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As responsibilities are redefined and financial rewards and risks reallocated, project delivery methods such as “project alliance contracting” may be at the forefront of a refabricated design and construction process.
Project alliances are a part of various project delivery approaches, including design-build and public-private partnerships. The one common feature of project alliance contracting is a risk-sharing mentality. The sharing of risk is usually proportionately and contractually defined and ranges from pure alliance contracting, in which every participating party’s assets are at risk, to limited, or “impure” forms where only profits or stated assets might be jeopardized by a deficient result. The goal of the risk sharing is to reduce the adversarial effect of conflicting interests on a construction project and foster more integration and collaboration to achieve a successful project. Concomitant to project alliances is the elimination of placing fault or blame on one party. This, for instance, negates the concept of negligent performance within the alliance. It also makes coverage for internal alliance costs, losses, or damages problematic, and it raises the exposure of all parties by creating fiduciary duties among partners in the arrangement.
Construction contractors and construction managers face many new opportunities in a project alliance system with its shared control and shared responsibilities. Project outcomes can be integrated with the project owner's goals thus reducing dissatisfaction and disputes. Tighter control of costs and higher profits can create efficiencies. But those opportunities also result in the need to focus on aligning the interests of all project participants on measurable performance targets. As integrated practice procedures evolve and client-driven efforts to share risk mature, alliance contracting entities will need to look closely at their business risks and at the scope and limitations of current insurance coverages.
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