2.1.1 Alliancing success factors
An alliance is established by the Owner to deliver the Owner's VfM Statement13 (i.e. the project's approved capital and/or service objectives at a fair cost). It is useful to consider the successful establishment of the alliance as dependent upon four success factors shown in Figure 2.2:
Integrated, collaborative team
The combined team for an alliance project includes personnel from both the NOP and Owner organisations. These personnel will be allocated as members of both the leadership team and the management team. The affinity between members of the team and resulting project culture has a significant impact on the effectiveness of the key features of alliancing (described below) and the project outcomes. The Alliance Leadership Team (ALT) establishes and sustains the project culture.
Project solution
The project solution comprises the design solution, construction methodology and project delivery arrangements. The commercial arrangements and the TOC will be developed and agreed to reflect the unique project solution.
Commercial arrangements
The commercial arrangements, or the Commercial Framework, are agreed as part of the Project Alliance Agreement (PAA) and are intended to drive the alignment between the Participants. The commercial arrangements should reflect the unique project solution to ensure that the appropriate level of risk sharing and reward are achieved, and to drive the desired team behaviours and project outcomes.
The Target Outturn Cost (TOC) is the estimated actual costs of designing and constructing the assets. It should reflect the project solution and the commercial arrangements.
However, for these four factors to work successfully to deliver the project, they must be supported by a number of key features that must be applied effectively. These features could be described as 'enabling' the delivery of the alliance, and are identified in Figure 2.2 below.
Figure 2.2: Alliance Success Dynamics
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13 Refer to Guidance Note No 4, Reporting VfM Outcomes in Alliance Contracting for details and a template on preparing the Owner's VfM Statement