Renegotiation can increase the chance of a dispute or challenge. This is particularly the case in developing markets with weaker institutional frameworks that lack the following features:
• A defined and transparent process and framework for renegotiation
• Transparency of the renegotiation process
• Established guidelines for levels of compensation
• A transparent framework for conflict resolution in the renegotiation process
The final decision on a renegotiation should be based on full disclosure of long-term costs, risks and potential benefits. The case for a renegotiation should be made explicit and recorded so that the decisions are made in a rational and defensible manner. Evidence should demonstrate that project distress is material and likely to result in default under the PPP contract or other serious adverse implications should it continue. The evidence should demonstrate that the distress is likely to cause adverse outcomes for the public sector and/or users of the service. Information management is detailed in Section 3.4 (Information management).