Practice briefing : Is BOT the best financing model to procure infrastructure projects? A case study of the Hong Kong-Shuhai-Macau Bridge

Abstract: Purpose – Several major infrastructure projects in the Hong Kong Special Administrative Region (HKSAR) have been delivered by the build-operate-transfer (BOT) model since the 1960s. Although the benefits of using BOT have been reported abundantly in the contemporary literature, some BOT projects were less successful than the others. This paper aims to find out why this is so and to explore whether BOT is the best financing model to procure major infrastructure projects. Design/methodology/approach – The benefits of BOT will first be reviewed. Some completed BOT projects in Hong Kong will be examined to ascertain how far the perceived benefits of BOT have been materialized in these projects. A highly profiled project, the Hong Kong-Zhuhai-Macau Bridge, which has long been promoted by the governments of the People's Republic of China, Macau Special Administrative Region and the HKSAR that BOT is the preferred financing model, but suddenly reverted back to the traditional financing model to be funded primarily by the three governments with public money instead, will be studied to explore the true value of the BOT financial model. Findings – Six main reasons for this radical change are derived from the analysis: shorter take-off time for the project; difference in legal systems causing difficulties in drafting BOT agreements; more government control on tolls; private sector uninterested due to unattractive economic package; avoid allegation of collusion between business and the governments; and a comfortable financial reserve possessed by the host governments. Originality/value – The findings from this paper are believed to provide a better understanding to the real benefits of BOT and the governments' main decision criteria in delivering major infrastructure projects.

A model for determining the optimal project life span and concession period of BOT projects

The concession agreement is the core feature of BOT projects, with the concession period being the most essential feature in determining the time span of the various rights, obligations and responsibilities of the government and concessionaire. Concession period design is therefore crucial for financial viability and determining the benefit/cost allocation between the host government and the concessionaire. However, while the concession period and project life span are essentially interdependent, most methods to date consider their determination as contiguous events that are determined exogenously. Moreover, these methods seldom consider the, often uncertain, social benefits and costs involved that are critical in defining, pricing and distributing benefits and costs between the various parties and evaluating potentially distributable cash flows. In this paper, we present the results of the first stage of a research project aimed at determining the optimal build-operate-transfer (BOT) project life span and concession period endogenously and interdependently by maximizing the combined benefits of stakeholders. Based on the estimation of the economic and social development involved, a negotiation space of the concession period interval is obtained, with its lower boundary creating the desired financial return for the private investors and its upper boundary ensuring the economic feasibility of the host government as well as the maximized welfare within the project life. The outcome of the new quantitative model is considered as a suitable basis for future field trials prior to implementation. The structure and details of the model are provided in the paper with Hong Kong tunnel project as a case study to demonstrate its detailed application. The basic contributions of the paper to the theory of construction procurement are that the project life span and concession period are determined jointly and the social benefits taken into account in the examination of project financial benefits. In practical terms, the model goes beyond the current practice of linear-process thinking and should enable engineering consultants to provide project information more rationally and accurately to BOT project bidders and increase the government's prospects of successfully entering into a contract with a concessionaire. This is expected to generate more negotiation space for the government and concessionaire in determining the major socioeconomic features of individual BOT contracts when negotiating the concession period. As a result, the use of the model should increase the total benefit to both parties.

Developing a best practice framework for implementing public private partnerships (PPP) in Hong Kong

Public Private Partnership (PPP) is a well established methodology for procuring public works projects. By incorporating the private sector’s expertise, efficiency, innovation, business sense, risk sharing, financing etc. into public works projects, the quality of public services and facilities can be uplifted. Like many jurisdictions, Hong Kong is also keen to take aboard this methodology which is so familiar but yet so distant. Although they have been one of the first jurisdictions to utilise the private sector in public works projects, their comfortable financial reserves has meant that there has been no urge to push the movement until recently. PPP has become increasingly popular amongst governments. The Hong Kong Special Administrative Region (HKSAR) government is no exception. Some of the more active works departments have commissioned studies to investigate the best ways to deliver these projects, others have even trialed the method themselves. The efficiency Unit of the HKSAR government has also become an active arm in conducting research in this area. Although so, the information that is currently available is still very broad. Building from their works there is a need to develop a best practice framework for implementing PPP projects in Hong Kong by incorporating international experiences. To develop a best practice framework will require thorough investigation into the benefits, difficulties and critical success factor of PPP. PPP should also be compared with other procurement methods. In order to do so it is important to clearly understand the local situation by an analysis of projects conducted to date. Lessons learnt can further be derived from other countries and incorporated to those derived locally. Finally the best conditions in terms of project nature, complexity, types, and scales for adopting PPP should be derived. The aim and objectives of this study were achieved via a comprehensive literature review, in-depth case analyses, interview survey with experts from both Hong Kong and overseas, and finally a large scale data collection was conducted via a questionnaire survey with PPP practitioners. These findings were further triangulated before they were used as the basis to form the best practice framework presented in this thesis. The framework was then further validated by PPP experts to ensure it is comprehensive, objective, reliable and practical. This study has presented a methodology that can be adopted for future studies. It has also updated our knowledge on the development trends of PPP as well as opened up the experiences of other jurisdictions. The findings have shown that the local industry is familiar with “what” should be done in PPP projects but they are unsure of “how” these goals can be achieved. This framework has allowed this further knowledge to be delivered to PPP practitioners. As a result, the development of this framework can help to resolve the current economic crisis by encouraging more developments and business opportunities for the private sector. In addition, the correct projects can be delivered by PPP, the advantages of PPP can be maximised, and the general public can benefit from the private sector’s participation.

