FAQ

FAQ: Project alliance in general

• A.1 Why do we need a “project alliance” model?

  Construction is becoming increasingly complex in many places. To ensure that the goals of a project can be achieved sustainably, as efficiently and effectively as possible, organizational models are needed in which the client, planners and contractors agree on the goals to be achieved together at an early stage and then implement them as partners.

  The alliance model makes it possible to involve the key partners in the project at an early stage and aligns the interests of all partners towards the joint success of the project.

• A.2 What are the key benefit arguments for planning and building in project alliances?

  • The goals to be achieved are agreed together and the achievement of these goals is jointly managed. This has a generally positive influence on the achievement of project goals.

  • The early involvement of contractors in the planning process encourages the implementation of innovative solutions.

  • Everyone wins (or loses) collectively.

  • As a result, the entire energy of all participants is invested in a solution-oriented manner in favor of the project.

  • Alliance projects should be planned and realized in a more cost-stable, efficient and effective manner, and therefore more economically and sustainably.

  • Employees are motivated by the increased opportunities for co-design and joint success. This increases the attractiveness of the entire industry, which should help to promote young talent.

• A.3 What are the prerequisites for planning and building in project alliances?

  The following basic requirements must be met for the use of an alliance model to make sense:

  1. Willingness to undergo a fundamental cultural change combined with a new understanding of roles in relation to the joint planning and realization of the project. The alliance partners must see themselves as a value-adding partnership, who regard each other as equals, who are committed to the jointly defined goals and who jointly bear the risks for planning and realization.

  2. This understanding must be shared by the entire project organization as well as the investor.

  3. In a project alliance, the client must contribute to the planning and realization process as an equal partner to its realization partners. To this end, it must have sufficient qualified personnel with the necessary technical and social skills. Outsourcing the client’s key tasks to third parties is not expedient in a project alliance.

• A.4 Who are alliance models suitable for?

  For all willing parties, be they building owners, planners or contractors. The model is also aimed without restriction at small and medium-sized companies. Building owners who want to trigger the alliance model need sufficient knowledge of the alliance model for it to work.

• A.5 Where is the alliance model not appropriate?

  The alliance model is certainly not suitable for clients who are not committed to the alliance as a value creation community between equal partners with joint risk-bearing.

  The alliance model is particularly unsuitable where excessive client risks are to be unilaterally shifted to the contractors.

  The alliance model cannot be regarded as a panacea that is intended to quickly rescue projects in foreseeable or already existing difficulties.

• A.6 When does planning and construction in project alliances start?

  The client’s strategic planning must be available to the extent that he can describe his project functionally with the given clarity.

  The exact entry into the project alliance varies from project to project. This can take place after completion of the preliminary study phase or only in the traditional tendering phase before the start of realization (pure execution alliance).

  Within this framework, the Factsheet SIA 2065 is open to entering a project alliance at any point in time.

• A.7 What role do the realization partners play in the approval phase?

  This question only arises in cases where the alliance is formed prior to the approval procedure. This question does not apply to pure implementation alliances.

  In the approval procedure, the client is and remains the applicant and the recipient of the building permit/planning approval.

  The realization partners from the planning phases remain in the project. They support the client in the approval process (possibly additional evidence, objection procedure) and implement any conditions from the approval process in the project. Project risk management must be intensified during this time and the structures for construction must be created to ensure that construction can start as quickly as possible once the building permit has become legally binding.

  The realization partners are therefore also essential partners in the project alliance during the approval phase.

• A.8 For which market segments is the project alliance model suitable?

  Project alliances are generally suitable for public and private construction, as well as for building construction and civil engineering.

  Previous experience abroad has shown that project alliances are particularly suitable for the following project categories:

  • Public and private projects in building construction and civil engineering, where the investor or future users want to have a strong influence on the project planning and realization due to the complexity of the project requirements.
  • The prerequisite for this is that the client representation has the corresponding human resources and is willing to enter into joint project management with joint risk-bearing.

