Flexibility in PPP contracts - Dealing with potential change in the pre-contract phase of a construction project

Public Private Partnerships (PPPs) cover a range of possible relationships between public and private parties. PPP contracts are typically used in contexts of great uncertainty, such as large construction and infrastructure projects that are realized over a longer period of time. Hence, a major chal...

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Bibliographic Details
Published in:Construction management and economics 2017-04, Vol.35 (4), p.196-206
Main Authors: Demirel, Hatice Çiğdem, Leendertse, Wim, Volker, Leentje, Hertogh, Marcel
Format: Article
Language:English
Subjects:
Availability
change
Change detection
complexity
Construction
Construction contracts
Construction costs
Contracts
Cost control
DBFM
Face recognition
Flexibility
Infrastructure
Partnerships
Phase transformations
Phase transitions
Project
Public private partnerships
Studies
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Summary:Public Private Partnerships (PPPs) cover a range of possible relationships between public and private parties. PPP contracts are typically used in contexts of great uncertainty, such as large construction and infrastructure projects that are realized over a longer period of time. Hence, a major challenge in PPPs is to keep construction progress cost-efficient and on schedule, under continuously changing circumstances. One way to achieve this is through clever contracting, by proactively anticipating potential change in the planning phase and providing flexible contract mechanisms that enable an effective response. The purpose of this article is to discuss potential changes and the subsequent requirement of flexibility in PPP contracts. By flexibility, we mean the ability of the contract to deal with changing circumstances. We set out to do so by studying the available literature on the subject and by analysing the case study of the Blankenburgverbinding in the Netherlands, a Design, Build, Finance and Maintain (DBFM) project that is currently in its planning phase based on 32 interviews. Our main findings are that the timely and accurate recognition of potential changes, combined with the availability of flexible coping mechanisms, provide the stakeholders with a better understanding of the challenges they face in realizing their aims in the pre-contract phase of projects. This understanding helps to better prepare a PPP contract for potential changes.
ISSN:0144-6193
1466-433X
DOI:10.1080/01446193.2016.1241414