Optimization of the Concession Period in Public-Private Partnership Projects

This thesis analyzes the optimization of the concession period in Public-Private Partnership (PPP) projects, focusing on the Build-Operate-Transfer (BOT) contractual model. The concession period determines how long the private partner operates an infrastructure to recover investment costs and earn a return, before transferring ownership to the public sector. Its duration is a critical variable: if too short, the project may be financially unsustainable for private investors; if too long, it may undermine public welfare by limiting government control. The research provides a comprehensive review of existing methodologies for determining the optimal concession length, including traditional financial tools such as the Net Present Value (NPV) model and more advanced techniques that incorporate uncertainty and negotiation dynamics. Particular attention is given to probabilistic approaches such as Monte Carlo simulations, which account for the variability of key parameters like inflation, interest rates, and operational costs. Furthermore, Game Theory-based models are explored to simulate the strategic interaction between public authorities and private concessionaires, allowing a fairer distribution of risks and benefits. To address the limitations of deterministic models, the study also examines hybrid frameworks integrating fuzzy logic and system dynamics, which offer more flexible management of uncertain and imprecise variables. These theoretical perspectives are complemented by the analysis of real-world case studies from transportation and healthcare sectors, demonstrating how concession optimization methods are applied in practice and highlighting their implications for project feasibility and long-term sustainability. The results indicate that no single model is universally optimal; instead, combining financial, probabilistic, and negotiation-based approaches produces more robust and equitable outcomes. The thesis concludes by emphasizing the importance of multi-criteria and “win-win” optimization frameworks that balance public and private interests, ensuring economic efficiency, risk mitigation, and social value in PPP projects.