- Outsourcing Law - http://www.outsourcing-law.com -
Build-Operate-Transfer (“BOT”) and Build-Own-Operate-Transfer (“BOOT”)
New Centers. In some cases, the enterprise customer wants to set up a new service delivery center or service architecture or infrastructure. It may enlist the assistance of a service provider in the design of the operations, procurement of the necessary equipment, real estate and technology, and in the recruitment, hiring and training of the personnel for the new service delivery center.
BOT vs. BOOT. To address such situations, outsourcing planners have learned from project financing the structures for “build-operate-transfer” (“BOT”) and “build-own-operate-transfer” (“BOOT”) models. They are essentially identical.
Time Lapse Scenario. Thus, where the enterprise customer wants help in building its own captive, the BOT or BOOT model provides a legal structure for the supplier to build and, for a time, manage the entire service delivery center before assigning it to the customer. This model reflects traditional project financing for building transportation infrastructure – such as highways, airports, bridges, tunnels and ports – for governments. In the public sector, BOT relationships are sometime called “public-private partnerships.” [LINK TO THAT PAGE = SEE BELOW]
Accounting. An essential element of BOT is its cost accounting. The cost structure for BOT involves amortization of capital investment. The pricing structure will reflect this amortization if the service provider owns any physical assets, license agreements or real property used for service delivery.
Advantages. The BOT and BOOT models offer several advantages to the enterprise customer. It saves:
Disadvantages. The BOT and BOOT models have certain drawbacks for the enterprise customer.
Further reading:
“Managed Services”: Facilities Management / “Operations and Maintenance” / Infrastructure Management
Return to Sourcing Models
Article printed from Outsourcing Law: http://www.outsourcing-law.com
URL to article: http://www.outsourcing-law.com/sourcing-models/build-operate-transfer-bot-and-build-own-operate-transfer-boot/
Click here to print.
Copyright © 2012 Outsourcing Law. All rights reserved.