Greater certainty of achieving desired project outcomes is often noted as a benefit of alliancing or as a characteristic on when to use alliancing. The outcomes described in this context generally include:
• On-time or early completion.
• Optimum asset lifecycle cost and performance.
• Stakeholder satisfaction.
• Knowledge transfer and job satisfaction for Owner's staff.
• Quality, safety and environmental management performance.
The certainty of achieving these outcomes in alliancing is said to be a result of:
• Aligning the objectives of the alliance participants.
• Providing incentives for the NOPs to achieve these objectives.
• Collective ownership of project risks and outcomes.
• Collaboration and flexible approach to management.
Alliances are also widely regarded as providing greater certainty of outturn cost. However, there are varying views as to whether this means a smaller range of possible outcomes around the TOC or enhanced probability ('certainty') that the actual outturn costs will be less than TOC. Owners need to be clear if they are seeking one or both of these since it will have a material impact upon the TOC. The results of this Study found that the majority of alliances deliver the actual outturn costs extremely close to the TOC but that the TOC is generally significantly greater than the business case estimate.
While this can be considered as a possible indicator of certainty of outcomes it should not be considered an indicator of VfM. It also raises the following questions in relation to VfM:
• What certainty of outcome does the Owner (investor) require?
• How should the project outcomes and required level of certainty be defined and by whom?
• What premium should be paid for certainty of outcomes and how should the appropriate premium be determined?
It was observed that an emphasis by alliances on outstanding outcomes may result in outcomes exceeding the business case objectives. This is compounded by the fact that the costs associated with exceeding business case objectives are often included in the TOC. Hence it is possible that the Owner may be paying more for something they did not want or need.
Alliances should consider outcomes rather than certainty of outcomes. A focus on VfM suggests achieving the business case objectives at minimum cost, rather than exceeding business case objectives at additional cost.