No.

Subject

Traditional contract

Alliance contract

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

10

Insurance

Either the Principal or the Contractor will be responsible for taking out and maintaining contract works and public liability insurance for the contract. In most instances, the Contractor will take out those insurances.

In addition, the Contractor will be responsible for taking out and maintaining professional indemnity and workers' compensation insurance under the contract.

To the extent that the Contractor is responsible for taking out and maintaining insurances for the contract, the Contractor's costs of the insurances will be included in the Contract Sum.

Claims made against the insurances taken out under the contract will be managed by the party taking out that insurance.

Any insurance proceeds will be dealt with in the following manner:

if the work under the Contract needing reinstatement has been the subject of an amount payable by the Principal to the Contractor and the Contractor has not completed reinstatement, the insurance proceeds will be paid into a joint account and the Contractor's cost of reinstatement will be certified by the Superintendent; and

if the work under the Contract needing reinstatement has not been the subject of an amount payable by the Principal to the Contractor, the insurance proceeds will be paid directly to the Contractor.

In some instances, the Owner will be responsible for taking out and maintaining contract works, professional indemnity and public liability insurance for the Project. The insurances taken out by the Owner will generally be project specific and will also name the NOPs and all of the subcontractors as insureds (where applicable). As part of developing its project requirements, the Owner will undertake a risk analysis (with input from its insurance adviser) to determine whether it is desirable for the Owner to take out and maintain these insurance policies for the project.

In addition, each of the Owner and the NOPs will take out and maintain their own workers' compensation, motor vehicle and construction plant and equipment insurances for the Project.

The cost of the insurances taken out and maintained by the Owner and the NOPs will be included in the TOC and paid as Reimbursable Costs under the alliance contract. Any excesses applicable to those insurance policies will also be paid to the Participants as Reimbursable Costs under the alliance contract and the TOC may be increased to reflect the additional Reimbursable Costs incurred by the Participants (in circumstances where the Owner agrees to take the sole risk of the cost of insurance claims under the alliance contract). However, if the Owner does not agree to take the sole risk of the cost of insurance claims under the alliance contract, then the TOC will not be adjusted in these circumstances and the Owner and the NOPs will share the additional costs as part of the Risk or Reward* regime.

Claims made against the insurances taken out by the Owner for the Project will be managed by the Owner.

To the extent that a NOP receives insurance proceeds that reimburse any amounts that were or are reimbursable under the alliance contract, the NOP must pass on those insurance proceeds to the Owner. The Owner may otherwise require its insurer to make payment of any insurance proceeds directly to the Owner.

The ALT will regularly review and make recommendations to the Owner as to the insurances required for the Project and the adequacy and appropriateness of the insurances taken out for the Project.

Under a traditional contract, in most instances, the Contractor will take out their own insurances for the purposes of the contract. The Contractor's costs of the insurances will be included in the Contract Sum. Claims made against those insurances will be managed by the Contractor.

In some instances and unlike under most traditional contracts, the Owner will, where a risk analysis shows this to be the most desirable option be responsible for taking out the key insurances for the Project under an alliance contract. These insurances will be project specific. However, given this responsibility for taking out the key insurances, the Owner will be entitled to manage any claims made under those insurances. The cost of the insurances (including any excesses applicable to those insurances) will be paid as Reimbursable Costs under the alliance contract.