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In order to accommodate and satisfy the increasingly
transportation needsof today and tomorrow, tremendous amount of
capital has been invested inlong-term transportation
infrastructure projects, which results in huge fiscalstrain on
the government. Thus, it is prudent for the government to
encourageprivate investments in the infrastructure projects. The
risks , however,associated with projects are inherently high, as
the changing social andpolitical environment may lead to policy
changes unfavourable to investors. The past research has not
yet provided a satisfactory framework forevaluation of risks
faced by private investors in these"build-operate-transfer(BOT)"
projects. Nor is there a proper framework toevaluate risks over
uncertainty on public policy in the long-run. Therefore,the
purpose of this research to propose a framework to evaluate
risks facedby private investors to help the negotiation between
public and privatesectors and prepare the risk management
strategies. The proposed evaluation framework is based on
risk management, and employsfuzzy theory and aggregate loss
distribution method. This framework providestwo evaluation
models depending on whether the concession period includes
thedesign and construction of the project or not. This study
analyzes the risks caused by government on two sides：the
delayof land acquisition and decrease in operating revenues due
to transportationpolicy change. A case study on CKS Airport Link
Rapid Transit System isconducted. Taking into account of risks
and operating efficiency, the BOTproject is more favorable if
the design and construction of the project areincluded in the
contract. Private Investors, to decrease exposure to
politicaluncertainty, may either 1) request from the government
guarantees of certainsupport/terms to prevent financial loss
from happening, or 2) explorere-insurance alternatives or
financial options such as re-financing, etc.Similarly, the
involved government body can and should provide and
createmorefavourable investment conditions through changes to
the existing regulations or the enactment of new regulations,
such as government subsidy or preferentialfinancial loans, etc.
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