Ranking of innovative financing instruments for urban projects using a hybrid multi-criteria approach (case study: Hamedan Municipality)

Samavat, Ali; Sohrabi, Ruhollah; Rahbar, Amirhossein

doi:10.22034/uep.2025.556777.1758

Ranking of innovative financing instruments for urban projects using a hybrid multi-criteria approach (case study: Hamedan Municipality)

Document Type : Original Article

Authors

Ali Samavat ¹

Ruhollah Sohrabi ²

Amirhossein Rahbar ³

¹ Master of Business Administration, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

² Associate professor, Department of Management, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

³ Assistant professor, Department of Management, Faculty of Management and Accounting, Bu-Ali Sina University, Hamedan, Iran

10.22034/uep.2025.556777.1758

Abstract

With the expansion of metropolises and the increasing demand for urban services, traditional municipal revenues are not sufficient to cover development and current costs. This financial gap makes the move towards modern financing methods necessary. The present research was conducted with the aim of prioritizing 24 innovative financing instruments (derived from the literature) for 5 selected projects of Hamadan Municipality, employing a quantitative strategy and utilizing the opinions of 15 experts in the field of finance and investment. For this purpose, multi-criteria decision-making (MCDM) techniques were applied, wherein the weighting of criteria was performed through the Analytic Hierarchy Process (AHP), and the final ranking of alternatives was conducted using the TOPSIS technique. Findings showed that among the five criteria (risk, cost, time, return, and efficiency), the “efficiency” indicator, with a weight of 0.476, holds the highest importance in selecting the financing method. Furthermore, the project prioritization results indicate that in large-scale and revenue-generating projects with stable cash flows, participatory methods of the BOT family are the priority. Whereas for real estate projects lacking continuous income and based on asset value, the instruments of “land and building fund,” “civil partnership,” and “barter” are considered preferred options. In commercial projects, the “civil partnership” method also achieved a superior position. Finally, the results emphasize the necessity of municipalities transitioning from traditional financing methods to modern modes relying on private sector investment and demonstrate that selecting the appropriate method does not have a single solution and must be undertaken flexibly and in proportion to the nature and scale of each project.

Keywords

Hamadan

Multi-criteria decision making

Public-private partnership (PPP)

Urban financing

Subjects

Urban Economy

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