Title: Renegotiation of Transportation Public-Private Partnerships

Language: English

Type: Document

Nature: Report

Published: January 1, 2014

Region: North America

Country: United States

Keywords: PPP Cycle, PPP Reference Guide, Online Guide

Document Link(s):

• Renegotiation of Transportation Public-Private Partnerships The U.S. Experience

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Document Summary:

Public-private partnerships (P3s) 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 P3 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. This study examines the US experience with highway P3 renegotiations, including four types of event: contract modifications, defaults, bankruptcies and buyouts. While the US highway P3 market has grown gradually, failure to understand renegotiations and their potential consequences may dampen the market and adversely affect national infrastructure investment efforts. The analysis finds that insufficient evidence exists to disentangle the drivers of renegotiation in the US, although exogenous changes and contractual relationship complexity appear to be paramount. The analysis highlights the distinct political and institutional environment that shapes highway P3 renegotiations in the US, suggesting the need for continuing and sensible analysis to effectively manage the undesirable consequences of renegotiations.

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Document Details:

Gifford, Jonathan, Lisardo Bolaños, and Nobuhiko Daito. 2014. “Renegotiation of Transportation Public-Private Partnerships: The U.S. Experience.” Discussion Paper 2014-16. Paris: Organisation for Economic Co-operation and Development, International Transport Forum. [#4672]

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Updated: June 27, 2022