Alliance Contracting Research Articles

Synergistic effect of alliance contract and lean methodology on project performance measures in the construction industry: SEM analysis

Alliance contracting is introduced in pre-construction to improve joint ventures and Lean reduces pre-construction and construction waste. Using Alliance and Lean in construction projects improves quality, transparency, and productivity due to which Lean and Alliance strategies are adopted by Researchers and Organizations. Lean and Alliance practices for construction have been studied, but most studies have not analyzed the effect of the integration of Lean and Alliance. This is the motivating factor behind the current investigation which surveys the Indian construction industry. This study uses factor analysis, Structural Equation Modelling (SEM), and the weighted average method to explore the synergistic effect. The study identified the lack of stakeholder commitment and better work transparency as barriers and benefits of Alliance Lean integration. This study's Hypothesis also shows that integrating Alliance with Lean methodology is effective. Therefore, this study proposes combining Alliance and Lean to improve construction project delivery.

The ‘context’ of transport project cost performance: Insights from contract award to final construction costs

Despite the plethora of studies examining the cost performance of transport projects, we still do not fully understand why they exceed their agreed price for construction. A lack of an in-depth exploration of context has contributed to this lack of understanding. In this paper, we seek to provide a context as to why the construction costs of transport projects experience increases from their contract award. We adopt sense-making approach, which is qualitative in nature, to examine the performance and financial reviews for eight transport projects constructed by an Australian contractor. The reviews are checkpoints undertaken during the construction of projects to monitor actual costs and forecasted profits for the contractor. The reviews are performed at the 50% and 75% milestones of a project's forecasted schedule by a team independent from the contractor's organization. We look into context states of projects such as their programme, quality, safety, design, and management. We use a context breakdown structure to uncover the ‘contexts within contexts’ that significantly contribute increases to construction costs. We reveal that the mean forecasted contractor margin was almost 9%, which reinforces the belief that there is a lack of competition in the marketplace. Overall, the hierarchy of contexts within contexts we unravel provides further understanding as to why transport projects experience increases in their construction costs. Considering the nature of the recurring contexts that we identify, we recommend that governments re-calibrate their approaches to procuring their transport projects. We suggest that they embrace negotiated contracts, alliance contracting, leadership and resourcing strategy, and work toward establishing a generative culture in the projects they procure.

The Effects of Contract Detail and Prior Ties on Contract Change: A Learning Perspective

Despite the large literature on alliance contract design, we know little about how transacting parties change and amend their underlying contracts during the execution of strategic alliances. Drawing on existing research in the alliance contracting literature, we develop the empirical question of how contract detail and prior ties influence the amount, direction, and type of change in such agreements during the collaboration. We generated a sample of 115 joint ventures (JVs) by distributing a survey to JV board members or top managers and found that the amount of contract change is negatively associated with the level of detail in the initial contract but is positively associated with the number of prior ties between alliance partners. In relation to the direction of contract change, we find that the level of detail of the initial agreements negatively correlates with the likelihood of removing or weakening existing provisions and that prior collaborative experience positively correlates with the likelihood of strengthening of existing provisions or adding of new ones. We also find that prior ties affect the type of change in that JV parents prefer to change enforcement provisions more so than the coordination provisions in the contract. Our paper generates new insights on the complementarities between relational governance and transaction cost economics perspectives on alliance contracting.

Factors Causing Construction Litigation in Saudi Arabia

The problem of litigation and disputes in the construction sector is a major impediment to a country’s development goals. The purpose of this paper is to investigate the problem of high legal costs and long delays that arise due to litigation involving project owners, designers, contractors and other construction parties worldwide and in Saudi Arabia, as well as give recommendation according to the outcomes of this research. The causes of litigious behavior in Saudi Arabia and around the world were identified and documented; also the differences in litigation of the Saudi Arabian construction industry as compared to other countries were identified. Preliminary investigations revealed that there is some level of similarity in the nature of the causes. Thus, these causes were grouped into three main categories, which are expectation factors, communications factors and documentation factors. Further research based on existing literature showed that the practices used to minimize litigation in the construction industry were investigated. The following delivery processes were researched: Design-Build (DB) Delivery Method, Alliance Contracting, Construction Manager at Risk (CMAR), Best Value Model (BVM), Integrated Project Delivery (IPD), Public-Private Partnerships (PPP) and the Best Value Performance Information Procurement System (BV PIPS). Many of these delivery methods were found to have issues, which means the methods by observation do not seem to be the ideal solution to minimize litigation in the construction industry. The only delivery method found to have no litigation issues was the BV PIPS approach.

