Build Operate Transfer (BOT) contracts
Produced in partnership with Victoria McGie
Build Operate Transfer (BOT) contracts

The following Construction guidance note Produced in partnership with Victoria McGie provides comprehensive and up to date legal information covering:

  • Build Operate Transfer (BOT) contracts
  • Benefits
  • Drawbacks
  • BOT tender process
  • Sponsors
  • BOT financing
  • Concession agreement for a BOT
  • Construction contract for a BOT
  • Operating and maintenance agreement (O&M agreement)
  • Supply agreements
  • more

The Public Private Partnership (PPP) models are a popular way for governments to involve private investment, expertise and risk in procuring infrastructure, with the potential to deliver a project more efficiently and economically. One of the most popular PPP models for procuring infrastructure projects is Build Operate Transfer (BOT). The details of a BOT model vary depending upon the nature of the project. Generally speaking, a BOT involves the following:

  1. a government (in the form of a government body or local authority) requires new public infrastructure facility, such as a road or energy facility

  2. typically a consortium of private entities (often including financers, construction contractors and O&M contractors) forms a special purpose entity (often called Project Co)

  3. Project Co and the government enter into a concession agreement, which sets out the terms upon which it will procure and operate the facility and be entitled to revenues

  4. Project Co:

    1. obtains finance for the project

    2. procures the design and construction of the facility, often under an EPC/Turnkey contract or possibly an EPCM (Engineering, Procurement, Construction Management) arrangement

    3. procures the operation and maintenance of the facility for the concession period (typically between 10–30 years), under an O&M agreement

    4. collects facility revenue during facility operation, either directly from users or government

    5. uses revenue to service debts and circulate profit to investors

    6. transfers the facility (where