Vision and Commitment | Alliancing will work well where there are commonly aligned objectives with the parties committing to work towards common goals and behave in a cooperative and collaborative manner articulated through setting out, at the beginning of the project, a “statement of intent” as to the aims and objectives of the project delivery and working relationships. An effective way to achieve this can be through setting out a shared vision for the project and agreeing the terms of a Project Charter incorporating these objectives and alliance principles and forming the philosophical basis for the project and expected behaviours. Parties should be aware of the quality of works and services required to meet the objectives of the alliance. A commitment to a “best for project” approach is required which means that the alliance representatives will need to choose between any competing proposals put forward by several participants of the alliance. |
Open Communication | There should be effective teamwork based on the foundations of mutual goals, respect, openness and honesty, with the support and encouragement of senior management teams. Open information sharing between parties is encouraged and a regular forum for effective communication between all the parties (internally within organisations and externally between organisations) to form an effective and efficient partnering team. Information sharing should include open book accounting so that accurate figures for forecasts, costs, expenses and profits are freely available to all parties. |
Integration | Integration is a further key requirement. This is particularly the case for the project team where the participants/contractors are jointly and severally liable to the client and all liabilities under the agreement are shared equally, regardless of fault. Another example is where participants and clients deliver the project as one entity and decisions are taken throughout the supply chain which leads to “joined-up thinking.” This means that a decision is not made to the benefit of one party but to the detriment of another but instead for the overall benefit of the project. Integrated decision making can be achieved by a management team or alliance leadership team, sometimes called an Alliance Board (AB) or Project Alliance Board (PAB), which includes all participants plus the client and all key decisions are made by this team. All decisions must be unanimous and there is very limited recourse if decisions cannot be made. The team makes decisions for the best interests of the project with no outside influence and decisions can be taken at an appropriate time, based on up to date information, not just information available at the time the contract was signed. |
Shared Risk | All uninsurable risk in the project is shared between alliance project participants, as opposed to specifically allocating risk which is common practice in traditional standard forms of contracts. Fair and equitable sharing of risk between the participants is designed to avoid a “win-lose” outcome. |
Gainshare/Painshare | Payment should be on a target cost basis such that the contracting team is entitled to the actual cost it incurs subject to gainshare/painshare if the actual cost is less/more than the target. This is accompanied by a set budget for project opportunities and risks and this is managed collectively. As the client is a member of the delivery team, the client contributes to the actual cost and therefore the gainshare/painshare, which is split equally (or in pre-agreed proportions) between the delivery team members regardless of individual responsibility for cost savings and over-runs. This incentivises parties to be innovative and to consider new ideas which could benefit the project. |
No blame/no claim | A no blame/no claim environment is fundamental to the alliance agreement, including the exclusion of the right to claim for losses arising from many events and circumstances including delay, defective work and design, which are usually a significant cause of dispute. Exceptions to the no blame/no claim environment can include: termination, repudiation, wilful default, non-payment and breach of provisions relating to intellectual property rights. |
Alliancing Mindset | A “facilitator” may be used to guide the alliance participants and help create an alliance “environment/spirit/frame of mind”. Participants may require a shift in mindset to embrace the partnering relationship and change old habits which are inconsistent with the partnering ethos. Participants should work to eliminate discipline demarcation which means that every member of the alliance team is responsible for the overall performance. There is no “not my job” attitude in an alliance culture. |
Mutual Understanding | There should be a development of mutual understanding between the parties (for example, one extra process by one party may allow another party to eliminate a complex stage of the project process). This may prove cost/time-efficient, with the rewards of such cost/time-saving shared by all the parties. In a more traditional/adversarial form of contract, there would be no reward for a party to carry out an additional process: only additional costs and additional recovery sought by them. |
Trust | Trust is required to allow parties to share their strengths and disclose perceived weaknesses or threats to the project on the basis that if they can be eliminated or mitigated, the project will benefit. Trust may also result in improved staff morale and retention, improved stability, a lower emphasis on paperwork and bureaucracy and ultimately fewer disputes. |
Appropriate Dispute Resolution Procedure | An appropriate dispute resolution procedure should be set up to operate as a problem-solving framework, as opposed to an adversarial environment including early warning meetings to discuss, reduce and/or eliminate risks. A collaborative approach to such meetings should be encouraged with “lessons learned” sessions to identify problems which may have occurred and to identify solutions which can be employed to mitigate/avoid the effect of such problems should they arise in the future. Tiered management can be called upon to consider any residual issues e.g. at site level, then middle management, escalating to senior management if needed; and resort to alternative dispute resolution, e.g. mediation. The culture is very much one of dispute avoidance, management and resolution of disputes or conflicts at the level where they occur rather than adversarial. |
Insurance | Obstacles to a successful alliancing project can generally be overcome with an effective insurance policy. Traditional insurance models, however, can be costly in the context of ‘shared risk’ and ‘trust’. As such, a new generation of insurance has emerged; ‘Integrated Project Insurance’. IPI covers all parties to a construction project under a single insurance policy, as if a ‘virtual company’ was created. The idea behind IPI is to insure risks and outcomes rather than focusing on liabilities and causes. This creates a truly blame-free relationship; a key to element of alliancing projects. Furthermore, in terms of commercial viability the IPI approach could result in project savings since Professional Indemnity disclosures are not needed if there is no prospect of litigation, and there are no duplications of cost from each party placing individual insurance policies. |
