Designing contracts for chaos

Long-term infrastructure contracts cannot anticipate every shock over their 20- or 30-year life. When the financial model breaks, rigid contracts offer no way to adapt and can paralyse the public authority that depends on them.

This policy brief by Miguel Díaz-Martínez (Visiting Policy Fellow, Institute for Policy Research) draws on two Colombian transit systems that met that moment under identical national law and opposite fates: Bogotá’s was restructured and survives; Bucaramanga’s collapsed into liquidation.

The decisive difference for Bogotá’s success was not the contract’s wording but the institution behind it – a single authority able to act, the capacity to build a defensible case, and protection for the officials who put their names to the decision.

The brief sets out five conditions that determine whether adaptation is possible, and argues that flexibility must be engineered into contracts before a crisis arrives. It draws direct lessons for UK debates on HS2, the Private Finance Initiative, and the design of Great British Railways and bus franchising.

Published July 2026.