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Partnering in Europe

Partnering has been finding successful application in the construction industry for at least a decade. Originating in the USA, it has subsequently been widely adopted in the UK and, increasingly, in many other parts of the world, including mainland Europe. The concept of partnering grew out of the realisation that traditional forms of contracting for construction projects were frequently failing to deliver results that were acceptable to either or both the owners and construction contractors. Many reasons for this failure have been put forward, each of which has some degree of validity.

Some failures undoubtedly have had their roots in a simple failure to apply good project-management practices. Indeed, it is worth stating at the outset that partnering is not, and never will be, a substitute for sound project management. On the contrary, partnering is unlikely to be effective if this is missing. Other failures have been related more directly to breakdowns in the relationships between owners and construction contractors. The most common observation has been of an increasing tendency for disputes and even litigation between the parties when problems arise during the course of a project. Such disputes have often proven to be time consuming and costly, and frequently neither party has been satisfied with the outcome. Indeed, it has been noted that the resources devoted to dealing with disputes arising from this so-called adversarialism have greatly exceeded those that have or could have been applied to finding effective and mutually acceptable solutions to the original problems.

Partnering takes many forms, but all seek to address the issue of adversarialism directly. It is based on the simple, some would say common sense, premise that … better results can be achieved for all participating companies if they work together towards agreed common goals rather than as individual companies each with its own separate agenda and objectives.

A practical guide for creating and implementing project-specific alliances, primarily for engineering construction activities for private-sector clients. Also contains applications for many areas of the building and construction industry.
Task Force Member
Executive summary

Part 1

1. What is partnering?
1.1 Definition
1.2 Categories of partnering
1.3 Key features of project alliances
1.3.1 Early involvement of key participants
1.3.2 Equitable relationship
1.3.3 Managerial commitment
1.3.4 Commercial alignment
1.3.5 Integrated team
1.3.6 Trust
1.3.7 Innovation
1.3.8 Open communication

2. Why adopt alliancing?
2.1 Limitations of ‘traditional’ contracting
2.1.1 Misalignment between owner and contractors
2.1.2 Misalignment between contractors
2.1.3 Lack of access to contractor expertise
2.2 How does alliancing address the limitations of current practice?
2.3 Alliance benefits
2.3.1 Tangible benefits
2.3.2 Intangible benefits
2.4 Circumstances suitable for alliancing
2.4.1 Owner business philosophy
2.4.2 Project size
2.4.3 Project uncertainty and risk factors
2.4.4 Alliance partner (contractor) availability and capacity
2.4.5 Summary

3. Potential barriers to alliancing
3.1 Organisational structures
3.1.1 Hierarchical organisations
3.1.2 Matrix organisations
3.2 Cultural attitudes
3.2.1 Little low-level empowerment
3.2.2 Little peer group contact
3.2.3 Blaming not sharing
3.2.4 Reluctance to communicate freely
3.2.5 Lack of real commitment
3.2.6 Ingrained distrust
3.2.7 Investment in inappropriate skills
3.2.8 Avoidance of personal accountability
3.2.9 Rigid roles and procedures
3.3 Partner fit
3.4 Commercial concerns
3.5 Owner skills

4. Legal considerations
4.1 Competition and fair trading
4.2 Public sector procurement directives
4.3 Proposals for change in the public sector
4.4 Utilities Directive
4.5 Concessions and other forms of public–private partnership
4.6 Employment issues
4.6.1 European Union’s Acquired Rights Directive
4.6.2 The use of integrated teams

Part 2 Implementing an alliance

1. Introduction

2. The owner internal alignment process
2.1 Owner commitment
2.2 Business and project alignment – a tool-kit
2.2.1 Owner role and competencies
2.2.2 The owner team

3. Starting the process with potential alliance contractors
3.1 Communicating the owner’s intent
3.2 Owner–contractor alignment

4. Selecting alliance contractors
4.1 Strategy
4.2 Alliance design: the number and type of partners
4.3 Timing of selection
4.4 Alliance partner selection process
4.5 Selection criteria
4.6 Evaluation plan and process

5. Contracts for alliancing
5.1 Contractual structures for alliances
5.2 Relationship of works contracts and alliance agreement
5.3 Tax and corporate implications of alliancing
5.4 Works contracts for partnering and alliancing
5.4.1 General
5.4.2 Compensation or reimbursement terms
5.4.3 Supervening insolvency
5.4.4 Information management, intellectual property and confidentiality
5.4.5 Audit and inspection
5.4.6 Early warning and joint problem-solving
5.4.7 Snagging and rework
5.4.8 Choice of law
5.5 Alliance agreement
5.5.1 Objective(s) of the alliance
5.5.2 Relationships and organisational structures
5.5.3 Incentive scheme
5.5.4 Other important contractual issues
5.5.5 Other clauses

6. The alliance incentive scheme
6.1 Definition of project completion
6.2 Setting performance criteria targets
6.2.1 Capital cost
6.2.2 Schedule
6.3 Shares in the incentive scheme
6.4 Incentive scheme formulae
6.5 Changes to performance criteria targets
6.5.1 Project intent
6.5.2 ‘Hurdles’
6.5.3 Force majeure and suspension
6.5.4 Excluded risks

7. Project organisation in an alliance
7.1 Organisational design
7.1.1 Example
7.2 Communication
7.2.1 General
7.2.2 Communication systems
7.2.3 Communication channels

8. Project procedures and processes in alliance
8.1 Execution procedures
8.2 Reporting systems

9. Building and sustaining alliance relationships
9.1 The importance of alignment
9.2 Alignment mechanisms
9.2.1 Examples of actions to create alignment
9.3 Facilitation, training and coaching: consultants
9.4 Generating performance improvement and innovation

10. Monitoring performance in an alliance
10.1 Performance against incentive-scheme targets
10.2 Safety performance
10.3 Relationship quality

11. Building relationships with others
11.1 Non-alliance companies
11.1.1 The procurement chain
11.1.2 Timing of involvement
11.2 Building effective relationships
11.2.1 Strategy
11.2.2 Communicating the intent of the alliance
11.2.3 Open dialogue
11.2.4 Commercial considerations
11.2.5 Integration
11.2.6 Communication
11.3 Relationships with external authorities
11.4 Relationships with external organisations and individuals

Glossary of terms

Appendix 1 Dispute avoidance and disputes resolution
Appendix 2 Targets in the context of an alliance
Appendix 3 Examples of project intents

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