Explain Build-Operate-Transfer (BOT) approach and classify the following expenses in Capital Cost or Operating and Maintenance Cost for Toll Roads:…

Build-Operate-Transfer (BOT) Approach: BOT is an option for the Government to outsource public projects to the private sector. With BOT, the private sector designs, finances, constructs and operates the facility and eventually, after specified concession period, the ownership is transferred to the Government. Therefore, BOT can be seen as a developing technique for infrastructure projects by making them amenable to private sector participation. Expenses Classification Land acquisition Capital Cost Interest expenses incurred for servicing term loans Operating and Maintenance Cost Material and Labour Capital Cost Toll Collection Expenses Operating and Maintenance Cost Contingency Allowance Capital Cost Periodic painting cost of railings etc. Operating and Maintenance Cost