The tradeoff between contract certainty and flexibility means that very early in the planning stage public authorities need to decide whether to retain risks resulting from future changes to the situation or to attempt to pass some or all of that risk to a private party. Indeed, they must consider whether or not the public party is even willing to accept the risk and, if they are willing, to accept its potential cost. For instance, hospitals might be completely privately operated and funded with the private sector taking on all the risk of the appropriateness of the facilities and usage, in the same way that any private company takes on the risk of any venture. At the other end of the spectrum, the public sector may want to retain long-term ownership and usage, and instead let to a concession that defines the current functionality needed. In this circumstance, the public authority retains the risk and cost of future change, although it may seek to put in place methods needed to make changes- either minor or major-as they wish.
As a rule of thumb, the greater the risk and cost of change that is passed to the private sector, the more conservative the funding structures (term, leverage, pricing, etc.) from the banks will be. Equity investors will seek higher returns for the additional risk they consider they are taking on.