No.

Subject

Traditional contract

Alliance contract

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

5

Achievement of Practical Completion

The Contractor must execute and complete the work under the contract to Practical Completion by the Date for Practical Completion.

If there is a delay in achieving Practical Completion, the Superintendent must determine whether or not to grant the Contractor an extension of time to the Date for Practical Completion.

An extension of time will only be granted to the Contractor if the cause of the delay is one of the 'qualifying causes of delay' under the contract, including:

industrial conditions;

inclement weather;

any act or omission of the Principal or Superintendent;

Latent Conditions (refer to Item 6);

variations (refer to Item 7); and

changes in Legislative Requirements (refer to Item 8).

Where the Contractor is entitled to an extension of time as a result of an act or omission of the Principal or Superintendent (but not the other qualifying causes of delay), the Principal will be liable to pay the Contractor delay damages.

If the Contractor fails to reach Practical Completion by the Date for Practical Completion, the Contractor will be liable for liquidated damages.

If the Contractor achieves Practical Completion before the Date for Practical Completion, the Principal may pay the Contractor a bonus for early completion.

The Participants must use their best endeavours to complete the Works by the Date for Practical Completion.

The ALT will recommend to the Owner any appropriate extension of time if there is a delay in achieving Practical Completion caused by:

a Scope Variation (refer to Item 7);

a Force Majeure Event (refer to Item 9);

an abnormal cause beyond the reasonable control of the Participants; or

suspension of the Works by the Owner (refer to Item 13).

However, please note that, in some instances, the alliance contract will not include an extension of time regime. Rather, there will be an 'adjustment event' regime under which the occurrence of any 'adjustment event' (which events will be workshopped and agreed between the Participants prior to entry into the alliance contract) will entitle the ALT to recommend an adjustment to any part of the Commercial Framework (including the Date for Practical Completion) for the Owner's approval.

Determination of extensions of time

Unlike under a traditional contract, the Owner will not solely determine whether or not extensions of time are granted under an alliance contract. Rather, the Participants will make those determinations jointly. However, the Participants must act in good faith* and in accordance with the Alliance Charter in making those recommendations to the Owner.

Qualifying causes of delay

There are fewer qualifying causes of delay under the alliance contract than under the traditional contract. This is because the cost of overcoming delays is included in the Risk Provisions in the TOC. However, the consequence of this is that if these costs are not incurred, then the NOPs will potentially share the benefit of a cost underrun under the Risk or Reward* regime (and therefore a Reward Amount will be payable to the NOPs). On the other hand, if the Risk & Contingency Provisions are not adequate to cover all of the costs to overcome delays, then the NOPs will potentially share the detriment of a cost overrun under the Risk or Reward* regime (and therefore a Risk Amount will be payable by the NOPs).

Delay damages, bonus for early completion and liquidated damages

Unlike under a traditional contract, no delay damages, bonus for early completion (except in some instances) or liquidated damages are payable under the alliance contract. Some alliance commercial models will incorporate the costs of delayed completion as part of the AOC when calculating the Risk or Reward Amount. The Participants will be incentivised to complete the Works on or ahead of schedule by the Risk or Reward* regime (and the Risk or Reward Amount which may become payable under the Risk or Reward* regime).