A two-stage multi-objective project selection regarding social welfare and risk optimization factors in BOT type projects: A case study in road construction industry

Infrastructure development is one of the key aspects to be prioritized if economic growth is to be maintained in developing countries. Amongst the bottlenecks in this path which impede the construction and expansion of the infrastructure facilities, lack of public funding is one of the primary issues. To tackle such a problem, governments are launching public-private partnership frameworks to raise funds for these projects. Studies on various methods of public-private partnerships suggest BOT (build, operate, transfer) as one of the most common and most successful ways of participation for the private sector in public projects and establishing a framework for the management of project risks. This project aims to provide a framework by which projects are prioritized according to their social welfare factors in the first step. Second step objective is to minimize the risks of taxes, utilization period, project lifetime, and highway capacity by solving a multi objective mathematical model. This is all done by proposing a two-stage optimization model based on reservation level Driven Tchebycheff Procedure (RLTP) and differential evolution (DE) algorithm to evaluate projects and prioritizing them based on their defined factors and associated risks. The model ensures that the private sector benefits from the execution and operation of the project in the BOT framework and the expected social welfare is also guaranteed. As a case study, data of the projects in transportation and road construction sector is obtained and evaluated.