Skip to main content

Abstract

While the previous chapter provided a theory-based perspective over renegotiations, this chapter focusses on a set of research questions with the aim to provide a comprehensive and systematic overview of the empirical research on PPP renegotiations. The objective is to provide evidence from real world examples and research, on how renegotiations occurred. Based on the existing literature, our key research questions can be posed as follows:

  • How frequent are renegotiations in PPPs?

  • Who initiates the renegotiation process?

  • When do renegotiations happen?

  • What are the main motives for the occurrence of renegotiations?

  • What are the main results of renegotiations?

  • What are the main determinants of renegotiation processes?

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 119.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 159.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 159.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Aghion, P., & Tirole, J. (1994). The management of innovation. The Quarterly Journal of Economics, 109(4), 1185–1209.

    Article  Google Scholar 

  • Andrade, I., Cruz, C. O., & Sarmento, J. M. (2018). Renegotiations of water concessions: Empirical analysis of main determinants. Journal of Water Resources Planning and Management, 144(11), 04018073.

    Article  Google Scholar 

  • Artana, D., Navajas, F., & Urbiztondo, S. (1998). Regulation and contractual adaptation in public utilities: the case of Argentina (p. 115). Infrastructure and financial markets division: Inter-American development bank, Sustainable development department.

    Google Scholar 

  • Bae, D. S., Damnjanoic, I., & Kang, D. H. (2019). PPP renegotiation framework based on equivalent NPV constraint in the case of BOT project: Incheon Airport Highway, South Korea. KSCE Journal of Civil Engineering, 23(4), 1473–1483.

    Article  Google Scholar 

  • Bajari, P., & Tadelis, S. (2001). Incentives versus transaction costs: A theory of procurement contracts. Rand journal of Economics, 387–407.

    Google Scholar 

  • Bitran, E., Nieto-Parra, S., & Robledo, J. S. (2013). Opening the black box of contract renegotiations: An analysis of road concessions in Chile., Colombia and Peru.

    Google Scholar 

  • de Brux, J. (2010). The dark and bright sides of renegotiation: An application to transport concession contracts. Utilities Policy, 18(2), 77–85. https://doi.org/10.1016/j.jup.2009.07.003.

    Article  Google Scholar 

  • Campos, N., Engel, E., Fischer, R., & Galetovic, A. (2019). Renegotiations and corruption in infrastructure: The Odebrecht case (No. 0230). Dipartimento di Scienze Economiche “Marco Fanno”.

    Google Scholar 

  • Crocker, K. J., & Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. The RAND Journal of Economics, 24, 126–146.

    Article  Google Scholar 

  • Cruz, C. O., & Marques, R. C. (2012). Using the economic and financial reequilibrium model to decrease infrastructure contract incompleteness. Journal of Infrastructure Systems, 19(1), 58–66.

    Article  Google Scholar 

  • Cruz, C. O., & Marques, R. C. (2013a). Endogenous determinants for renegotiating concessions: Evidence from local infrastructure. Local Government Studies, 39(3), 352–374. https://doi.org/10.1080/03003930.2013.783476.

    Article  Google Scholar 

  • Cruz, C. O., & Marques, R. C. (2013b). Exogenous determinants for renegotiating public infrastructure concessions: Evidence from Portugal. Journal of Construction Engineering and Management, 139(9), 1082–1090. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000710.

    Article  Google Scholar 

  • Cruz, C. O., & Marques, R. C. (2013c). Integrating infrastructure and clinical management in PPPs for health care. Journal of Management in Engineering, 29(4), 471–481.

    Article  Google Scholar 

  • Cruz, C. O., Marques, R. C., & Franco, D. (2015). Road-network development in quickly-growing economies: Brazilian case study MG-050. Journal of Infrastructure Systems, 21(4), 05015002.

    Article  Google Scholar 

  • Dewatripont, M. (1988). Commitment through renegotiation-proof contracts with third parties. The Review of Economic Studies, 55(3), 377–390.

    Article  Google Scholar 

  • Dolla, T., & Laishram, B. S. (2018). Procurement of low carbon municipal solid waste infrastructure in India through public-private partnerships. Built Environment Project and Asset Management, 8(5), 449–460.

