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Authors

Chris Slocombe

Publication Date

5-29-2014

Abstract

Alliancing, as a project delivery model, has come a

long way since its beginnings in the North Sea oil &

gas industry, and its subsequent uptake in Australia in

the mid 1990s. Now, almost 20 years after the Wandoo

Alliance, Australia’s first alliance project, alliancing has

created for itself a place in the project delivery model

armoury of most procurers of significant works, both

public and (to a lesser extent) private. Between 2004

and 2009, the total value of alliance projects in the road,

rail and water sectors in New South Wales, Victoria,

Queensland and Western Australia was $32 billion.

This represented 29% of the total infrastructure spend

of $110 billion in the same sectors across the whole of

Australia.

Before comparing the approaches of the two Project

Alliance Agreements (PAAs), it is useful to briefly examine

the contextual background to each. The publication of

the National Alliance Contracting Guidelines

3 followed

a 2009 research study commissioned by the state

treasuries of Victoria, New South Wales, Queensland

and Western Australia. The findings of the study may

not have been well received by the state treasuries. One

of the key findings of the study was that on average,

alliance projects experienced an increase from business

case cost estimate to actual outturn cost in the order

of 45-55%. Perhaps in response to this finding, the

National Alliance Contracting Policy Principles (NACPP),

Guide to Alliance Contracting and the NACG PAA appear

to be heavily influenced by a desire to achieve value

for money (VFM), and these documents adopt certain

approaches which might not be considered to align with

the principles of a “pure alliance”.

This article examines and compares the treatment by

the two forms of key features common to the standard

alliance agreements.

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