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Claver, E, Molina, J F and Tari, J J (2003) Strategic groups and form performance: the case of Spanish house-building firms. Construction Management and Economics, 21(04), 369-77.

Eyiah, A K and Cook, P (2003) Financing small and medium-scale contractors in developing countries: a Ghana case study. Construction Management and Economics, 21(04), 357-67.

Horsley, A, France, C and Quatermass, B (2003) Delivering energy efficient buildings: a design procedure to demonstrate environmental and economic benefits. Construction Management and Economics, 21(04), 345-56.

Ofori, G (2003) Frameworks for analysing international construction. Construction Management and Economics, 21(04), 379-91.

Pitt, M and Smith, A (2003) An assessment of waste management efficiency at BAA airports. Construction Management and Economics, 21(04), 421-31.

Shields, R and West, K (2003) Innovation in clean-room construction: a case study of co-operation between firms. Construction Management and Economics, 21(04), 337-44.

Thomas, A V, Kalidndi, S N and Ananthanarayanan, K (2003) Risk perception analysis of BOT road project participants in India. Construction Management and Economics, 21(04), 393-407.

Ye, S and Tiong, R L K (2003) Tariff adjustment frameworks for privately financed infrastructure projects. Construction Management and Economics, 21(04), 409-19.

  • Type: Journal Article
  • Keywords: regulation; tariff adjustment framework; privately financed infrastructure; bot; risk management
  • ISBN/ISSN: 0144-6193
  • URL: https://doi.org/10.1080/0144619032000073550
  • Abstract:

    Since privately financed infrastructure (PFI) projects are usually natural monopolies, their tariffs should be regulated to ensure socially desirable outcomes. In reality, the regulation is usually realized through tariff adjustment mechanisms. There are four basic tariff adjustment frameworks for PFI projects - adjustment based on sale price, revenue, operating income and profit after tax. They have different risk exposures and incentives. The adjustment based on the sale price provides the project company with the highest potential to increase profit but exposes it to the highest risk, while the adjustment based on the guaranteed ROR exposes the project company to the lowest risk but provides the least potential for increasing profit. Adjustments based on the revenue or the operating income are somewhere in between. In practice, a hybrid of two or more adjustment frameworks may be adopted to adapt to specific project environments. A well-designed tariff adjustment framework can create a ’win-win’ solution for both the public and private sectors.