Extensive policy and guideline material has been developed for these infrastructure procurement models by the Inter-Jurisdictional Alliancing and Traditional Contracting Steering Committee.
The Committee draws representatives from the Treasury departments of Western Australia, Queensland, New South Wales, Victoria (the Chair) and the Australian Government (Department of Infrastructure and Transport). This material and other publications are presented here.
This page is structured as follows:
Alliancing is a method of procuring, and sometime managing, major capital assets. Under an alliance contract, a state agency contractually works collaboratively with private sector parties to deliver the project.
Alliance contracting is characterised by a number of key features, which generally require the parties to work together in good faith, act with integrity and make best-for-project decisions. The alliance participants work as an integrated, collaborative team to deal with key project delivery matters.
Under alliance contracts, risks of project delivery are often jointly managed by the parties, although financial exposure lies mostly with the State.
An agency’s decision to use alliance contracting needs to be based on a strategic procurement analysis with a good understanding of which contracting model is most likely to best deliver value for money against business case objectives.
Normally, alliancing is used to deliver the larger, more complex and high-risk infrastructure projects (with capital costs exceeding $50 million) and where the client has particular capability to contribute its skills and expertise to deliver the project.
Projects suitable for potential delivery as alliances are generally characterised by one or more of the following factors:
The policy and guidance material are aimed at departments and agencies undertaking alliancing contracts and other collaborative contracting models such as ECI.
The Victorian Government policy, which applies to all departments and agencies planning and progressing alliance contracting, has now been published as the National Alliance Contracting: Policy Principles on the Commonwealth website National Alliance Contracting: Policy Principles (July 2011)
They set out the Victorian Government’s minimum requirements for alliance contracting and other collaborative contracting models.
This Commonwealth website also provides the guide to alliance contracting and a number of topic specific guidance documents. These provide benchmark practices that will ensure departments and agencies satisfy the principles set out in the policy. This documentation includes:
The guide has been prepared to provide consistent guidance on alliance contracting to departments and agencies that develop and own infrastructure projects. It sets out current leading practices for delivering infrastructure projects using alliance contracting.
Guidance notes are provided on various special interest topics to assist departments and agencies in planning and reporting on their alliancing contracts.
These guidance notes, which are also published on the Commonwealth website are:
A new guidance note has recently been approved by the Inter-Jurisdictional Alliancing and Traditional Contracting Steering Committee:
The final draft is published here in an interim format. In due course publication, with improved graphics and formatting, will be on the Commonwealth website.
Guidance note 6 ECI and other collaborative procurement models.pdf (PDF 1.48mb)
Guidance note 6 ECI and other collaborative procurement models.docx (DOCX 1.18mb)
The templates have been developed to be consistent with the National alliance contracting: Policy principles and the guidance material. They draw on leading practices from Western Australia, Queensland, New South Wales and Victoria.
They reflect the best practice from each state jurisdiction rather than replicate practice from any one jurisdiction. It is intended that the documents will provide project owners with a template which can then be tailored to reflect the nature and requirements of the specific project.
The following templates have been published on the Commonwealth website :
DTF advises agencies undertaking project alliance contracting to exercise caution if referring to the Reference Project Alliance Agreement from the former Alliancing Association of Australasia (now incorporated into Infrastructure Partnerships Australia).
Caution is required as a number of clauses in this agreement do not reflect the policy positions approved by the Victorian Government.
The insights arising from extensive experience and research undertaken in engaging with Australian agencies and contractors using the non price competitive model of alliance contracting, predominantly from 2004 to 2010, have been documented in the article, Tamburro N and Wood P (2013) Alliancing in Australia: competing for thought leadership, Proceedings of the ICE - Management, Procurement and Law, Volume 167, Issue 2, October 2013 pages 75 –82 (DOI: 10.1680/mpal.13.00012). The article can be found at www.icevirtuallibrary.com/content/journals
The abstract of the article is:
Clients need to be ever vigilant to maintain a central role in thought leadership for the procurement of infrastructure projects. This paper uses the case study of alliancing in Australia as a cautionary tale to illustrate how value for money can be eroded when clients concede thought leadership to suppliers. In the mid-1990s the alliance model of contracting was introduced to Australia. By approximately 2005 this alliancing model was a dominant method of infrastructure procurement. Thought leadership by suppliers (including advisors) quickly evolved a model based on the promise that, ‘Clients would receive enhanced value-for-money outcomes and no disputes with a culture-centric procurement model that avoided price competition’. It sounds naive and it was, as evidenced by substantial research sponsored by the various Australian state treasuries. In July 2011 the public sector took a thought leadership role and adopted a new National Alliance Contracting policy and guidelines. This second generation of the alliance model was founded on competition of intellectual effort and price. The story of alliancing in Australia demonstrates that thought leadership in the procurement of infrastructure projects cannot be ignored by clients.
