The IPAA (Interim Project Alliance Agreement) phase of an Alliance is perhaps the most challenging phase of the Alliance lifecyle.  It precedes the PAA (Project Alliance Agreement) stage where the work is undertaken to deliver the project or programme of works.  One of the biggest challenges is that all participants but particularly the owners are wearing two hats through the IPAA process.   The first hat is the working as one Alliance team hat looking to build a high-performance team and working collaboratively to undertake work, develop a Target Outturn Cost (TOC) and build high levels of trust.   The other hat is the commercial one where there is constructive tension between the owner and non-owner participants in agreeing an affordable TOC, align on scope and minimum requirements and sign a PAA that ensures the project or program of works is delivered to expectations.

As an Alliance coach, I have worked on a number of IPAA phases in the last fifteen years in Australia, New Zealand and Canada in different industries and have seen many different challenges and lessons learnt on various projects or program of works over this period.  This blog looks to capture these key lessons learnt from the perspective of the owners and non-owner participants so they can be used for future Alliances.

As a recap, it is worth working through the circumstances that the Alliance procurement model is suited to and selected by an owner for a project or program of works which are as follows:

• The scope is unclear or cannot be defined up front as part of the procurement process which makes it hard for the supply chain to provide commercial certainty to the client as part of the tender process;
• There is a high likelihood of scope changes for a variety of reasons leading to challenges around risk allocation and the associated challenge of the scope not being clearly defined at a point in time to allow pricing certainty by the market;
• There are numerous complex and/or unpredictable risks that cannot be allocated to the party in the best position to manage the risk.  This leads to challenges with pricing and also scope management and certainty;
• Very tight timelines are in play for a variety of reasons.  This could be political or there are some critical path activities that require project acceleration;
• There is a need for the client and their supply chain project partners to work closely together to manage challenges and respond effectively when faced with adversity as well as a significant amount of contingency on both sides;
• There is increasing complexity and uncertainty associated with the project that requires a shared risk model that ensures all parties are focussed on finding solutions together to these challenges;
• There are shifting business or political imperatives that need to be proactively managed;
• There are significant stakeholder or partner challenges that require a collaborative approach to managing their expectations, additional scope of works and other project requirements;
• There is a need for owner interference or significant value-adding by owner in the project.  There could be significant project history and experience and subject matter experts within the client organisation that needs to be leveraged by the project which the Alliance model allows for through the Owner Interface Manager (OIM) role and function; and
• Threats and/or opportunities that can only be managed collectively by all parties can be managed proactively through the Alliance procurement model with a focus on solutions and working as one team.

Ensuring the owner and all alliance participants are all clear on why an Alliance has been chosen for this project and the benefits of adopting this procurement model are communicated is critical to building momentum within the IPAA phase.  Ideally this is captured in a Multi-Criteria Analysis (MCA) document that is shared with everyone to ensure alignment on why it was chosen for your particular project or program of works.

In terms of the broad objectives of the IPAA phase of an Alliance, they can be summarised as follows:

• Develop, reconcile and agree between all parties a Target Outturn Cost (TOC) and associated schedule of proposed works;
• Look to drive value management and drive value engineering very early in the IPAA phase that delivers savings, innovation and subsequently public value for the owner;
• Undertake early works, planning and design to set up for the PAA phase of the project looking to mitigate key risks and capitalise on key opportunities as an Alliance;
• Start the initial work around choosing best for alliance systems and procedures from all participants particularly in key areas such as the alliance management plans and other key foundational systems and processes;
• Start the initial work to develop teamwork and high levels of trust between all parties to build a high performing one team culture within the Alliance.  This includes the development of a charter, key result areas, alliance principles, objectives and aspirational goals for the alliance;
• Work through governance of the Alliance ensuring that it is set up for success in all key areas relating to the interface to the Owner team, approvals, delegations, issue resolution and key governance areas; and
• Sign the PAA agreement which includes all the commitments all parties make in the Alliance to delivering the project or program of works.

From a commercial perspective, the non-owner participants are reimbursed at actual cost through the IPAA phase by the owner.

In terms of key lessons learnt from coaching many alliances during the IPAA phase, they are as follows:

