Project Alliancing

Posted on 15th February, by JimYoung in Blog. Comments Off on Project Alliancing

As part of the NZIM Diploma in Project Management programme students visit local project sites and discuss with the project managers involved about the realities of the discipline.  On Thursday 13 February 2014 our course visited the Wellington National War Memorial Park and Underpass construction project.  The park will be the centerpiece of ANZAC Day commemorations in 2015. Work towards the National War Memorial Park is progressing well and is on target to be open in time to commemorate the 100th anniversary of the Gallipoli landings on 25 April 2015.


The National War Memorial Park will strengthen the existing National War Memorial as the principal place for New Zealanders’ commemoration of service and sacrifice in time of war, and provide a place to mark the enduring relationships forged between New Zealand and other nations during that time.  The underpass will fully integrate with the planned Basin Reserve transport improvements and also with the existing road layout.  Moving State Highway 1 underground will create an appropriately peaceful environment, for quiet contemplation and remembrance in the park and the War Memorial precinct.  It will also improve the environment for the neighbouring community.


Two particularly interesting aspects of this project are the most effective stakeholder management strategies employed and also the alliance formed between NZ Transport Agency, Downers, HEB Construction, Tonkin & Taylor, and URS.  This alliancing approach is a relatively new way of delivering projects and warrants some further explanation. The form of project alliancing practised here is driven not only by the advantages of sharing resources but more importantly, by the need to participate in a complicated work environment, and share some liabilities and risks involved.  To an increasing extent project alliances can be found in building or engineering industries, primary resources, infrastructure, and research & development. Innovative aspects of project alliances include a peer relationship where all participants have an equal say, all decisions are made on a best-for-project basis, innovative thinking is encouraged and all transactions are open-book.


Sometimes alliancing is confused with partnering.  Alliancing involves a formal contract in which the parties undertake to act in the best interests of the project and this is a key difference from partnering where the undertaking to act in such a manner is purely voluntary. A core issue that differentiates between the two approaches is that in partnering, partners may reap rewards at the expense of other partners. In alliancing each alliance member places their profit margin and reward structure “at risk”. Thus in alliancing, the entire alliance entity either benefits together or not at all. This fundamentally changes the motivation and dynamics of the relationship between alliance members.


Our local project alliances are commercial agreements between the NZ Transport Agency (NZTA) and a group of companies to plan and deliver a project. Partners in a project alliance can be involved in community consultation, planning, design and construction of a project and come from the public and private sectors. Key features include members of all the different companies belonging to the alliance as a project team, team members taking off their company “hats” to operate as a single organisation, the team ensuring value for money and partners sharing in the financial risk and rewards of developing and implementing the project.  Transparency is paramount.  Alliancing reminds me of the old “team” acronym – “Together Each Achieves More”.  This approach also allows for faster delivery of a project as different parts of the work can be progressed at different times by having the designer, contractor and technical specialists working together as one team.  This faster delivery seems most appropriate for our War Memorial Park and Underpass project given the fixed completion date – 25 April 2015.  It’s a time-sensitive undertaking.


An Australian practitioners’ guide to project alliancing may be found here. Over the last twenty years, there has been an increasing level of dissatisfaction amongst many of those involved within the Australian construction industry regarding the adversarial and inefficient environment in which construction projects are often undertaken.  The project alliance delivery method was developed for the purpose of overcoming the errors, omissions, inefficiencies, delays, coordination problems, cost overruns, productivity losses etc characteristic of a construction process fraught by lack of cooperation and poor information integration. The historical reasons for this dysfunctionality are many, including a multiplicity of participants with conflicting interests, incompatible cultures, and limited access to necessary information.  It seems that integrated project delivery is transforming the sometimes contentious, litigious, and often inefficient construction industry, and that it will provide a safe contractual environment for collaboration and the sharing of information.  The only concern I’ve heard about alliancing is a “psychological barrier” may sometimes exist between alliance partners caused by the fear that their partners may out-learn or de-skill them.  As usual, the biggest hurdle to the wider adoption of alliancing will be resistance to change – both contractually and commercially.

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