This guidance note has been prepared with the aim of giving public sector Participants in project alliances greater clarity regarding the value proposition of using alliance contracting.
Governments have a very broad range of social, environmental and economic objectives that they wish to achieve on behalf of the community. This normally results in an equally broad diversity of capital and infrastructure projects. Today there are a number of mature and emerging project delivery methodologies that can cater well to this project diversity on a 'fit-for-purpose' basis with selection through a careful and knowledgeable analysis of project characteristics and risks.
Increasingly, alliance contracting is being used by public sector agencies to procure significant infrastructure. Under this project delivery model, there is no allocation of risk or assignment of responsibilities for delivery of all or even part of the capital or infrastructure project between the Participants. The Participants agree to be jointly responsible for the delivery of the project, to share the risks and rewards of delivering the project and not to assign blame.
The alliance relationship between the Participants is based on a framework of cooperation and mutual adherence to agreed relationship (or alliance) principles. These relationship (or alliance) principles, together with the alliance objectives and alliance purpose for the project, are contained in the alliance charter which forms part of the alliance contract. The alliance charter contains the high level commitments or rules of engagement for the Participants. The commitments relate to the manner in which the Participants will work together to deliver the project. They are unique to each alliance.
Finally, alliance contracting sets up a model of agreed decision-making processes and incentives which seek to align the Participants' objectives in relation to the project and it is hoped, in that way, reduce the risk of disputes and remove the possibility of litigation between the Participants.
The relationship created by alliance contracting is embodied in the alliance contract. An alliance contract is very different, in many ways, from the more traditional contracting models used by public sector agencies to deliver capital and infrastructure projects.
Like all contracting methodologies, alliancing must also make continual improvements, and this guidance note aims to identify where alliance arrangements can be improved to further demonstrate their value to public interest.