Government relies upon a comprehensive and robust business case from the agency, with clear and transparent assessments of the proposed investment and the procurement strategy, so it can decide whether to support any one investment proposal against competing priorities for public resources. The business case should be prepared by agencies in accordance with relevant Government policy and guidelines.8
Any recommendation to proceed with an alliance procurement strategy to deliver the proposed investment should be supported by a business case that shows the potential for superior value or money outcomes compared to other procurement alternatives. Although the business case may prove otherwise, alliancing is unlikely to provide such outcomes for projects with a capital value of less than $50 million, primarily due to the resources which are required (from both the agency and industry) to set up and maintain an effective project or program alliance. Alliancing should only be considered for small projects if the agency's business case has expressly addressed the relevant resource impacts and costs. It is important for any recommendation by an agency to use an alliance contract (where there is an anticipated capital value of less than $50 million) to be accompanied by supporting information and a full procurement strategy analysis.
Where an agency intends to establish a program alliance9, this policy still requires the agency to show the superior case for using alliance contracting to deliver the project(s), and for selecting the program alliance approach, in the business case.
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8 For example, see National Public Private Partnerships Guidelines; and the Victorian Lifecycle Guidance Material.
9 A program alliance is effectively a pre‐qualified panel of potential alliancing parties that an agency establishes so it can expeditiously and conveniently select from the panel to form an alliance for a specific project or for a package of related works.