What is alliancing

An alliance is “an agreement between two or more individuals or entities stating that the involved parties will act in a certain way in order to achieve a common goal.”

An alliance is, in effect, a virtual organisation. The members of an alliance drive a synergy where the benefits are greater than those obtained by acting individually.

Collective ownership of opportunities and responsibilities together with shared decision making create a collaborative environment without the need for new organisational forms.

An agreement

  • formal documentation of the commitment of each member
  • can be a legal agreement, contract or charter
  • defines the alliance purpose, the outcomes required and the roles and accountabilities of its members
  • distinguishes alliances from other forms of collaboration which may be informal or ad hoc

Act in a certain way

  • members sign up to a set of principles, values and behaviours
  • decisions are based on these and on the outcomes to be achieved together
  • everyone takes responsibility for implementing the decisions

A common goal

  • will depend on the situation and ambition of those setting up the alliance
  • will shape the type of alliance you create

 

Alliances can take many forms and they all have the above definition in common. Alliancing can be applied to delivery of services, co-design, research and development, innovation and change programmes. See here for examples of why alliancing will add value in various situations.

An alliance is typically set up for a specific purpose and is disbanded when that purpose has been achieved.

Alliance contracting

Alliance contracting is the term usually applied to project or service delivery where there is one contract between the owner/financier/commissioner and an alliance of parties who deliver the project or service.

See our video for a 2 minute explanation of alliance contracting

An alliance contract creates a collaborative environment without the need for new organisational forms. By having one alliance contract, all parties are working to the same outcomes and are signed up to the same success measures. There is a strong sense of your problem is my problem, your success is my success.

Typically there is a risk share across all parties and any ‘gain’ or ‘pain’ is linked with good or poor performance overall and not to the performance of individual parties.

The distinctions between alliance contracts and traditional service contracts are broken down in the diagram below.

Traditional contracts

Alliance contract

Traditional contracts diagram Alliance contracts diagram
Separate contracts with each party One contract, one performance framework
Separate objectives for each party Aligned objectives and shared risks
Performance individually judged Success judged on performance overall
Commissioner is the co-ordinator Shared co-ordination, collective accountability
Provision made for disputes Based on trust and transparency
Contracts based on tight specification Contract describes outcomes and relationships
Change not easily accommodated Change and innovation in delivery are expected

 

 

shutterstock_185006324Lawrence-Hargrave-Drive

Alliancing and alliance contracting

  • Formalises collaboration to accelerate and strengthen shared goals
  • Drives innovation and fresh thinking
  • Values parties equally however big or small
  • Maintains each parties unique identity
  • Uses whole system outcomes to align success for each party

History of alliancing and alliance contracting

Alliances are not a recent phenomenon, they have been used for centuries. In the last couple of decades however they have evolved very quickly. Many people will be familiar with the airline industry’s One World Alliance and Star Alliance for instance. There are scores of examples of alliances in most sectors.

Nowadays the focus is around the synergies gained through collaboration and the provision of complementary expertise. It is the added value to a product or service rather than a simple joining of resources.

Alliance contracting for delivering projects has grown rapidly since it was first adopted with outstanding results in the early 1990s for the development of the BP Andrew oil field in the North Sea.

The first public sector alliance projects were undertaken in Australia in the late 1990s. Since that time methodologies have developed and the alliance approach for projects has been adopted in other sectors of the economy.

Alliance contracting has since been used in thousands of projects and continues to produce outstanding cost outcomes, early completion, exemplary health and safety records and  award winning solutions.

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