Abstract
In this paper, the contractual structure of BOT and BTO project schemes are investigated to understand incentive mechanism of how the SPCs are motivated to reduce project costs without deteriorating service quality under both schemes. The renegotiation models are formulated to analyze the impacts of the ownership structure upon the SPCs'cost reducing behavior. Our conclusions are: 1) BOT schemes are more advantageous in inducing cost reduction than BTO; 2) The incentive revenue schemes should be incorporatedin BOT schemes to enhance the service quality provided by the SPCs.
