Research on the Relationship Between Flexible Contract Term Setting Method and Setting Effect of Environmental Protection PPP Project

Abstract Environmental protection PPP projects (EP-PPP) are subject to uncertainty during the project cycle, setting flexible project contract terms in their contracts can help establish and maintain an effective partnership. This article aims to reveal the contract flexibility mechanism of EP-PPP projects by studying the relationship between flexible contract term setting methods and their effects. Questionnaires, case studies and structural equation modeling (SEM) are applied to conduct quantitative analysis. The research shows that although some flexible terms have been adopted in current EP-PPP contracts, there is still much room for improvement. In order to deal with unforeseen risks and challenges, it is necessary to consider: (1) List uncertainties as much as possible and set up response methods accordingly; (2) Guarantee a certain degree of flexibility in uncertainty response methods; (3) Give the project itself a certain degree of autonomous response power; (4) Leave plenty space for changes that may be needed in the future. The study results can help project practitioners enhance their understanding of flexible contract terms and help to promote contract flexibility in EP-PPP projects in a context-specific manner, thereby facilitating project success.