Important Terms from A to Z
BOOT (Build, Own, Operate, Transfer)
Build, Own, Operate, Transfer (BOOT) is one type of operator model used in international project management. Operator models are project forms within which the actual investor delegates the building, operation and maintenance of a plant to another company for a limited time and thus is de facto a “customer” of the operating company.
The umbrella term Build, Operate, Transfer (BOT) is an acronym for the three phases that traditionally constitute an operator model: The construction phase, the concession phase during which the plant is operated by the operating company, and the transfer, in which the plant is transferred to the customer. Because normally the customer has no interest in operating the plant himself following the concession phase, the operation is usually left to the operating company afterwards as well.
Originally, such operator models were developed for public-sector projects, where they are referred to as public-private partnerships (PPP). In these projects the plants are transferred into state ownership following the operational phase. In the mid-1990s they were also introduced in industrial sectors such as the automotive industry or tank terminal construction. Beyond the financial aspects, reasons for using an operator model often include the reduction in the customer’s business risk by involving a specialist, especially since payment is usually “pay-on-production.”
The special feature of the BOOT model is that unlike in the classic BOT model, the customer has no early buyout option that would allow him to prematurely become owner of the plant.
Status: December 2015
All information subject to change. Errors and omissions excepted.