    Article  Google Scholar 

  • Domingues, S., & Sarmento, J. M. (2016). Critical renegotiation triggers of European transport concessions. Transport Policy, 48, 82–91. https://doi.org/10.1016/j.tranpol.2016.02.016.

    Article  Google Scholar 

  • Domingues, S., & Zlatkovic, D. (2015). Renegotiating PPP contracts: Reinforcing the “P” in partnership. Transport Reviews, 35(2), 204–225. https://doi.org/10.1080/01441647.2014.992495.

    Article  Google Scholar 

  • Edlin, A. S., & Hermalin, B. E. (1997). Contract renegotiation in agency problems (No. w6086). National Bureau of Economic Research.

    Google Scholar 

  • Engel, E., Fischer, R., & Galetovic, A. (2006). Renegotiation without holdup: Anticipating spending and infrastructure concessions. National Bureau of economic research working paper series (vol. no. 12399). https://doi.org/10.3386/w12399

  • Engel, E., Fischer, R., & Galetovic, A. (2009). Soft budgets and renegotiations in public-private partnerships. National bureau of economic research working paper series (vol. no. 15300). https://doi.org/10.2139/ssrn.1460688

  • Estache, A., Guasch, J. L., Iimi, A., & Trujillo, L. (2009). Multidimensionality and renegotiation: Evidence from transport-sector public-private-partnership transactions in Latin America. Review of Industrial Organization, 35, 41–71. https://doi.org/10.1007/s11151-009-9225-0.

    Article  Google Scholar 

  • Estache, A., Guasch, J.-L., & Trujillo, L. (2003). Price caps, efficiency payoffs and infrastructure contract renegotiation in Latin America. World bank policy research working paper 3129. https://doi.org/10.1596/1813-9450-3129

  • Fernandes, C., Cruz, C. O., & Moura, F. (2019). Ex post evaluation of PPP government-led renegotiations: Impacts on the financing of road infrastructure. The Engineering Economist, 64, 116–141. https://doi.org/10.1080/0013791X.2018.1559384.

    Article  Google Scholar 

  • Green, J. R., & Laffont, J. J. (1992). Renegotiation and the form of efficient contracts. Annales d’Economie et de Statistique, 123–150.

    Google Scholar 

  • Guasch, J. L. (2004). Granting and renegotiating infrastructure concessions: Doing it right. Washington, DC: The World Bank. Retrieved from www.worldbank.org

  • Guasch, J. L., Benitez, D., Portabales, I., & Flor, L. (2014). The renegotiation of PPP contracts: An overview of its recent evoluation in Latin America. Discussion paper 2014–18, International Transport Forum, OECD.

    Google Scholar 

  • Guasch, J. L., Laffont, J. J., & Straub, S. (2003). Renegotiation of concessions contracts in Latin America. Policy research working paper 3011, The World Bank.

    Google Scholar 

  • Guasch, J. L., Laffont, J. J., & Straub, S. (2006). Renegotiation of concession contracts: A theoretical approach. Review of Industrial Organization, 29(1–2), 55–73. https://doi.org/10.1007/s11151-006-9109-5.

    Article  Google Scholar 

  • Guasch, J. L., Laffont, J. J., & Straub, S. (2007). Concessions of infrastructure in Latin America: Government-led renegotiation. Journal of Applied Econometrics, 22, 1267–1294. https://doi.org/10.1002/jae.

    Article  Google Scholar 

  • Guasch, J. L., Laffont, J. J., & Straub, S. (2008). Renegotiation of concession contracts in Latin America. Evidence from the water and transport sectors. International Journal of Industrial Organization, 26(2), 421–442. https://doi.org/10.1016/j.ijindorg.2007.05.003.

    Article  Google Scholar 

  • Guasch, J. L., & Straub, S. (2009). Corruption and concession renegotiations. Evidence from the water and transport sectors in Latin America. Utilities Policy, 17(2), 185–190. https://doi.org/10.1016/j.jup.2008.07.003.

    Article  Google Scholar 

  • Hart, O., & Moore, J. (1988). Incomplete contracts and renegotiation. Econometrica: Journal of the Econometric Society, 755–785.

