A contract period optimization model for shared water saving management contract based on win-win

Abstract

Aiming at the contract period of Shared Water Saving Management Contract (WSMC), this paper establishes a contract period optimization model based on win-win. Firstly, the water-saving investment and revenue are modeled as stochastic processes considering the fluctuation of uncertain variables such as operation and maintenance cost, water-saving amount and water price. Secondly, the profits of the water owner and Water-Saving Service Company (WSCO) are portrayed separately based on the WSMC market service mechanism. Then, the contract period model is constructed by minimizing the difference between the NPV of the two parties involved in the project as a constraint. Finally, the model is applied to two real cases, where the optimized contract period is 9 years in Case 1 and 12 years in Case 2. In addition, several variables affecting the model are analyzed, allowing the model to expand its applicability.

Keywords:

• WSMC
• contract period
• uncertainty modeling
• win-win

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant number 61873084].