Optimization of PPP project equity structures based on the satisfactions of the main stakeholders

FENG Ke; WANG Shouqing; XUE Yanguang

doi:10.16511/j.cnki.qhdxxb.2017.25.007

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Journal of Tsinghua University(Science and Technology) ›› 2017, Vol. 57 ›› Issue (4) : 376-381. DOI: 10.16511/j.cnki.qhdxxb.2017.25.007

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Optimization of PPP project equity structures based on the satisfactions of the main stakeholders

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Abstract

The equity structure of a public-private partnership (PPP) project directly affects the allocation of risk and interest among the project stakeholders. A reasonable equity allocation decision making model is important for a project's success. This paper first analyzes the equity allocation decision making principles of the main stakeholders. These principles and project financing characteristic were then used to define an optimization model to minimize a PPP projects' social costs while satisfying the objectives of the key PPP stakeholders, i.e., the debtors, the private companies and the governments. A genetic algorithm is used to solve the decision making problem with a Monte Carlo model to simulate the changes in the project revenues with an immunological memory cell to improve the algorithm convergence. The model is validated by companies with an actual urban rail transport project. The model can be used to provide reference data for public and/or private entities for equity structure decision making for other PPP projects.

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public-private partnership (PPP) / equity structure / genetic algorithm / Monte Carlo simulation

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FENG Ke, WANG Shouqing, XUE Yanguang. Optimization of PPP project equity structures based on the satisfactions of the main stakeholders[J]. Journal of Tsinghua University(Science and Technology). 2017, 57(4): 376-381 https://doi.org/10.16511/j.cnki.qhdxxb.2017.25.007

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