    Google Scholar 

  • Ho, S. P. (2006). Model for financial renegotiation in public-private partnership projects and its policy implications: Game theoretic view. Journal of Construction Engineering and Management, 132(7), 678–688.

    Article  Google Scholar 

  • Hodge, G. A., & Greve, C. (2009). PPPs: The passage of time permits a sober reflection. Economic Affairs, 29(1), 33–39.

    Article  Google Scholar 

  • Holmstrom, B. R., & Tirole, J. (1989). The theory of the firm. Handbook of Industrial Organization, 1, 61–133.

    Article  Google Scholar 

  • Howell, B., & Sadowski, B. (2018). Anatomy of a public-private partnership: Hold-up and regulatory commitment in Ultrafast Broadband. Telecommunications Policy, 42(7), 552–565.

    Article  Google Scholar 

  • Khallaf, R., Naderpajouh, N., & Hastak, M. (2016). A risk registry for renegotiation in public private partnerships (PPP) projects: ICRAM-PPP. In Construction research congress 2016: Old and new construction technologies in historic San Juan (pp. 2669–2678). American Society of Civil Engineers.

    Google Scholar 

  • Khallaf, R., Naderpajouh, N., & Hastak, M. (2018). Modeling three-party interactional risks in the governance of public–private partnerships. Journal of Management in Engineering, 34(6), 04018040.

    Article  Google Scholar 

  • Klein, B., Crawford, R. G., & Alchian, A. A. (1978). Vertical integration, appropriable rents, and the competitive contracting process. The journal of Law and Economics, 21(2), 297–326.

    Article  Google Scholar 

  • Kumar, L., Jindal, A., & Velaga, N. R. (2018). Financial risk assessment and modelling of PPP based Indian highway infrastructure projects. Transport Policy, 62, 2–11.

    Article  Google Scholar 

  • Li, X., & Hao, S. (2017, July). The PPP project renegotiation analysis based on the asymmetric game model. In 2017 4th International conference on industrial economics system and industrial security engineering (IEIS) (pp. 1–5). IEEE.

    Google Scholar 

  • Lohmann, C., & Rötzel, P. G. (2014). Opportunistic behavior in renegotiations between public-private partnerships and government institutions: Data on public-private partnerships of the German armed forces. International Public Management Journal, 17(3), 387–410.

    Article  Google Scholar 

  • Lohmann, C., & Rötzel, P. G. (2018). The outcome of renegotiations between institutionalized public–private partnerships and their public clients: Data on the public–private partnerships of the german federal armed forces. International Journal of Public Administration, 41(9), 735–745.

    Article  Google Scholar 

  • Macário, M. D. R. M. R., Costa, J. D., & Ribeiro, J. A. M. (2015). Cross-sector analysis of four renegotiated transport PPPs in Portugal. Transport Reviews, 35(2), 226–244. https://doi.org/10.1080/01441647.2015.1012755.

    Article  Google Scholar 

  • Maskin, E., & Moore, J. (1999). Implementation and renegotiation. Review of Economic studies, 39–56.

    Google Scholar 

  • Menezes, F., & Ryan, M. (2015). Default and renegotiation in public-private partnership auctions. Journal of Public Economic Theory, 17(1), 49–77.

    Article  Google Scholar 

  • Neto, D., Cruz, C. O., & Sarmento, J. M. (2017). Understanding the patterns of PPP renegotiations for infrastructure projects in Latin America: The case of Brazil. Competition and Regulation in Network Industries, 18(3-4), 271–296.

    Article  Google Scholar 

  • Nikolaidis, N., & Roumboutsos, A. (2013). A PPP renegotiation framework: A road concession in Greece. Built Environment Project and Asset Management, 3(2), 264–278.

    Article  Google Scholar 

  • Owusu-Manu, D. G., Edwards, D. J., Kukah, A. S., Parn, E. A., El-Gohary, H., & Hosseini, M. R. (2018). An empirical examination of moral hazards and adverse selection on PPP projects: A case study of Ghana. Journal of Engineering, Design and Technology, 16(6), 910–924.

