There are a number of differences between alliancing and traditional contracting.19 These include:
The key features discussed in section 2.1.2 operate in an integrated manner to ensure that the Participants exercise common behaviours and pursue common goals to deliver the project. In other delivery methods, each contracting party generally has its own independent goals and risk allocation.
The Participants are jointly responsible for delivering the works.
The Participants agree not to litigate in respect of the performance of the works, with limited exceptions (including a breach of the relevant behavioural 'commitments').
The Owner does not pay a fixed price for performance of the Works, but reimburses the NOPs for all costs which have been reasonably and actually incurred in performing the works, plus any fee (generally related to Corporate Overhead and Profit).
The Participants share the benefit of a cost underrun, and the 'pain' of a cost overrun, under the Risk or Reward Regime; and
The Participants commit to an 'open book' arrangement and have broad mutual access and audit rights to each other's documentation.
In alliance contracting, a threshold issue for the Owner is their ability to provide appropriate capability to participate as a fully informed member of the alliance process.
| Owner capability is a key to alliance success Alliance contracting is a complex commercial transaction applied to complex projects. The Owner should have the capability to engage with the other alliance Participants on an equal footing ensuring that they fully understand the implications of sharing the risks and opportunities to deliver the project successfully. If the Owner cannot effectively engage in the decision making within the alliance they are exposed to risks and outcomes they are unable to manage or influence. For this reason, Owners must have appropriate capability to effectively participate in an alliance contract. |
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19 Refer to Guidance Note No 3, Key Risk Areas and Trade‐Offs, Department of Infrastructure and Regional Development, Commonwealth of Australia, March 2011.