A best-for-project approach is intended to drive all decision-making processes. However, it is not a guarantee that the actual outcome of a relevant decision will be best for the project. That is, whether or not the alliance Participants regard a decision (at the time it is made) as best-for-project, this does not change the practical effect of the decision on the Commercial Framework, or the financial impact of the decision under the Risk or Reward regime. This is not intended to be a criticism of the best-for-project concept. Rather, it is simply to recognise the distinction between:
• the intent or guiding principles behind the decision-making process; and
• the outcome-the risk of which is dealt with under the risk sharing provided for in the Commercial Framework.
Public sector agencies should ensure that this distinction is understood and recognised, that using the phrase best-for-project will not necessarily make it so, and that Owner Participants should ensure they are clear about:
• what best-for-project will mean: The definition must not be too narrowly focused on just the physical work to be performed by the Non-Owner Participants. It should include examples, and should reflect the Participants' specific behavioural obligations under the agreement (given that the concept is closely tied to the decision-making process).
• what the 'project' is: The definition needs to be broad enough to capture all the Owner Participants' aspirations and the objectives of stakeholders (much of this should be captured in the agency's Business Case for the project and the Owner's Value for Money (VfM) Statement6).
• how the risk/reward framework applies and what it means if, despite the aspirations, some outcomes are not the 'best'.
A common definition used in alliance agreements (which attempts to address each of these issues) is as follows:
An approach, determination, decision, outcome, solution or resolution that is consistent with our alliance principles, facilitate gamebreaking performance, is value for money for the State and which is arrived at or taken for the ultimate purpose of providing fit for purpose assets to the State.
However, even where care is taken to define best-for-project, it is still difficult to measure qualitatively whether an outcome is the best for the project. Alliance Participants need to understand that the concept only has limited use as an objective test for their performance, and the structuring of the Risk or Reward regime is an important tool for ensuring that the alliance achieves the relevant goals.
The obligation to adopt a best-for-project approach also requires the alliance to recognise that although a decision may be 'best' for the individual Non-Owner Participants' commercial interests, that decision may not facilitate the 'best' outcome for the Owner. For example, the Owner may need to take 'whole-of-state' network considerations and the wider community into account. For this reason, alliance agreements will often set out a number of discretions which are reserved for exercise by the Owner. This is intended to ensure the Owner has the right to override any decisions which may 'collectively' be viewed as best-for-project, but which do not align with the Owner's objectives for the project.
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6 See National Alliance Contracting Guidance Note 4: Reporting VFM Outcomes in Alliance Contracting.