The project model is worth careful consideration
Projects built using the alliance model hardly ever see issues that have to be processed in a court of law. This also saves shared funds. The construction industry is sick and tired of conflicts, and the alliance model presents an opportunity for change.
We argue that alliance contracting is the best way to implement complex projects, all the way from urban rail traffic development to industrial investments and hospital buildings. If all parties of a construction project are responsible for the successes and failures together, shared funds are saved. “Public construction requires a significant financial input from society,” wrote Paavo Syrjö, Deputy Director General at the Confederation of Finnish Construction Industries, in February, and an alliance is the best way to manage that financial investment.
The key idea of an alliance is early integration of the parties, which guarantees that the most important stakeholders of the project, such as the owner, the designer, the builder, the party responsible for the maintenance and the user, can all come together to plan the project. It also enables seamless cooperation during construction and even use. Interaction becomes less confrontational because the parties are on the same side of the table in case a problem arises. If the problem cannot be solved by the project group, it is forwarded to the alliance management team. While other project models usually resolve issues in a court of law, the alliance model means that the management team discusses the matter until all the parties reach a consensus.
Many kinds of projects benefit from alliance contracting, which has been proved by the Naantali power plant project. In that project, the money was used efficiently on the correct targets, the schedule was adhered to down to the last milestone, safety performance was exceptionally high, and thanks to the model, many improvements were developed for the final execution. In addition, Jokeri Light Rail and Tampere Tramway are excellent examples of alliance model projects that are progressing according to plan and in which costs during construction are under control.
The alliance model is also more flexible than traditional as-planned models. If it is necessary to alter arrangements because of permit or complaint processes, for example, the alliance can do so quickly and even without adapting the schedule. For instance with Jokeri Light Rail, it has been possible to switch the focus to sections where work can progress normally while waiting for decisions from different courts regarding complaints. Because of the complaints, progressing in those sections has not been possible according to the original plan. This is why the project is still on schedule.
In alliance projects, also stakeholders are taken into account in a more planned manner, and bilateral communications enable presenting the perspectives of different parties.
When opposing the alliance model, feedback concerns the costs. The idea of an alliance is that the first cost estimate will be specified in the planning phase when the overall image of the project will become clearer. In the Crown Bridges alliance, for example, this has happened. As a result, it is important to set the correct objective cost for all parties in the planning phase to make it possible to adhere to it during construction.
In addition to costs, the success of large-scale and complex projects is measured in the quality of the end product or how well it meets the need, in the efficiency of the product or how the needs of the alliance parties and other stakeholders have been taken into account and integrated, in the project’s environmental impacts and impacts on adjoining or parallel projects, as well as the success of risk management.
When estimating the costs, it is also taken into account that some of the traditional tasks and costs of the client or owner are transferred to the service providers. That is why alliance contracting requires more extensive expertise than traditional contract forms, which should be taken into account in tender processes. Price is not the only selection criterion for an alliance, and the client must have the opportunity to select the best service provider.
The opinion have been published first in Kauppalehti 4th of May 2021 (in Finnish).