Owners

• Make sure the selection process is focussed on the right fundamentals and evaluation criteria in choosing the non-owner alliance participants.  Partner selection is critical and will either ensure the project is an enjoyable and successful outcome rather than being challenging from the start;
• Try and keep to the fundamentals of the alliance model.  Problems arise when well meaning procurement and client teams through the alliance selection process tinker significantly with the principles of the Alliance procurement model in key areas like governance, approvals or looking to combine other procurement model characteristics.  Use the national alliancing guidelines (refer to our blog on this The-Fundamentals-of-Alliancing) to implement the model fully with all key principles rather than a watered down version of hybrid version that causes problems downstream for all participants;
• Don’t man mark the Alliance.  The Alliance model is an empowering one with separate governance arrangements designed to move at pace.  There is minimal need for large owner teams which I am seeing more of which is concerning.  If you require key owner personnel in key technical roles in the Alliance, embed them within the Alliance ensuring they are working as one team;
• Ensure the owner team is fully resourced through the Owner Interface Manager (OIM) team in terms of the capability and resources required to support the IPAA phase of the Alliance;
• Train and educate the OIM and all Subject Matter Experts (SME’s) working with the Alliance around key areas of the Alliance model.  Alliance 101 training, understanding the commercial model of the Alliance, the purpose and function of the OIM/SME team are all areas where up front training is critical in the early part of the IPAA phase;
• Ensure the owner team is crystal clear on why an alliance was chosen for this project or program of works.  They need to be advocates for the alliance model both within the Alliance and back in the owner organisation;
• Ensure the OIM team is crystal clear in managing the expectations of the owner key stakeholders in terms of scope, budget and minimum requirements.  The challenge for most Alliances from the perspective of the owner is around affordability.  Value engineering workshops and looking to reduce costs as an Alliance is great but being really diligent in managing scope and having a realistic and robust budget that has the appropriate rigour from the start will save a lot of pain and tension between parties towards the end of the IPAA phase;
• Ensure you role model and live the Alliance principles.  They have been designed to optimise the shared and collective risk model that an Alliance is.  It is critical that the owner is fully committed to living these from selection through to the IPAA phase right through to the PAA phase.  Undertaking living Alliance principles training and detailing exactly what they mean in practice for everyone involved from the owners perspective with the Alliance is important in ensuring we are clear on expectations from the start;
• Put your best people in key roles.  The client needs commercially capable and experienced Alliance practitioners at ideally at PAB representation and within the senior OIM role.  Both areas are critical for ensuring we have a mature and intelligent client.  Train and educate your people in these key areas through PAB 101 training and OIM 101 training to the point where they see the Alliance as an extended business unit of the Owner;  and
• Spend time aligning on the roles and responsibilities of the subject matter experts back in the owner organisation.  They need to be clear on their roles, rules of engagement and swim lanes in ensuring they make decisions in a timely manner to keep the Alliance moving through the IPAA phase.

Non-Owner Participants

• Ensure you are fully committed to the Alliance model.   This includes training and educating your people on the collaborative mindset and behaviours required to live the Alliance principles at your best;
• Bring your best resources to the Alliance from the start.  This is critical in ensuring that the Alliance gets your best systems, processes and people to ensure that the owner gets the benefits from the Alliance procurement model;
• Bring your lessons learnt, innovations and smarts from previous Alliances.  This is critical in ensuring that the owner gets not only the benefits from this but it allows the Alliance to build early momentum through not having to reinvent the wheel in key areas;
• Keep the Alliance connected to your home organisations.   This interface is critical in ensuring the Alliance gets what they require from the home organisations and there is an effective and collaborative connection from all your leaders both ways;
• Play the long game with your client.  There will be challenges through the selection and IPAA phase with the owner and the project or program of works in all areas including time, cost, quality and other non-cost attributes important to the client and the project or program of works.  Invest in winning the war not every battle with a view to ensuring that you are fully committed to the Alliance model, and you have the back of the owner in ensuring they get the benefits from it;
• Train and educate all your staff on the fundamentals of alliancing.  There is a real need for everyone to understand the model, the benefits, why it was chosen, the commercial principles and all other aspects of it.   Don’t underestimate the amount of work in explaining the why, what and how of alliancing as it requires a significant mindset shift from more traditional procurement models such as design and construct and other more fixed price arrangements.  This is particularly important when educating project staff on the commercial model of an Alliance as contract form drives behaviour;
• Don’t avoid the difficult conversations with your client.  The earlier key issues and challenges can get flushed out, the earlier we can look to solve them.  Optimising the shared risk model is about identifying and defining the problem and then moving together quickly to problem solve.  This is critical in delivering great outcomes;
• See working in the Alliance environment as a privilege. It is collaborative, a great opportunity for growth for all staff and it is critical that non-owner participants see themselves as custodians and advocates for the Alliance model.  This means really ensuring that the client gets the outcomes they are looking for through the Alliance model by non-owner participants being fully committed.

All Alliance Participants

• Ensure the governance is simple and ideally contained within the Alliance itself.  The Alliances in an IPAA phase that tend to be extended or lack momentum are ones where significant governance in terms of approvals and decisions happen outside of the Alliance.  This slows down the IPAA phase and causes mistrust.  Develop a governance plan and decision matrix early and upfront so everyone knows what decisions need to be made where and by when.   This includes having an effective PAB and ALT with good operating cadence, a clear forward plan focussed on the IPAA deliverables and constructive leadership at all levels;
• Living the Alliance principles is critical for all leaders from all parties.   They need to be role modelled and demonstrated to ensure that we work through every situation using the alliance principles as our anchor;
• Invest in your people, leadership and coaching activities.  One of the biggest legacies from Alliances is the capability and capacity building of our industry.  The Alliance model is optimal for this and needs to continue to develop constructive leaders that have an impact broader than the project they are working on.  An Alliance is an ideal training ground to develop succession planning and leaders at all levels;
• Actively look to build trust right from the start of the IPAA phase.  Trust = speed and this really matters in all phases of the early stages of a project.  We need to not only demonstrate this with our Alliance participants but also external stakeholders and our home organisatons;
• Challenge yourself to identify and set aspirational targets and objectives for the Alliance collectively.  Look to stretch and really ensure that the Alliance model gets the benefits that the client is seeking but also realises the benefits of building a high performing team.

For me personally, I have loved the experience of working on many Alliances over a long period of time.  Ensuring we learn the lessons and apply them to future Alliances and other projects will ensure that we continue to hopefully utilise the procurement model in the right project or program circumstances.  It is about ensuring alliancing still delivers great project outcomes and value for money outcomes for our communities we serve.