsof planning is planning for the transitions between the build stage and theoperation stage and then again between the operation stage and the transferstage ("Build, Operate, Transfer (BOT) Model," 2 5). "Understanding wasta," say Cunningham and Sarayah, "is key to understanding decisions in the Middle East, for wasta...is a force in every significant decision" (Pipes, 1994). Thesepropositions assume that the hypotheses advanced in the paper are correctand that they can be supported.3.4.4 Target Population and Sampling MethodsThe target population and sampling methods in qualitative analysis arechosen to support research aims of providing "an in-depth understanding ofthe world as seen through the eyes of the people being studied" (Wilmot
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