Non-Price Competition

Price Competition

"Creates the right psychological foundation."

"Use when the Owner must make a choice between competing proprietary technologies/ solutions."

"More likely to align alliance Owner and Non-Owner goals after contract signature since the target cost is developed collaboratively."

"Use when the choice of technology could have a substantial impact on the capital and/ or the operating cost of the project or facility."

"The Owner and NOPs approach the development of the TOC in good faith, with sufficient checks and balances."

"The use of cost competition inherently demonstrates value for money."

"Promotes greater collaboration than other alliance models."

"Weakens the psychological foundation of the alliance."

"Must be underpinned by a comprehensive strategy to ensure VfM is (demonstrably) achieved."

"Competing proponent teams are more likely to actively seek out and incorporate innovations to reduce their respective TOCs and give them the best chance of securing work."

"Other alliance models cater for some of its shortcomings."

"The nature of the process precludes the kind of close collaboration and integration that can lead to opportunities for innovation."

"Facilitates faster tender selections and encourages maximum industry participation."

"Provides the opportunity for the Owner to work with each of the two final proponents over several months and make a more informed assessment of their respective capabilities."

"There is potential for reduced project costs, earlier completion and better outcomes in general, for special projects under extraordinary circumstances, through incentives for cost savings, cooperation and relationship management."

"Eliminates several of the VfM concerns of 'single TOC albeit at the expense of reduced collaboration."

"Involvement of the contractor and stakeholders in design decisions facilitates the development of appropriate responses to the project objectives, providing potential for innovation to improve outcomes."

"It may be difficult to make a fair comparison between two proponents."

"There is more certainty and less risk for non-agency participants."

"Where complex stakeholder issues exist, two separate proponent teams may unduly complicate matters."

"Fast tracking of the project is possible."

"Introducing cost competition/tension may sharpen the approach, especially in areas that are difficult to benchmark such as the provisions for risk."

"Issues that could cause claims and disputes are more likely to be resolved in the manner that is best for the project."

"May drive the competing proponents to underplay the possibility and/or consequence of risks. This could give risk to potentially harmful consequences where the resulting TOC does not contain adequate contingency."

"Success depends on teamwork and the adaptability, performance and attitudes of individuals."

"The competitive element under price competition may lead to inadequate contingency which in turn may lead to more inclination for scope changes and less common purpose."

"There are more demands on all personnel involved, and a change in culture and attitude may be required for many."

"Both teams need to be the best available from the proponent organisations. This means two sets of quality personnel are dedicated to the project for an extended period of time, although only one set will continue through to deliver the project."

"Non-agency participants are required to make extra effort to achieve "stretch" goals; manage changes to culture and attitudes; set up accounts open to public scrutiny; and commit the best people to one project."

"The additional cost of running two teams in parallel, including the Owner's extra staffing requirements, is likely to offset any reduction in the TOC."

"Non-agency participants expect and receive a substantially higher margin (including profit) for the additional input required."

"Price competition can be a waste of NOP resources."

"More agency resources and higher costs are involved to manage tendering processes, establish the alliance, maintain relationships and determine costs."

"As the Owner funds the design activities, all foreground intellectual property associated with the design is transferred to the Owner."

"Quality can be compromised to meet cost targets."

"Introduces large sunk costs to the alliance Owner."

"Risk allocation may not be clear, and the agency bears the risks once the specified liability of other participants is exceeded."

"Requires a much higher Owner resource."

"There is less price competition and less certainty of obtaining value for money."

"Proponents treat the process more like a design and construct bid."

"Consultant costs for project development and design are likely to be higher."

"It may be difficult to make a fair comparison between the two TOCs."

"The agency loses some litigation rights, and reduced Professional Indemnity insurance cover is provided by the participants."

"There may be lack of clarity, consistency, ownership of the TOC and commitment to it where the opportunity for full and open conversations based on principles is limited by the need for the two competing proponent teams to remain separate."