Project alliances provide
Local councils in New Zealand should adopt the alliance contracting concept to save money and improve performance on delivering infrastructure projects, says Robert Jones, chief executive of Fulton Hogan NZ.
The traditional way of bidding for projects often throws up “hidden” costs further down the track.
Jones says a better outcome, and greater value for money, is achieved when the client (asset owner), designer, planner and contractor including its estimating team are all together in the bidding process.
Jones points out that by taking an “open book” collaborative approach, the build-up of the costs is transparent to the client. “All parties take a collective responsibility towards the risks, and the client can concentrate on capital costs rather than long-term maintenance and repeated additional charges (as the project proceeds).
“Alliance contracting delivers value for money for ratepayers — it may not be the lowest price for the project but the client (council) has control of the cost,” he explains. “The open book process is cutting out multiple teams bidding on the same project — this also comes with a cost. When there is so much infrastructure work around, it's better to have three teams bidding for three projects rather than three for one project.
“The client will need to decide before entering into the process which designer and contractor he's comfortable working with based on past experience and whether they have the right resources to deliver the project.”
Jones says a good alliance contracting model is already operating in Christchurch. After the 2010 and 2011 earthquakes, it was not feasible to replace damaged assets on a like-forlike basis — it was simply not affordable. The Stronger Christchurch Infrastructure Rebuild Team (SCIRT) was formed, and is responsible for repairing and replacing the city's three waters (water, wastewater and storm water), roading and bridge networks, as well as some retaining walls and stopbanks. SCIRT is an alliance between Christchurch City Council, Canterbury Earthquake Recovery Authority (CERA), New Zealand Transport Agency (NZTA), City Care, Downer, Fletcher Construction, Fulton Hogan, and McConnell Dowell.
Jones says alliance contracting is particularly effective where scope is uncertain, risk is difficult to define, and speed of repair is critical.