Resource title

Reliability of public private partnership projects under assumptions of cash flow volatility

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Resource description

This paper focuses on dynamic financial modelling of recurring cash flow items in PPP projects in operating stage and on risks associated with the volatility of these cash flows. As we concentrate on so-called government-pays schemes, only cash-outflows are considered, such as operating costs, repairs and maintenance expenses, and administration costs, whereas the revenue side is considered to be not at risk. We show different approaches to modelling the uncertainty of recurring operating expenses and explain how to interpret the results. Our analysis is based on the mathematical framework of stochastic processes, which, in finance, are particularly used to describe price series evolutions in capital markets. We apply them to generate variable trajectories of operating costs and integrate them into a stochastic simulation of the financial model.

Resource author

Henning Schöbener, Christoph Schetter, Andreas Pfnür

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27031

Resource license

Adapt according to the presented license agreement and reference the original author.