Robust Decision-Making for Multiparty Renegotiations in Public–Private Partnerships

Abstract

Public–private partnerships (PPPs) increasingly face disputes that have significantly impacted their outcome. These disputes may result in legal actions or renegotiation, which in any case lead to outcomes such as increased contract duration, increased subsidy schemes, or changes in the risk-sharing mechanism between the public and private parties. Statistics have shown that a large number of PPPs go through renegotiations, sometimes even more than once during the concession period. As a result, communities, policy makers, planners, and managers are often challenged by the potential uncertainty stemming from the wide range of outcomes. This paper applies the concept of robust decision-making (RDM) to model renegotiations in a multiactor setting in public–private partnership projects. The analysis is based on a game theory model of the interaction scenarios and their simulation to assess the impact of potential mitigation strategies. The model is applied to the case study of the Tanzania Railway project to showcase the application of the proposed approach.