• A.9 How can a partnership-based project culture develop at all?

  The basic prerequisite for a project culture based on partnership is primarily properly formulated economic incentives:

  • Adequate target costs with appropriate financial risk provisioning
  • Consistent implementation of the principle of joint risk-bearing
  • Appropriate participation in the risk of additional/reduced costs by all alliance partners, taking into account their risk-bearing capacity

• A.10 How can the partnership-based project culture be maintained over the duration of the project?

  Once the conditions described in question A.9 have been created, the project culture of partnership can only be maintained if it is practiced daily and in all committees throughout the entire duration of the project alliance.

  This can only succeed if the alliance team is characterized by trust, openness, honesty and transparency and an understanding of cooperation as equal partners on an equal footing.

  All alliance partners must be aware that these requirements are delicate matters. A single serious breach of these requirements can permanently damage or destroy the basis (e.g. trust) for working together as partners.

  In order to promote the alliance partners’ understanding of these relationships, it may be helpful to set out the requirements for successful long-term cooperation in a project charter or a project-specific code of values.

• A.11 Does every alliance partner become dependent on the result of the planning and construction?

  The individual success or failure of each alliance partner depends on the collective success of the alliance or the overall project.

  The achievement of project success is directly influenced by all alliance partners according to their role and task.

  “Dependence” exists in the sense of achieving joint success/failure in achieving the joint project objectives, in which all alliance partners participate within the scope of their performance and the agreed risk-bearing capacity.

• A.12 What financial risks does each realization partner bear?

  Risks are generally borne jointly in the alliance contract, with the exception of intent and gross negligence.

  A financial risk only arises if the target costs are exceeded. If this should occur, each realization contractor participates in the additional costs within the framework of the alliance agreement, taking into account its risk-bearing capacity.

  The alliance contract defines a threshold value above which the client alone bears the financial risks if the target costs are exceeded.

• A.13 What solution is proposed if the target costs determined by the alliance after the planning phase are already above the client's budget?

  The first step is to investigate why the target costs have been exceeded.

  To solve the problem, there is the following scope for action, depending on the cause:

  • Further project optimization rounds with the implementation partners
  • Modification of the project scope within the scope of the client’s abilities (design to cost principle
  • Potential discussion with the investor about additional funding
  • Abandonment of the project

  Switching to a traditional organizational model can lead to lower costs in the short term, as risks are often assessed lower or not at all in such models. However, if risks materialize, a corresponding increase in costs must be expected until the final invoice is issued (claims). Changing the organizational form of the project is therefore unlikely to be beneficial.

   

• A.14 Which aspects of a specific project should be considered within the framework of the alliance model?

  This must be determined for each individual project on the basis of the client’s specifications and risk analysis.

• A.15Which behaviors and which contractual agreements contradict the alliance model in accordance with Factsheet SIA 2065?

  Some examples are listed below:

  Any rules and behavior that disrupt mutual trust and are detrimental to working together as partners should be avoided. Trust is destroyed by a lack of reliability, openness and transparency, among other things.

  Hidden special conditions offered by subcontractors and suppliers to individual realization partners destroy trust and thus the basis of a project alliance

  For example, the client should not include any one-sided and asymmetrical risk regulations to the detriment of the realization partners.

  The inclusion of guarantee claims without proof of entitlement via a risk analysis should be avoided.

• A.16 How many realization partners will there be in an alliance?

  This question must be assessed on a project-by-project basis. There are often very different constraints between building construction and civil engineering.

  However, care must be taken to ensure that the decision-making bodies have a reasonably limited number of people in order to remain able to act.

• A.17 Who is responsible for implementation planning in a project alliance?

  The following principle also applies in the project alliance: “The planner plans; the contractor builds.”

  The project-specific design of this principle depending on the qualifications and capacities of the individual realization partners has to be determined by the alliance management team. The issue must be discussed and clarified in detail when allocating the various service packages in the run-up to the signing of the alliance contract.