No.

Subject

Traditional contract

Alliance contract

Material difference and trade-off between traditional contract and alliance contract

1

Performance of the Works

The Contractor is solely responsible for executing and completing the work under the Contract in accordance with the requirements of the contract (as prescribed by the Principal in the Principal's Project Requirements).

The Participants are jointly responsible for performing the Works.

In performing the Works, the Participants must act in good faith* and in accordance with the Alliance Charter. The Alliance Charter sets up a model of agreed decision-making principles which relate to the manner in which the Participants will work together to deliver the project and therefore seek to align the Participants' objectives in relation to the Project. It is hoped that alignment will reduce the risk of disputes and largely remove the possibility of litigation between the Participants. The Participants also agree to a no blame - no suit principle* (i.e. that there will be no litigation or arbitration between them under the alliance contract, except in limited circumstances including Wilful Default by a Participant).

The AMT(on which the Owner Participant and the NOPs are jointly represented) will prepare status reports that address progress on:

Design and Construction;

the build-up of the TOC ;

the Project management and reporting systems; and

the Date for Practical Completion.

These reports must be approved by the ALT (on which the Owner Participant and the NOPs are jointly represented) and the Owner.

Once reports are approved by the Owner, the Participants must perform the Works in accordance with the reports.

Responsibility for the Works

Unlike under a traditional contract, the Owner will not allocate full responsibility for the performance of the Works to the Contractor. Rather, the Participants will be jointly responsible for the performance of the Works. However, the Participants agree that they will not sue each other in respect of the performance of the Works (with limited exceptions) with the effect that the adversarial or 'claims- based' culture of the traditional contract does not pervade the alliance contract.

There are also commercial implications for the Participants to an alliance contract as a consequence of the joint responsibility for executing and completing the Works. Unlike under a traditional contract, the Owner under an alliance contract will pay all Reimbursable Costs actually and reasonably incurred by the Participants-even over and above the TOC. However, all payments of Reimbursable Costs by the Owner will be reflected in the final outcome of the Risk or Reward* regime in the payment of a reduced Reward Amount or the payment by the NOPs of a Risk Amount.

Requirements for the Works

Unlike under a traditional contract, the requirements for the Works will not be solely determined by the Owner under an alliance contract. Rather, the requirements for the Works will be jointly developed by the Participants and approved by the Owner. However, the requirements for the Works will Be based on the Owner's project requirements (as reflected in the Owner's VfM Statement).