No. | Subject | Traditional contract | Alliance contract | Material difference and trade-off between traditional contract and alliance contract |
6 | If, during the execution of the work under the Contract, the Contractor becomes aware of a Latent Condition, it must notify the Superintendent. A Latent Condition is a qualifying cause of delay entitling the Contractor to an extension of time under the contract. In addition, any additional costs incurred by the Contractor as a result of the Latent Condition will be reflected in an adjustment to the Contract Sum. The additional costs will be valued as a variation under the contract. | If the Participants become aware of a Latent Condition, the Participants will be jointly responsible for overcoming the Latent Condition as part of the performance of the Works. The Participants will not be entitled to any time or cost allowance for a Latent Condition. That is because the Risk & Contingency Provisions in the TOC will include the cost of overcoming Latent Conditions and any delays associated with Latent Conditions. | Unlike under a traditional contract, the Participants will not be entitled to a time or cost allowance (i.e. extension of time or adjustment to the TOC) for Latent Conditions under an alliance contract. However, allowance for the cost of overcoming Latent Conditions and any delays associated with Latent Conditions will be made by the Participants when setting the TOC (which is approved by the Owner). Given that the allowance will be made as Risk & Contingency Provisions, the Participants will make a gain or loss under the Risk or Reward* regime depending on whether or not the Reimbursable Costs incurred for Latent Conditions are less than or exceed those Risk & Contingency Provisions. These gains or losses will be shared equally between the Owner and the NOPs under the Risk or Reward* regime. Scope does exist, however, for certain Latent Conditions which carry a low risk of materialising to be excluded from the Risk & Contingency Provisions, and therefore the TOC. |