Alliances: An Innovative Management Model for Public and Private Investments

Although Alliancing has been in use since the 1990s in Australia and New Zealand, this method of procuring and managing major capital assets and services has become more popular also in Europe in the past few years. Under an Alliance contract, a public or private entity contractually works collaboratively with the contractor to deliver the project under the principle of 'open books', that is, sharing gains and pains. This chapter will analyse the Alliance contracting model, which is characterised by three main features: It requires parties to work collaboratively, act with integrity and make best-for-project decisions. The project team, formed with members of the promoter and contractors, works as an integrated, collaborative team to deal with all project matters. In alliance contracts, risks are jointly managed by the parties together, except financial exposure, which lies mostly on the owner/promoter. Through the examples presented in the chapter, including the desalinations plants of Perth or Adelaide water supply system, in Australia, it will be concluded which kind of projects are more suitable for potential delivery as Alliances.