Case study: Australia

The collaborative project delivery methodology was introduced in Australia in the mid 1990’s after a period of growing dissatisfaction with project outcomes within the construction industry. Delivered performances and productivity were below acceptable and viable levels and industry participants had become increasingly frustrated with the time spent on disputes.   

In the late 1990’s the Australian Constructors Association (ACA) promoted a new, collaborative way of project execution based on “relationship contracting”, defined as a “process to establish and manage the relationship between the parties that aims to remove barriers, encourage maximum contribution and allow all parties to achieve success.”

Since then, Project Alliancing has been successfully used and refined as a method of procurement for large-scale projects by the public sector and the construction industry. The first two projects to use Project Alliancing in Australia were in the oil & gas industry in 1994 (Wandoo Project and East Spar Project). As a result of their success, other Australian clients and contractors in the heavy civil works sector took notice and began learning about and using this new collaborative model. Since then, the Australian public sector has utilised alliance contracting delivery for many complex infrastructure projects in the roads, rail and water sectors with a combined total value of c. AU$32bn between 2004 and 2009. 1 There is very limited statistical information available from Australia after 2010. There is ample evidence that Project Alliancing has offered Australian clients and the construction industry an effective and efficient form of collaboration to deliver highly complex and risky projects, putting the focus on genuine value for money, whilst achieving outstanding performance levels and increased productivity.

Over time, and to suit different circumstances, various types of legal/commercial relationships have been used in Australia that are referred to as “alliances”. These range from traditional “risk-transfer” arrangements undertaken in a collaborative manner, to the more commonly used “pure alliancing” arrangements.  The “no fault – no blame” approach underpins the success of Australian pure alliancing.

However, although alliance contracting has been widely used in more than 200 complex infrastructure projects in Australia in an attempt to overcome a range of negative impacts associated with the traditional adversarial approach, there has been an ongoing debate on the question of ‘value for money’ and whether or not alliance contracts deliver better project outcomes compared to projects undertaken in a more price competitive environment.

It is not possible to compare actual versus target outcome and whether alliancing delivers better value for money because targets are established by consensus between project participants, however, studies do show some interesting results:  according to a study by RMIT University, 2 The ‘Longitudinal Study of Performance in Large Australasian Public Sector Infrastructure Alliances between 2008‐2013’, prepared by the School of Property Construction & Project Management, RMIT University, Melbourne, Victoria. the alliance delivery approach is considered as superior to the Design & Build (DB) or traditional Design, Bid, Build (DBB) approaches.

The study carried out research amongst members of the Australian Alliancing Association (AAA) who were asked to volunteer details on project outcomes in terms of tangible and intangible performance indicators. Information from 60 projects was analysed to get on overview on whether alliancing is perceived as successful or not.

Whilst the TOC is the basis to compare cost instead of value, this graph shows that more than 50% of the projects were delivered under the final TOC and only c. 15% were over. It should be noted that this assessment might be isolated to some degree since Alliancing is more than just delivering project outcome at price. Alliance delivery provides an opportunity for scope change and variations without causing significant delay and contractual negotiations but also provides opportunities to deliver outstanding performances in other key result areas, e.g. occupational health and safety, community engagement and stakeholder relations, people training and development and so forth.

A DB contract, however, would likely have incurred cost each time the design was changed, whereas the alliance contract delivers continuous improvements by having the project owner, designer and contractor on the same side of the fence and their (contractual) commitment to delivering “best for project” instead of “best for party”.

Additionally, respondents overwhelmingly considered the alliance delivery to be superior to the DB or DBB approaches:

The alliance delivery method better addressed the complexities and risks associated with the design and construction. Previous endeavors on similar infrastructure projects had resulted in litigation.

According to in-depth analysis of a series of alliance projects undertaken between 2004 and 2009 (valued over AU$100m), a comprehensive benchmark study 3 The Department of Treasury and Finance in Victoria, Australia prepared a benchmark study on “whether alliancing delivers incremental value for money (VfM) to government against other procurement methods”.  set out the following key findings:

Perceived performance 


  • 94.5% of project owners (POs) and 97.3% of non-owner participants (NOPs) believed that their alliance met or exceeded the requirements (aggregated); and
  • NOPs tended to have a higher perceived degree of success in each performance area and overall than POs.

Reported performance


  • 80% of alliances used the single TOC approach
    • 54% as a project alliance
    • 26% as a programme alliance;
  • 85% of alliances had an AOC that met or came below the TOC;
  • 94% of alliances were completed on time or ahead of schedule; and
  • there was strong correlation between stakeholder management and community with good time and cost outcomes.

Selection of an alliance


  • team dynamics was viewed as a significant driver for NOPs in the selection of an alliance and had a moderate correlation with good time and cost outcomes;
  • POs placed the lowest degree of importance on team dynamics when selecting an alliance;
  • 91% of projects included benchmarked NOP profit and overhead fee; and
  • there was an even split of projects that used cost criteria in their evaluation process.