An evaluation of current and future botnet defenses

Botnets are large networks of compromised machines under the control of a bot master. These botnets constantly evolve their defences to allow the continuation of their malicious activities. The constant development of new botnet mitigation strategies and their subsequent defensive countermeasures has lead to a technological arms race, one which the bot masters have significant incentives to win. This dissertation analyzes the current and future states of the botnet arms race by introducing a taxonomy of botnet defences and a simulation framework for evaluating botnet techniques. The taxonomy covers current botnet techniques and highlights possible future techniques for further analysis under the simulation framework. This framework allows the evaluation of the effect techniques such as reputation systems and proof of work schemes have on the resources required to disable a peer-to-peer botnet. Given the increase in the resources required, our results suggest that the prospects of eliminating the botnet threat are limited.

Overcoming reputation and proof-of-work systems in botnets

Reputation and proof-of-work systems have been outlined as methods bot masters will soon use to defend their peer-to-peer botnets. These techniques are designed to prevent sybil attacks, such as those that led to the downfall of the Storm botnet. To evaluate the effectiveness of these techniques, a botnet that employed these techniques was simulated, and the amount of resources required to stage a successful sybil attack against it measured. While the proof-of-work system was found to increase the resources required for a successful sybil attack, the reputation system was found to lower the amount of resources required to disable the botnet.

Ability of recombinant human bone morphogenetic protein 2 to enhance bone healing in the presence of tobramycin : evaluation in a rat segmental defect model

Objective To determine whether locally applied tobramycin influences the ability of recombinant human bone morphogenetic protein 2 (rhBMP-2) to heal a segmental defect in the rat femur. Methods The influence of tobramycin on the osteogenic differentiation of mesenchymal stem cells was first evaluated in vitro. For the subsequent, in vivo experiments, a 5-mm segmental defect was created in the right femur of each of 25 Sprague-Dawley rats and stabilized with an external fixator and four Kirschner wires. Rats were divided in four groups: empty control, tobramycin (11 mg)/absorbable collagen sponge, rhBMP-2 (11 μg)/absorbable collagen sponge, and rhBMP-2/absorbable collagen sponge with tobramycin. Bone healing was monitored by radiography at 3 and 8 weeks. Animals were euthanized at 8 weeks and the properties of the defect were compared with the intact contralateral femur. Bone formation in the defect region was assessed by dual-energy x-ray absorptiometry, microcomputed tomography, histology, and mechanical testing. Results Tobramycin exerted a dose-dependent inhibition of alkaline phosphatase induction and calcium deposition by mesenchymal stem cells cultured under osteogenic conditions. The inhibition was reversed in the presence of 500 ng/mL of rhBMP-2. Segmental defects in the rat femora failed to heal in the absence of rhBMP-2. Tobramycin exerted no inhibitory effects on the ability of rhBMP-2 to heal these defects and increased the bone area of the defects treated with rhBMP-2. Data obtained from all other parameters of healing, including dual-energy x-ray absorptiometry, microcomputed tomography, histology, and mechanical testing, were unaffected by tobramycin. Conclusions Although our in vitro results suggested that tobramycin inhibits the osteogenic differentiation of mesenchymal stem cells, this could be overcome by rhBMP-2. Tobramycin did not impair the ability of rhBMP-2 to heal critical-sized femoral defects in rats. Indeed, bone area was increased by nearly 20% in the rhBMP-2 group treated with tobramycin. This study shows that locally applied tobramycin can be used in conjunction with rhBMP-2 to enhance bone formation at fracture sites.

Summarisation of short-term and long-term videos using texture and colour

We present a novel approach to video summarisation that makes use of a Bag-of-visual-Textures (BoT) approach. Two systems are proposed, one based solely on the BoT approach and another which exploits both colour information and BoT features. On 50 short-term videos from the Open Video Project we show that our BoT and fusion systems both achieve state-of-the-art performance, obtaining an average F-measure of 0.83 and 0.86 respectively, a relative improvement of 9% and 13% when compared to the previous state-of-the-art. When applied to a new underwater surveillance dataset containing 33 long-term videos, the proposed system reduces the amount of footage by a factor of 27, with only minor degradation in the information content. This order of magnitude reduction in video data represents significant savings in terms of time and potential labour cost when manually reviewing such footage.

ThreatBot: A new model for improving FPS experiences with bots

This work is focused on the player experience and the design of artificial intelligence (AI) to meet player expectations in a competitive video game context. The original contribution of this research is a new approach to designing games and AI opponents that are more enjoyable for players to interact with, particularly in First Person Shooter (FPS) video games. This approach is modeled in detail and implemented in a prototype game AI called ThreatBot. The results show that the new AI design is more enjoyable to compete against, particularly with regards to player's perceived levels of competence.