    Article  Google Scholar 

  • Sarmento, J. M., & Renneboog, L. (2016a). Anatomy of public-private partnerships: Their creation, financing and renegotiations. International Journal of Managing Projects in Business, 9(1), 94–122.

    Article  Google Scholar 

  • Sarmento, J. M. & Renneboog, L. (2016b). Renegotiating public-private partnerships. European Corporate Governance Institute (ECGI)-finance working paper (461).

    Google Scholar 

  • Sarmento, J. M., & Renneboog, L. (2017). Cost overruns in public sector investment projects. Public Works Management & Policy, 22(2), 140–164.

    Article  Google Scholar 

  • Sharafi, A., Taleizadeh, A. A., & Amalnick, M. S. (2018). Fair allocation in financial disputes between public–private partnership stakeholders using game theory. Service Science, 10(1), 1–11.

    Article  Google Scholar 

  • Shi, L., Zhang, L., Onishi, M., Kobayashi, K., & Dai, D. (2018). Contractual efficiency of PPP infrastructure projects: An incomplete contract model. Mathematical Problems in Engineering, 2018, 3631270.

    Google Scholar 

  • Soliño, A. S., & Gago de Santos, P. (2016). Influence of the tendering mechanism in the performance of public-private partnerships: A transaction cost approach. Public Performance & Management Review, 40(1), 97–118.

    Article  Google Scholar 

  • Squeren, Z. L., & Moore, J. (2015). The political cycle of public-private contract renegotiations: Evidence from the French car park sector. In 19th Annual Conference of the international society for new institutional economics - ISNIE 2015 (pp. 1–43).

    Google Scholar 

  • Sun, H., & Yin, X. (2017). Seek a positive renegotiation mechanism for PPP projects. In Advances in public-private partnerships (pp. 354–364). Reston, VA: American Society of Civil Engineers.

    Google Scholar 

  • Tirole, J. (1999). Incomplete contracts: Where do we stand? Econometrica, 67(4), 741–781.

    Article  Google Scholar 

  • Valéro, V. (2015). Government opportunism in public-private partnerships. Journal of Public Economic Theory, 17(1), 111–135.

    Article  Google Scholar 

  • Wee, B. V., & Banister, D. (2016). How to write a literature review paper? Transport Reviews, 36(2), 278–288.

    Article  Google Scholar 

  • Williamson, O. E. (1976). Franchise bidding for natural monopolies – in general and with respect to CATV. Bell Journal of Economics, 7(1), 73–104.

    Article  Google Scholar 

  • Wu, S. & Yang, Y. (2016, May). Analysis and review of key factors at PPP project renegotiation. In 2016 International conference on education, management and computer science. Atlantis Press.

    Google Scholar 

  • Xiong, W., & Zhang, X. (2014). The real option value of renegotiation in public–private partnerships. Journal of Construction Engineering and Management (February), 4016021. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001130

  • Xiong, W., & Zhang, X. (2016). The real option value of renegotiation in public–private partnerships. Journal of construction engineering and management, 142(8) 04016021.

    Google Scholar 

  • Xiong, W., Zhao, X., & Wang, H. (2018). Information asymmetry in renegotiation of public–private partnership projects. Journal of Computing in Civil Engineering, 32(4), 04018028.

    Article  Google Scholar 

  • Xiong, W., Zhao, X., Yuan, J. F., & Luo, S. (2017). Ex post risk management in public-private partnership infrastructure projects. Project Management Journal, 48(3), 76–89.

    Article  Google Scholar 

  • Zhang, X., & Xiong, W. (2015). Renegotiation and early-termination in public private partnerships. International Journal of Architecture, Engineering and Construction, 4(4), 204–213. https://doi.org/10.7492/IJAEC.2015.021.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and permissions

Copyright information

© 2021 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Oliveira Cruz, C., Miranda Sarmento, J. (2021). Renegotiation Analysis. In: The Renegotiations of Public Private Partnerships in Transportation. Competitive Government: Public Private Partnerships. Springer, Cham. https://doi.org/10.1007/978-3-030-61258-0_4

Download citation

Publish with us

Policies and ethics