GROUP FIVE (5)

THE BOOT APPROACH TO ENERGY INFRASTRUCTURE

MANAGEMENT
(A MEANS TO OPTIMIZE THE RETURNS FROM FACILITIES)
A CASE STUDY OF AUSTRALIA
PRESENTED BY:
MSc. PROJECT MANAGEMENT

09 TH SEPTEMBER 2018
 CONTENT
 INTRODUCTION
 ENERGY INFRASTRUCTURE
 STATEMENT OF PROBLEM
 AIM OF THE STUDY
 WHAT IS A BOOT PROJECT
 STRUCTURE OF BOOT
 THE BOOT PROCESS
 PHASES IN THE BOOT PROCESS
 COMPARISON OF BOOT with major procurement option.
 LESSONS LEARNT
 REFERENCE
 INTRODUCTION
• The facility management industry is faced with financial challenges
• Inadequate budgeting results in poor facility management and hence the need
to adopt the BOOT Approach
• This study shows the major facets of the Build-Own-Operate-Transfer
(BOOT) approach of procuring energy related assets.
 ENERGY INFRASTRUTURE
It is said to include the traditional utilities associated with energy transport and
management examples coal transport, trains natural gas pipelines and electric
transmission lines.
IMPORTANCE
It is obvious that a sound public infrastructure plays a vital role in encouraging a
more productive and competitive national economy
meeting public demands for safety, health, and improved quality of life.
public office buildings, courthouses, support non-economic goals and allow
government agencies to carry out their missions (Guerrero, 2001).
 STATEMENT OF PROBLEM
Lack of adequate resources for delivery of high quality services in the facility
management(FM) industry.
 AIM OF STUDY
 To foster a greater understanding of BOOT(Build Own Operate
Transfer)by outlining the various aspects of a typical boot report.
To illustrate the benefits of a variety of BOOT approaches to procuring
energy facilities.
 WHAT IS BOOT
A project based on the granting of a concession by a Principal to a Promoter
who is responsible for the construction, financing, operation and
maintenance of a facility over the period of the concession before finally
transferring at certain or no cost a fully operational facility to the
Principal(Merna and Smith, 1996).
BOOT STRUCTURE
PHASES IN THE BOOT PROCESS
 ADVANTAGES OF BOOT
BOOT approach offer a number of advantages :
It minimizes the public cost for infrastructure development
It reduces public debt
It allows for innovation
It allows a chance to bring in expertise
It is the process that is fully appraised
 CHALLENGES OF BOOT
• Complex to set up.
• Bureaucracy and red tape(legalities, lengthy negotiations)
• It requires
➢ time
➢ Money
➢ patience.
• Administrative bottlenecks.
 COMPARISON OF POTENTIAL BENEFITS FROM MAJOR
PROCUREMENT OPTIONS.

Procurement Efficiency gains in POTENTIAL POTENTIAL

Option construction/ BENEFITS BENEFITS
operation
Additional Control by the
Finance Risk Transfer principal
BOOT contract High High High Medium
Franchising Low/Medium Low Medium Medium
Contracting-Out Low None Low Medium
Leading Low/None Medium Low High

Purchase Low/None None None High

 LESSONS LEARNT
 The BOOT approach provides an attractive option for the upgrade, redevelopment or
procurement energy infrastructure assets.
 BOOT is not penicillin ,it is flexible strategy in that it can start small in terms of project scope by
having multiple stages and that it can be switched to become alternative procurement methods
during the course of the process if the circumstances of the principle by altering the contractual
terms.
 BOOT project faces less risk exposure to technological obsolescence during its usual, long
concession period.
 By adopting a BOOT approach to the procurement of energy-related assets, a facility owner can
expect to reap a number of benefits including: . better risk allocation; . operational efficiency; . use
of more effective business processes and cost control procedures; . quicker project delivery;
greater quality assurance; . integration of design and operational needs.
 REFERENCES

• Flynn, R. (1996), ``Principal organizations'', in Merna, A. and Smith, N.J. (Eds),

Projects Procured by Privately Financed Concession Contracts - Volume 1 , Asia
Law & Practice Ltd, Hong Kong. Merna, A. and Smith, N.J. (1996), Guide to the
Preparation and Evaluation of Build Own Operate Transfer Project Tenders , Asia
Law & Practice Ltd, Hong Kong. Wilde Sapte (1997), Project Finance: The Guide
to Financing Build-Operate-Transfer Projects - Uses in PPP , Euromoney
Publications plc.
• (John Chu is Manager Business Analysis at the Strategy & Regulation division of
CitiPower, a national energy supply company based in Melbourne, Australia and a
subsidiary of US utility, American Electric Power.