The following graph shows an assessment of performance achievements from the POs’ perspective: 

Source: “In Pursuit of Additional Value”, Department of Treasury and Finance, Victoria, Australia, October 2009Appendix 1: This study involved a collaborative effort between Evans & Peck and the Department of Civil & Environmental Engineering at the University of Melbourne.

The same criteria have been used to assess the performance of alliance projects by NOPs:

Source: “In Pursuit of Additional Value”, Department of Treasury and Finance, Victoria, Australia, October 2009

Appendix 1: This study involved a collaborative effort between Evans & Peck and the Department of Civil & Environmental Engineering at the University of Melbourne.

What these demonstrate is that through collaboration, joint problem framing/solving and the “best for project” approach, the tangible outcome of the project is the delivery of the expected benefits. This could be a functioning hospital, transportation infrastructure, water supply or sewerage system. The intangible results are behavioural outcomes in terms of mutual respect, collaborative process and action, trust and commitment.

The Ipswich Motorway Upgrade

One of the most successful alliance projects undertaken in Australia was the AU$1.95bn “Ipswich Motorway Upgrade: Dinmore to Goodna (D2G) Project.”  It was one of the most complex road infrastructure projects ever undertaken in South East Queensland. The Ipswich Motorway is located west of Brisbane and is the main arterial link between Brisbane and Ipswich. It also forms part of the National Road Network, providing connection between Brisbane, Sydney, Melbourne and Darwin.

The aim of the D2G Project was to provide an integrated and sustainable transport solution by:


  • Increasing the capacity of the Ipswich Motorway;
  •  Improving road safety, geometry and reliability;
  • Improving / increasing local road connectivity and functionality;
  • Increasing access to public transport;
  • Increasing / improving facilities for pedestrians and cyclists;
  • Strengthening road pavements and structures; and
  • Installing a state-of-the-art Intelligent Transport System to improve ongoing management of the motorway.

The Alliance (“Origin Alliance”) was formed by six organisations: QLD Department of Transport and Main Road (DTMR); Abigroup Contractors; Seymour Whyte; Fulton Hogan; Parsons Brinckerhoff; and SMEC Australia. One of the biggest challenges was bringing together a large group of people from six partners, all of which were very different organisations in terms of culture, size and experience, into one cohesive team. One of the key steps in achieving a ‘unique project culture’ was ensuring that everyone, from the Alliance Manager through to the youngest apprentice, worked collaboratively to deliver “best for project” outcomes: everyone had to leave their ‘home organisation’ persona at the site gates and embrace the ‘Origin Alliance Way’.

At project commencement, DTMR and the Alliance ALT-Team agreed specific performance measurement criteria based on a mix of cost and non-cost factors, including a set of Key Results Areas (KRAs) based on the most important non-cost items for the project. The outcomes achieved against planned targets were remarkable:

Cost: Through innovations and careful management, the overall project was delivered approximately 10% under budget.

Time: Despite the devastating impact of the January 2011 floods in Queensland on both the motorway and project site offices, the project was officially opened six months ahead of schedule.

Quality: Through a rigorous quality management system, all of the required quality benchmarks were achieved within the agreed time and cost parameters of the project.

During the three years of construction, a significant number of innovations in engineering, design and construction were developed, knowledge and experience that is now being shared across the Australian infrastructure industry.

Over the life of the project, each KRA was independently measured using a set of detailed key performance indicators. The resulting performance data was then independently verified. As of 15 May 2012, the D2G Project’s KRA scores were:

KRA 1Traffic Flow Safety10 out of 10
KRA 2Traffic Flow Reliability9.5 out of 10
KRA 3Community and Stakeholder8.4 out of 10
KRA 5Connectivity and Access During Construction7.8 out of 10
KRA 5Design Optimisation and Maintenance Minimisation7.5 out of 10

Source: “2012 Australian Construction Achievement Award (ACAA) Technical Paper”, Origin Alliance Ipswich Motorway Dinmore to Goodna Project

Therefore, the construction industry in Australia has clearly demonstrated that relationship-based procurement, and pure project alliancing in particular, can be a successful methodology for large and complex infrastructure projects with respect to delivering value for money and project outcomes.

Despite the obvious successes, however, a trend has emerged where many public clients have more recently moved away from Alliancing. There is an increasing appetite for external forces to provide financing of projects and take the responsibility for the operation and maintenance of the asset. As such, this form of contract, “Design, Build, Finance, Operate” (DBFO) has become more popular. Notwithstanding this trend, there are still billions of AU$ in public infrastructure investments in the rail sector, particularly in Victoria, where Alliancing is still seen as the most appropriate method for delivery.

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