Chapter 10 - CHAPTER 10 QUESTIONNAIRE 1 What is build...

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CHAPTER 10 QUESTIONNAIRE 1) What is build operate and transfer (BOT) of a project? Private party (concessionaire) retains a concession for a fixed period from a public party, called principal (client), for the development and operation of a public facility. Development consists of financing, design, and con- struction of the facility, managing and maintaining the facility adequately and making it sufficiently profitable. The concessionaire secures return of investment by operating the facility and, during the concession period the conces- sionaire transfers the ownership of the facility free of liens to the principal at no cost. 2) How does privatization address the problems of developing infrastructure? By utilizing private funds to finance and construct public projects. For example, if a bridge is needed to connect two political entities separated by a river, a private consortium can raise the funds to construct the bridge recovering the cost and effort involved by charging tolls to users of the bridge. 3) What are the essential ingredients that must be considered in the construction of a project referred to as the four M’s? Money, Machines, Manpower, Materials 4) What are short term and long term loans? Owner’s financing of any significant undertaking required two types of funding: short term and long term loans. Short-term funding is usually in the form of a construction loan. Long-term financing involves a morthahe loan over a term ranging from 10 to 30 years. 5) At a minimum, what seven documents do lenders require to get a loan? 1) A set of financial statements for the firm. 2) Personal financial statements from the principals of the firm.
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Chapter 10 - CHAPTER 10 QUESTIONNAIRE 1 What is build...

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