Public-Private Partnerships: Build-Operate-Transfer Project Meaning

A build-operate-transfer (BOT) project is a type of a public-private partnership agreement were a private company has the main responsibility for financing, developing and finally operating the project for a specified period of time before passing on ownership to the government.

For example, let’s say a government wants to build new modern infrastructure in it’s country. The government can engage the private sector and propose to them the BOT project at hand.

From there the government will decide which private companies or corporate entities that have enough track record and capital to undertake the BOT project.

Eventually the eligible private companies will be granted a concession, thereby becoming BOT contractors that will work with the government on the mentioned grounds of a BOT public-private partnership.

How Private Companies Make Money With BOT Projects

When a private company completes a BOT project it has a contractual limited time to operate the project in order recover the costs of financing and developing the BOT project.

NOTE: A BOT project usually states that a private company has 10 or 20 years to operate the BOT project after completion.

In other words this means a private company will run the BOT project for that duration of time while earning money from that same BOT project up until the time reaches when the private company has the obligation to transfer the BOT project back to the government.