Can project alliancing agreements change the way we build?
Errors, omissions, inefficiencies, delays, coordination problems, cost overruns, productivity losses—the list of complaints against (and often by) architects and contractors is a long one. The Construction Users Roundtable (CURT) has characterized the difficulties experienced in typical projects as “artifacts of a construction process fraught by lack of cooperation and poor information integration.” The historical reasons for this dysfunctionality are many, including a multiplicity of participants with conflicting interests, incompatible cultures, and limited access to necessary information.
In an influential 2004 white paper titled in part, “Collaboration, Integrated Information, and the Project Lifecycle,” CURT said, “The goal of everyone in the industry should be better, faster, more capable project delivery created by fully integrated, collaborative teams.” It is increasingly believed that the achievement of this elusive goal, commonly called “integrated project delivery” (IPD), will be facilitated by the emerging technology of building information modeling (BIM).
While a number of architects and contractors are experimenting with BIM, the very definition of IPD is unclear to most industry participants. In an effort to remedy this confusion, the AIA California Council (AIACC) recently published a report titled, “Integrated Project Delivery—A Working Definition.” The report calls IPD “a project delivery approach that integrates people, systems, business structures, and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication, and construction.” A key element of this process, says the report, is early, open, and collaborative participation by designers, constructors, and fabricators “beginning when the project is first conceptualized [and continuing] throughout the full life cycle of the facilities.”
Project alliancing agreements
The AIACC report does not recommend a specific contractual structure for an IPD project, but it does mention one possible model: the project alliance agreement. This model is also referred to in recent CURT white papers, and it is increasingly mentioned in programs, meetings, and symposia exploring the progress and potential of IPD. While virtually unknown until recently in the U.S., this model has a proven track record in Australia, most significantly in the design and construction of a new National Museum in Canberra.
In the National Museum project, the owner and the primary designers and constructors were organized into an integrated group called the Acton Peninsula Alliance, under a single agreement signed by all of them. Alliance members were chosen through a rigorous process in which candidates were evaluated not only on their technical skills, but also on their ability to work effectively in a collaborative environment. The selected exhibition design team was led by a Boston-based firm, Amaze Design. Andy Anway, the president of the firm, has referred to the alliance as “a transformative experience that changed the life of everyone who participated in it.”
The alliance agreement
had as its goal the alignment of interests for the benefit of the project as a whole. Each alliance member (other than the owner) was compensated on an open-book, cost-reimbursed basis, with a preestablished profit amount approved by all other Alliance members. In addition, all of the members received prenegotiated “Gainshare” bonuses if the project as a whole achieved or exceeded agreed-upon goals, and they all paid prenegotiated “Painshare” penalties if the project failed to meet the goals. There was no expressly stated limit on the reimbursable costs payable to each alliance member, although the owner was not obligated to pay more than the amount of the total project budget to all the other alliance members combined.
The alliance was managed
by a leadership team consisting of one senior representative of each alliance member, including the owner. One hundred percent attendance constituted a quorum at each monthly meeting of the leadership team, and all of its decisions had to be unanimous. A trained facilitator, paid out of the project budget, attended many of the meetings to help guide this unusual process.
Personnel of the alliance members were mixed and matched on a “best for project” basis, and problems were solved in a collaborative “no-blame” environment. In order to achieve that environment, the owner and all of the other alliance members agreed in advance to release one another from all liability arising out of the project except for “willful default” as defined in the alliance agreement. This definition excluded “any error of judgment, mistake, act, or omission, whether negligent or not, made in good faith by an alliance member,” for which no claims could be made by the owner or any other alliance member either during or after the design and construction process.
The project alliance delivery method was developed for the purpose of overcoming extreme challenges and achieving “breakthrough” results, where “business as usual” performance would not be sufficient. It achieved these goals in the National Museum project, which was completed within a fixed budget and opened on schedule on the 100th anniversary of the Australian Federation. It has also been used successfully in several dozen Australian public works and infrastructure projects, and the government of the province of Victoria has recently promoted it in a detailed Practitioner’s Guide (available online at www.dtf.vic.gov.au). However, project alliancing has not been used in any other Australian vertical building project since the completion of the National Museum in 2001. According to Carey Lyon, immediate past president of the Royal Australian Institute of Architects, possible reasons for this include the reluctance of Australian contractors to give up the adversarial approach that is “built into their business model.”
“However,” says Lyon, “the use of BIM and integrated project delivery will take away the ability to drive wedges into the information chain. This will open up significant opportunities to redefine contracting, and could lead to wider use of project alliancing.”