In contracts for construction of public services infrastructure, the private sector has strong incentives to reduce costs over the life of the project, which affects the quality of the service. This paper extends the model of Hart to evaluate the benefits of public-private partnership, examining different types of ownership and introducing a simple mechanism for renegotiation. The exercise shows that government involvement is not justified by their ability to make innovations in quality, but because it internalizes the costs and benefits of investment in cost reduction by the private sector.