Term

Description

Quantity

No indication

In none of the case studies

0

Little indication

In one or two of the case studies

1-2

Some/sometimes

In three or four of the case studies

3-4

Often

In five, six or seven of the case studies

5-7

Generally/majority

In greater than seven, but less than 14 of the case studies

8-13

Always

In all case studies

14

Key finding 1:  Business case - Defining the project's VfM proposition

Business cases often did not clearly define the project VfM proposition to the rigour required for investment decision making.

Particular findings of note:

•  The average increase from business case cost estimate to AOC was of the order of 45-55%.

•  The business case assessment of an optimum delivery method often tended to 'default' to alliancing using a non- price selection approach for NOPs and did not consider a range of other delivery options.

•  In general, a robust program and budget was not evident from the business case stage.

Business case development

1

2

3

4

5

6

7

8

9

10

11

12

13

14

AOC higher than business case cost estimate by more than 25%

Delivery methods other than alliancing using a non-price selection approach for NOPs, were considered at the business case stage

Evidence of a robust program and budget from the business case stage

Key finding 2:  Procurement strategy - Owner's rationale for selecting the alliance delivery method

Having considered project specific requirements, the primary reasons for selecting the alliance delivery method, in addition to those contained in the DTF Project Alliancing Practitioners' Guide were:

•  to achieve early project commencement through early involvement of the NOPs

•  to progress the project development in parallel with the project approvals.

In general, Owner's specifically used alliancing and the non-price competitive selection approach to attract key resources and capabilities to a project in a buoyant construction market.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Alliance method selected to achieve early commencement

Alliance method selected to progress project development in parallel with project approvals

Non-price competitive approach selected to attract NOPs in a buoyant construction market

Key finding 3:  Selecting the NOPs - Non-price and price competition 

Non-price competition

It was found that when non-price selection approaches were used to select NOPs:

•  Owner representatives generally indicated moderate to high levels of satisfaction with the selection process

•  Owner representatives sometimes noted that the selected NOP team members were either not made available to the project or left prematurely.

Price competition

Noting that the number of price competition approaches examined in this Study was limited to two case studies (consistent with current industry practice), it was found that when price competition was used to select NOPs:

•  Owner representatives reported a significant management demand on their organisation (compared with non-price selection approach).

•  the total cost to establish a TOC using price competition (two TOCs) was less (of the order of 2% of TOC) than when non-price selection (single TOC) was used.

•  the TOC was found to be of the order of 5-10% (of TOC) less, relative to non-price competition on the basis that the following items were lower (in aggregate and individually) when using price competition:

-  On-site overhead costs.

-  Design costs.

-  TOC development costs.

-  NOP profit margins.

Owners on all alliances in the Study advised that good relationships had developed and that the participants worked well together as effective teams. No discernible difference was found between alliances that used price competition and non- price competition.

It was also found that generally NOPs have a strong preference for alliancing over other traditional delivery methods. Additionally, NOPs have a strong preference for non-price selection approach over price selection approach.