Delivery of Low-Volume Road in Pilbara Region of Western Australia by Alliance Contracting

Abstract

Alliance contracting differs from other forms of contracting for delivery of road projects: the emphasis is on risk sharing rather than risk transfer. The owner, contractor, and designer form a single organization that contracts with the owner to deliver the project at an agreed target price that is subject to independent audit. Depending on how the project delivers against the target price, the nonowner participants gain various levels of reward. Delivery at a cost higher than the target price results in an escalating forfeit of the overhead and profit portion. Delivery at a cost lower than the target price ensures nonowner participants a share of the savings. An alliance contract is thus an incentivized cost-reimbursement contract with a strong focus on risk sharing and cooperation. In 2005, Main Roads Western Australia elected to deliver Stage 2 of the Karratha Road to Tom Price Road by alliance contracting. The project involved the design, construction, and maintenance of 90 km of a new two-lane highway with a sprayed seal surface in the hot arid Pilbara Region in the northwest of Western Australia. This paper describes the participant selection process, the use of whole-of-life analysis, and quantitative risk assessment in identifying designs for low-volume roads that were of the best value, fostering of an innovative culture, building of a cooperative approach, team building for a virtual organization, and the technical acceptance criteria.