De-risking project finance for infrastructure development through flexibility in engineering design

An approach to de-risking infrastructure projects and increasing their bankability is proposed, where flexible design is used to complement traditional Public-Private Partnerships (PPPs) under Project Finance schemes. By definition, forecasts of future project performance will 'always' be wrong in that actual future demand 10 years after the planning phase almost always differs from the forecasts. The potential divergence between predicted and actual demand becomes crucially important if the project's costs are to be recovered from the revenue stream it is supposed to generate. Whereas traditional financing schemes rely exclusively on contractual terms to reduce risks to lenders, an engineering-based framework to mitigate demand and credit risks is proposed as a complement to current approaches. This thesis presents in detail how the use of flexibility in engineering design could be implemented to de-risk PPPs and increase their bankability.

Name thesis:degree_name

Master

Department dc:contributor.department

Massachusetts Institute of Technology. Institute for Data, Systems, and Society

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2019

Author dc:creator

• Duarte Pardo, Juan Pablo.

Advisor dc:contributor.advisor

• Richard de Neufville.

• Institute for Data, Systems, and Society.
• Technology and Policy Program.

Statement dc:rights

• MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/122093

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/122093