During 2011, Department of Treasury and Finance was engaged by the Commonwealth Department of Industry and Transport (DoIT) to undertake an extensive national research project on the Design & Construct (D&C) tender strategies used in infrastructure projects and on related issues.
As part of the research effort, over 50 meetings were held with senior practitioners in the delivery of infrastructure and building projects.
These individuals came from various sections of the infrastructure industry, including construction, engineering design and legal firms, public sector agencies and a few companies in the mining and process engineering sectors.
Central government departments involved in developing state and national level policies and guidelines for public sector practices were also consulted. These meetings were supplemented by five group sessions with key industry players that workshopped some of the key issues facing traditional procurement.
This research was reported in two publications:
This paper can be found in the right hand sidebar of this web page under ‘Related Publications’.
The investigation found three key challenges that must be satisfactorily addressed to deliver an optimal project outcome for both the client and the tenderer. These were:
In conducting this investigation, a number of opportunities were identified where further work would be of benefit, and which will promote improvements in the productivity of infrastructure delivery through traditional contracting.
These opportunities were the subject of the consultation paper released by DoIT in February 2012. Submissions closed in April 2012. The consultation paper outcomes resulted in the development of the National framework for traditional contracting of infrastructure.
The National framework for traditional contracting of infrastructure has been initiated to document best practice to promote productivity improvements in the planning and contracting phase of major projects.
In the context of the framework, traditional contracting refers to those contracts that to varying degrees allocate construction and design risk to the suppliers (but are not alliances or PPPs).
The two primary categories of traditional contracting are:
The research undertaken in 2011 and 2012 resulting in Towards agreed expectations, and the subsequent outcomes of the consultation paper, supported the development of a framework with focus on:
This is a best practices framework, providing a resource that individual jurisdictions can use to inform their own policy and guideline development for traditional contracting of infrastructure. (The framework does not address building projects.)
The documentation makes explicit statements that where there is a conflict in the guidance of this framework and jurisdictional policies and guidelines, the jurisdiction’s position will take precedence.
The exposure drafts of these documents were widely distributed for feedback. Comments closed on 28 June 2013. DTF has published the following drafts in an interim format. In due course they will be published by the Commonwealth Department of Infrastructure and Transport, with improved graphics and formatting, for the Commonwealth's Better Practice Framework.
National Framework for Traditional Contracting - The Guide (Final draft, interim format) (PDF 847kb)
National Framework for Traditional Contracting - TSG1 Project Definition (Final draft, interim format) (PDF 1.46mb)
National Framework for Traditional Contracting - TSG2 Project Budgets (Final draft, interim format) (PDF 2.39mb)
National Framework for Traditional Contracting - TSG3 Governance (Final draft, interim format) (PDF 652kb)
National Framework for Traditional Contracting - TSG4 Performance (Final draft - interim format) (PDF 679kb)
To effectively address the emerging opportunities and issues in alliance and traditional contracting, a collaborative inter-jurisdictional approach has been undertaken.
The Inter-Jurisdictional Alliancing Steering Committee was established in early 2009 to pursue a number of joint initiatives, including the development of the policies, guidance material, templates and training programs pertaining to alliancing contracting. In 2011 the role of the Steering Committee was expanded to cover traditional contracting.
The Committee has representatives from the Treasury departments of Western Australia, Queensland, New South Wales, Victoria (the Chair) and from 2011 the Australian Government (Department of Infrastructure and Transport).
The role of the Committee concluded in 2014 with the finalisation of the National framework for traditional contracting of infrastructure.
Infrastructure Alliance and Contracting teamDepartment of Treasury and Finance
1 Treasury Place
Melbourne VIC 3002
Telephone: 03 9651 5111