Legal Risk Management between the Project Corporations and Secondary Contractors in BOT Project

Governors either cannot afford infrastructures due to shortage of budgets or, for some reason, they are reluctant to finance these projects. Hence, they appeal to the methods of financing infrastructure projects through the private sector including the conventional contract method BOT (Building, Opration and Transfer). Although, the main BOT contract is between the government and the project corporation, the contractor would sign agreements with other secondary contractors, various corporations, financial institutions, and banks to implement the projects. The multiplicity of the partners, contractors, and the fact that they are from different countries result in various risks. Among other things, the benefit of BOT to governments and their motivation to resort to BOT is the transfer of project risks to the project company. However, the contractor is not usually qualified enough to manage and accept all the project risks and tries to attribute some of the risks to the other parties involved such as construct contractors, operators, providers of raw materials, and product and service customers.