Developing a Revenue Sharing Method for an Operational Transfer-Operate-Transfer Project

Abstract

The transfer-operate-transfer (TOT) project model is used widely as a commercial framework for public-private-partnerships to support provision of infrastructure and enable the delivery of services. However, operational delivery of such projects can encounter certain challenges, such as the need for improved revenue sharing between governmental and private partners. The purpose of this paper is to design a revenue sharing method (RSM) that satisfies the revenue-sharing forecast in the contract design stage and the realized revenue sharing in the contract execution period for an operational TOT project. This approach identifies the impact of external uncertainty and effort level as well as the input ratio on revenue sharing of participants, distributes and reasonably minimizes the project revenue uncertainty among the participants, and achieves an improved matching of the participants’ revenue sharing with their risk-sharing, resource input and effort level. The paper utilizes the fuzzy-payoffs Shapley value method for revenue distribution for an operational TOT project, where the fuzzy alliance and input ratio coefficient are adopted to gradually optimize the Shapley value and form the RSM of an operational TOT project. The RSM allows prediction of the revenue sharing of participations under uncertain conditions of project revenue and supports improved decision-making by participants.