Network Prominence, Bargaining Power, and the Allocation of Value Capturing Rights in High-Tech Alliance Contracts

We suggest and provide empirical evidence that the bargaining power of alliance partners stemming from their prominence in alliance networks influences the ex-ante allocation of value capturing rights in high-tech alliance contracts. Network prominence can enhance the availability of alternative partners for a firm and thereby elevates the firm’s bargaining power and enables the firm to receive (i) more value capturing rights vis-à-vis its partner (i.e., more net value capturing rights) and (ii) more rights to the unexpected outcomes vis-à-vis its partner. We empirically investigate the content of research and development (R&D) collaboration contracts between biotech and pharmaceutical firms and show that as the prominence of the client (i.e., pharmaceutical firm) increases, it is able to attain (i) more net value capturing rights to outcomes within the area of collaboration and (ii) more rights to unexpected outcomes. By contrast, increased prominence of the R&D firm (i.e., biotech firm) decreases both the number of net value capturing rights the client receives as well as the rights to unexpected outcomes that the client captures in an alliance contract. The bargaining power that the R&D firm attains from its prominent position in alliance networks becomes less important during hot IPO markets, which provide the R&D firm more outside options to obtain financial resources. By documenting the importance of firms’ network positions as sources of bargaining power during alliance contracting, our paper contributes to the literature on strategic alliances, bargaining, and contract design.

New Models of Contracting in the Public Sector: A Review of Alliance Contracting, Prime Contracting and Outcome‐based Contracting Literature

AbstractThe coordination of public services is an enduring challenge and an important policy priority. One way to achieve collaboration across organizational boundaries, which is being considered in public services such as the English National Health Service (NHS), is through the adoption of alliance contracting, prime provider contracting and outcome‐based contracting. This article reviews the cross‐sectoral literature concerning the characteristics of these new contractual models, how they function, their impact, and their relation to public sector governance objectives. These new contractual forms are characterized as models which, in line with the New Public Management (NPM)/post‐NPM agenda, seek to incentivize providers through the transfer of risk from the commissioners to the providers of services. Key findings are that the models are likely to incur high transaction costs relating to the negotiation and specification of outcomes and rely heavily on the relational aspects of contracting. There is also found to be a lack of convincing cross‐sectoral evidence of the impact of the models, particularly in relation to improving coordination across organizations. The article questions the reconciliation of the use of these new contractual models in settings such as the English NHS with the requirements of public sector governance for transparency and accountability. The models serve to highlight the problems inherent in the NPM/post‐NPM agenda of the transfer of risk away from commissioners of services in terms of transparency and accountability.

The impact of agreed principles in the culture of alliance contracts

Adversarial forms of procurement have for some time marred the Australian construction industry. Alliance contracting is a relational type of procurement underpinned by a 'no litigation' and 'best for project decision-making' approach. The research used a semi-structured interview mechanism to examine the contract language and the objectives of the charter in guiding the behaviour of members of the alliance. The purpose was to highlight the role of such contract terms in the success of the alliance. This paper found that the principles and objectives played a role in the contract by reducing litigation, and clearly defining the non-owner participant's relationship within the alliance team. Despite individual members of the alliance facing uncertainty and risk in the project, the principles and objectives within the contract were significant to the success of the alliance.

Contracting Complexity in Biopharmaceutical Clusters

The location of the alliance partners relative to each other might be antecedent to the complexity of alliance contracting but has not received much direct attention in the literature. This researc...

Commissioning for better outcomes in mental health care: testing Alliance Contracting as an enabling framework

Purpose – Commissioning has been a central plank of health and social care policy in England for many years now, yet there are still debates about how effective it is in delivering improvements in care and outcomes. Social inclusion of people with experience of mental health is one of the goals that commissioners would like to help services to improve but such a complex outcome for people can often be undermined by contractual arrangements that fragment service responses rather than deliver holistic support. The purpose of this paper is to discuss a form of commissioning, Alliance Contracting, and how it has been allied with a Social Inclusion Outcomes Framework (SIOF) in Stockport to begin to improve services and outcomes. Design/methodology/approach – The paper is a conceptual discussion and case description of the use of Alliance Contracts to improve recovery services and social inclusion in mental health care in one locality. Findings – The paper finds that the Alliance Contracting approach fits well with the SIOF and is beginning to deliver some promising results in terms of improving services. Research limitations/implications – This is a case study of one area and, as such, it is hard to generalise beyond that. Practical implications – The paper discusses a promising approach for commissioners to develop locally to guide service improvements and better social inclusion outcomes for people. Social implications – Rather than developing good services but fractured pathways of care across providers and teams, the Alliance Contracting approach potentially delivers more holistic and flexible pathways that ought to better help individuals in their recovery journeys. Originality/value – This is the first paper to set out the use of Alliance Contracting and social inclusion measures to help improve services and outcomes for people experiencing mental health problems.

