Contractual incompleteness and renegotiations of public private partnerships : a mixed-methods analysis

Public-private partnerships (PPPs) are frequently renegotiated. The reason is that these long-term contracts (of over 30 years) require major investments and therefore are necessarily incomplete. Thus, research perceives the renegotiation of PPPs as their biggest pitfall. The abnormal occurrence of renegotiations leads to low efficiency and potential problems in this type of organizational choice. This study addresses the contractual incompleteness and the effect of renegotiations by using Portuguese PPPs. The use of mixed methods (a qualitative approach using fsQCA and a quantitative one) provides a deeper knowledge of the conditions that can cause renegotiations. The results show that investment, debt, type of shareholder, and type of payment have a strong effect on the occurrence or absence of renegotiations. Regulatory agencies responsible for both the creation and the renegotiation of PPPs must consider these findings in the design of PPP contracts, particularly regarding the payment conditions of each project, as this is a critical condition for posterior renegotiation of contracts.