Pros And Cons Of Long-Term Franchise

‘The FIDIC DBO form has arisen out of recognition that for concession contracts in the transport and water/waste sectors, the market typically uses the existing FIDIC Yellow Book with operations and maintenance obligations tacked on. FIDIC has recognised that this is unsatisfactory, and in a similar way some of the contractual developments described above, in order to achieve uniformity and therefore a higher degree of certainty, the new form has been prepared to meet the demand. The DBO approach to contracting combines design, construction, and long-term operation and maintenance of a facility into one single contract awarded to a single contractor (who will usually be a joint venture or consortium containing all the skills required by the particular DBO

What was to be the world’s largest automated airport baggage handling system, became a classic story in how technology projects can go wrong. Faced with the need for greater airport capacity, the city of Denver elected to construct a new state of the art airport that would cement

From the city of Denver’s perspective, it was an easy choice to award BAE Automated Systems with the contract. The initial project design (as cited in Montealgre et al, 1996, p. 8) did not incorporate an airport-wide baggage system; the city expected the individual airlines, largely consisting of United and Continental Airlines, to build their own systems in their respective concourses as in most other American airports. The city sent out initial requests for bids to take on the first attempt at implementing such a complex baggage system, with not much response. Eventually they had no choice but to approach BAE, whose superior reputation in the field of baggage handling had already motivated United Airlines to contract them to design their baggage handling system. This system was to be implemented in United’s Concourse B without integration with the other concourses (Montealgre et al, 1996, p. 8). In return, BAE offered the city of Denver a proposal to develop the “most complex automated baggage system ever built” (Montealgre et al, 1996, p. 9). The whole DIA project was to be a public works project involving many shareholders with various financial sources and intentions. The main shareholders

A privately financed project was a specified from of PPP that involved not only private sector financing but also controlling ownership. PFPs differed. From the outsourcing or construction by the government. There has been widespread adoption by Governments across the world of Public Private Partnerships (PPPs) as a way of providing public infrastructure. Grimsey and Lewis report that the UK version of PPPs,

Government funding through grants and loans is particularly important given the low profit margins in U.S. petroleum in the current market. Many infrastructure revitalization and replacement plans have high upfront costs that are often too high a risk for the private

The implementation phase of the Chunnel Tunnel was rife with risks and issues as the project team opted to fast track the design and construction phases of the project (Anbari, et al.,2005, p. 12). Fast tracking is described by the Project Management Institute (2013, p. 540) as a schedule compression technique in which activities or phases normally done in sequence are performed in parallel for at least a portion of their duration. Typically, project teams use this technique in hopes of shortening the delivery timeframe with the knowledge that this approach makes the project susceptible to additional risks (Anbari, et al.,2005, p. 10). The Chunnel Tunnel project team chose to fast track overlap the execution of these two phases due to schedule delays and cost overruns in previous phases. For the project team, compressing the construction time was crucial to ensure that the project objectives would be completed. In time, banks and private investors recognized the incremental risks associated with continuous delays and began weighing in on project decisions to minimize risks (Anbari, et al.,2005, p. 9). Financial stakeholders expected a return on investment (ROI) and the project team allowed them to have too much control when recommending risk mitigation strategies (Anbari, et al.,2005, p. 9). Thus, subcontractor contracts were changes to fixed price contract and later resulted in a contractor claim (Anbari, et al.,2005, p. 9).

The basis of Design Build Finance and Operate for procuring a major public sector project

Franchising is a type of business in which a business grants the other business the right to use the brand name, business systems and processes in order to produce goods and services according to certain specifications. The party which gives out the rights to the other party to use their name is called the franchisor and the party purchasing the rights of the other business to use their name is known as the franchisee. Franchising is a type of a license given by the franchisor to the franchisee in order to allow the franchisee to sell goods and services under the name of the franchisor; the franchisee pays a certain amount of fees to the franchisor to buy their license. Franchising is one of the most popular methods in the world today to do

Benefits that would get by the both parties which is franchisor and franchise through different useful Franchise Development Programme from different organization such as lower their business risks, get the maximum profit and so on. In the case study that our group chosen is Ayamas, franchisee would get the lower business risks that means the business risk will decrease to minimum and the franchisee no need to worry about their business will make them bankrupt because the risk is low. Next, opportunity to market goods or services that are acceptable in the market which means the goods or service must have acceptable by the public and follow the rules of the country. For example, in Malaysia, foods that are halal must have registered the certificate of halal and stamp the logo of halal on the foods to show that it is safe for muslin. It would get the market to sell halal foods in Malaysia. Economic benefits of scale is one of the benefits for franchisee. It means franchisee can enjoy the benefits of economies of scale that are bring high profit and money return to their business.

There however are challenges in the industry occasioned by uncertainty on future spending on construction projects by the government. Moreover, the cost of doing business and the ability to increasingly make revenue have created a challenging environment for the construction firms. Therefore stakeholders in the construction industry are concerned with whether the government would increase its spending and whether the public construction projects will be available in the future since less than 10 percent are currently financing their clients.

As this table illustrates, many of the stakeholders are similar. However, there are significant differences in the asset providers and those entities with a direct financial interest. This variance drives major differences in the evaluation of investment in projects in either area, freight or passenger transportation. In freight operations, most often the assets are provided by private firms with a direct interest in the operation of freight transportation services on the asset. In most passenger transportation systems, the asset provider is a public entity, such as a transit authority.

Since the PPPs are used to develop public facilities , such as hospitals, roads, and defense facilities, we have to pay more attention to the payment mechanisms and the risks that are associated with these types of project. The main reason for that is they can significantly affect the outcomes of the PPPs because they can influence the incentives of the public and private entities to deliver the facility that must satisfy the users requirements and needs .

When the newly elected government decides whether to allocate extra funds to complete a particular infrastructure project, the costs that have already been incurred become ‘sunk costs’. The decision should be based on a comparison of the extra benefits and extra costs that will result from completing the project, evaluated at that point in time. Insisting that all projects be completed could result in ‘throwing good money after bad’ and in investments being made by the government for which costs exceed benefits.

Since private participation in infrastructure is restricted in developing countries, predominantly in India, cost recovery and methods to perfect policy and institutional outlines are vital for generate a virtuous circle of growth and investment.

As the Infrastructure development remains a key constraint, the government 's role remains essential. India 's government has long struggled to set aside enough money for infrastructure investment. The past decade has seen improvement on this front, largely because of private-sector involvement. Also, political pressure to keep