Alliancing in Australia: competing for thought leadership

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.

An Organisational Level Approach to Integrated Care: Models and Mechanisms

Introduction: A major challenge for any health system is to enable health care to be integrated across different service providers in diverse organizations. A number of models of integration in have been developed to facilitate integrated care. This study aimed to identify the models of integrated primary health care and the mechanisms contained within effective models. Methods: A literature review was undertaken using a range of electronic databases and websites. A snowballing technique was used to identify additional material. Results: Common mechanisms in the Australian and International models of organizational level integration in primary health care included: partnerships, memoranda of understanding, alliance contracting, co-location and communication strategies. Discussion: The siloed structures of the past, built in part to preserve professional autonomy, are often difficult to align with the inter-professional and inter-organizational approaches required by systems thinking. However, while many challenges exist, there are also several promising approaches to enabling integration across primary health care organizations, both in Australia and elsewhere.

Alliance contracting: adding value through relationship development

Purpose – Alliancing and partnering have been extensively used to stimulate collaborative relations between supply chain members as well as to address the need to improve the performance of projects. Recognising the need to build and sustain relationships in alliances, the paper aims to present a model that is developed and tested by industry practitioners who are regularly involved with alliance contracting. The developed model can be used to encourage a culture of reflective learning and mutual trust, beyond merely project‐specific performance outcomes.Design/methodology/approach – To examine the applicability of the conceptual model to alliance contracting in construction an exploratory approach was adopted. A total of 49 in‐depth interviews were conducted over a six‐month period with a variety of industry practitioners (clients, contractors, design consultants, construction lawyers, and alliance facilitators) who had extensive experience with working in alliance contracts. Interviews were used as the ...

Authentic leadership for 21st century project delivery

Project leadership has to adapt to meet changing needs of this 21st century if it is to remain relevant. The 21st century world has changed from that of the previous century with the global financial crisis (GFC) marking a point of inflection in this change. At the same time generational change and particularly in Australia, a move to project alliance contracting, combine to require a re-examination of project leadership. Results of a pilot study and preliminary results of research into characteristics required for successful alliance project leadership are presented. Characteristics identified by this research relate closely to those of authentic leadership. A capability maturity model (CMM) to track the development of authentic leadership attributes in project leaders is proposed. Research by others in a range of project based environments would further test the usefulness of this CMM for project managers and leaders.

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

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.

Price Competitive Alliance Projects: Identification of Success Factors for Public Clients

The need to identify the critical factors in the successful development and management of the price competitive alliance model has become a priority for public sector clients, as there is an increasing need to obtain better value for money (VfM) for its infrastructure projects. Yet, there has been limited research undertaken about the nature and use of price competitive alliances. This research determines the success factors (SFs) for price competitive alliances during their relationship development phases as this form of alliance contract is being used extensively by public sector clients to procure critical infrastructure projects in Western Australia (WA). A review of the literature of partnering and alliance contracting is used to develop a conceptual model of potential SFs. Interviews with 21 practitioners who participated in alliances on behalf of a WA public sector client were conducted to determine their perceived SF for price competitive alliances throughout the relationship development process. Contrary to the literature, each of the SFs identified was required in each stage of the relationship development process. In particular, the development of a leadership enriched culture (where people view the project as an extension of themselves and feel good about what they personally achieve through cooperation) was deemed necessary for the successful implementation of a price competitive alliance. Moreover it was revealed that the establishment of trust for the client began to arise at the point when a realistic target outturn cost that was able to deliver VfM, as well as an innovative sustainable outcome could be attained. Price competitive alliance models are considered to be an appropriate procurement method, albeit during the current economic climate an alternative to public private partnerships, for delivering large complex infrastructure projects.

Alliance Contracting - Breaking the Barriers of Traditional Project Delivery

Alliance Contracting - Breaking the Barriers of Traditional Project Delivery

Alliance Contracting and Sustainability

The purpose of this paper is to consider sustainability from the perspective of contracting. In particular, a form of contracting called Alliance contracting. This differs from more traditional contracts which, unless specified in a brief, tend to have more of an “end of pipe” approach. Alliance contracting creates the conditions for sustainability to be considered at the outset and throughout the life of a project.