Conjoint analysis: An innovative approach for sunk cost prevention in PPP contracts

Abstract

The preparation stage of PPPs is crucial in order to avoid unsuccessful negotiations that lead to sunk costs. The key to successful negotiations is to construct an effective contract reconciling the differing interests of all parties. Therefore, identification of the most important features of the project from both partners’ points of view is extremely important to ultimately concluding the negotiations successfully. The purpose of the study is to test and assess the usefulness of an innovatively adapted conjoint analysis method aimed at identifying the preferences of both partners involved in PPP.