For the past 10 years the alliance contracting model has been trying to establish itself within the Australian construction industry as a legitimate and viable project delivery method. Alliances represent a paradigm shift away from the traditional adversarial contracting techniques commonly used within the industry. Alliances promise the successful delivery of complex projects through the use of integrated teams, open book costing, no variations and aligned objectives. Despite this, much conjecture currently exists within the industry as to whether the alliance strategy produces value for money outcomes.
The issue of value for money came to prominence in 2003 as a result of the Performance Audit of the Northside Storage Tunnel project (NST) by the NSW Audit Office. Since the release of the Performance Audit there has been a growing sense of unease amongst the public sector owners over their ability to demonstrate that the alliance delivery strategy produces value for money outcomes.
To effectively demonstrate value for money on alliance projects there must be the development of effective and efficient means of communication between the alliance project team and those ‘outside’ of the project who have some responsibility towards project outcomes, i.e. Treasury. One such means of communication is the use of guides and frameworks to improve the consistency and performance in determining value for money. This thesis is intended as a scoping study with the aim to:
1. Critically analyse the literature to establish a value for money framework for alliance projects; and
2. Gain understanding of current industry perspectives in relation to demonstrating value for money on alliance projects.
To gather current industry perspectives, a cross-section of industry representatives were surveyed using a semi-structured interview. Those interviewed were representative of the key parties involved in the alliance process. Qualitative data analysis techniques were then used to establish current industry perspectives in relation to aspects of demonstrating value for money. These perspectives reinforce issues discussed in the proposed value for money framework, giving particular emphasis to ensuring that the alliance model is used for suitable projects, strategies for developing an ‘accurate’ cost estimate as well as the need for improved planning for evaluating project performance.
The key findings of this thesis provide important insight to the issue of demonstrating value for money on alliance projects. This information will help focus the industry’s attention for the way ahead to establish alliancing as a legitimate and viable delivery method.