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Public Private Partnerships for Transport Infrastructure

Renegotiation and Economic Outcomes

image of Public Private Partnerships for Transport Infrastructure

Public-private partnerships (PPPs) are an important vehicle for private participation in infrastructure investment, delivery and management. Renegotiations are an integral part of the PPP process but their prevalence varies markedly in different parts of the world. Renegotiations can be usefully employed to adjust the PPP contract to unforeseeable events, beyond the control of contractual parties. There is also a danger, however, that they will be used to change the initial balance of costs and benefits in the contract.

The purpose of this report was to provide an overview of the nature of PPP renegotiations in different regions of the world and at different times to help understand when PPP contract renegotiations are desirable and when they are not. In general it is concluded that when contracts are set up well, renegotiations should be few and far between.

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Renegotiation of transportation public-private partnerships: The US experience

International Transport Forum

Public-private partnerships (PPPs) typically rely on long-term contracts between participants. When conditions arise that fall outside the expectations embodied in the contract, one party may seek to renegotiate the contract terms. Globally, the frequency of PPP contract renegotiations has been sufficient to raise questions regarding why these events occur and what their consequences are for the projects and society. The literature highlights four relevant causes behind renegotiation occurrences: unexpected exogenous changes, the complexity of the contractual relationship, winner´s curse and rent seeking behavior.

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