The consultation draft of the new NEC4 Alliance Contract was recently released for feedback. Construction and infrastructure professionals are encouraged to review the contract to ensure the framework meets their needs. The framework intends to enable a true multiparty contract in which everybody is engaged on a single set of terms and conditions.
Alliance contracting was developed to meet the demands for better integration of project teams, says Ricardo Pillay, Partner at Dentons South Africa.
“It is used to generate better outcomes for large, highly complex infrastructure projects, where clients in specialised sectors, have particular capabilities to contribute skills and expertise to deliver the project. Traditional EPC (Engineering, Procurement Construction) contracts generally do not deliver optimal outcomes in such projects, in part because they do not promote the necessary collaboration and risk sharing between the client and players in the supply chain,” says Ricardo.
The NEC4 Alliance Contract is performance-based and ensures that all members of the alliance share in both the risk and reward for achievement of the project objectives. This contract model was pioneered in the Australian oil industry in the mid-1990s, then used in the water sector from the late 1990s and in road construction from 2000, and has already delivered good results in both the United Kingdom and Australia.
“We are going to see massive infrastructure projects going ahead and we need to identify creative means of collaborative contracting to ensure that projects are on time, on budget and in accordance with specification. International best practice would dictate that these risks are best managed through alliance contracting, a ‘best-for-project philosophy’ where performance is measured and monitored at an alliance rather than individual party level. We simply cannot afford the project delays and cost overruns that historically plague infrastructure projects,” says Ricardo.
For more information, contact Dentons via www.dentons.com.