Bilfinger Berger Award

CITIES AND COMMUNITIES IN AUSTRALIA ARE RELYING ON ALLIANCE CONTRACTS TO MEET THE CHALLENGES OF COMPLEX PROJECTS. THIS CONTRACT MODEL WAS RECOGNIZED AT THE BILFINGER BERGER AWARD

A successful construction project and a good marriage have a lot in common. Both are based on mutual trust and a willingness to solve problems together rather than with the help of a lawyer. Joy, pain and risks are shared. Ideally, they are partnerships which benefit both sides.“Alliancing” the Australian contract model, seeks to promote such relationships. While alliance contracts are still relatively unknown in Germany, the experience clients and contractors have gathered in Australia since the 1990s has been overwhelmingly positive.

A large number of road and infrastructure projects are now being carried out using such cooperations. Cities and communities in Australia are also entering into alliances to deal with the country’s most pressing problem—water shortages. For the past five years Australia has been suffering from a drought the likes of which have never been seen before. Drinking water is rationed in many cities, washing cars is forbidden.“80 percent of Australian cities are subject to long-term water-supply shortages,”says John Kirkwood, General Manager of Bilfinger Berger’s operations in Queensland. The situation can only be remedied through massive investment in infrastructure, often with the help of alliances.

One such project is currently being carried out in Queensland. There, Bilfinger Berger is involved in the Southern Region Water Pipeline Alliance (SRWPA). The approximately 100-kilometer long pipeline runs through Ipswich, Brisbane and tourist areas on the Gold Coast. Construction began in October 2006 and the project is scheduled to be completed by December 2008. Bilfinger Berger’s role is not limited to laying pipes; the company will also design and build three water reservoirs, five pumping stations, four river crossings and nine major tunnels.

COOPERATION IS BETTER THAN CONFRONTATION
Bilfinger Berger Australia is involved in more than a dozen alliance projects with a total volume of over 3.2 billion Australian dollars (about 2 billion euros). “About a third of our output volume is currently being generated in alliance arrangements,” says Darrell Hendry, CFO of Bilfinger Berger Australia. The cooperation between the partners occurs within the scope of a joint project company. The parties agree to solve disagreements among themselves and to keep them out of the hands of the courts. Conflicts and resorting to legal remedies are avoided. That’s exactly the reason why alliance models are so successful, says Andrew Lonsdale, Bilfinger Berger’s corporate counsel in Sydney: “The desire for conflict-free construction is huge—on all sides.” John Kirkwood is also convinced that alliances will continue to gain acceptance. “In the last 20 years, the relationship between client and contractor has shifted: away from the relationship between a boss and his employee and toward a partnership,”he says.This is highly beneficial to the projects: only rarely are there claims in alliances.

RADICAL RE-THINKING
In Germany, such cooperations are still far away. Client and contractors often work together closely, within the framework of public-private partnerships, for example, but PPPs in particular are characterized by strict contractual regulations. They are designed to minimize risk, but what they end up doing, in the view of experts in construction law, is obstructing cooperation based on trust. Alliance contracts, on the other hand, rely on soft factors: trust, teamwork, flexibility.“The atmosphere is open, positive and creative. Alliances therefore develop an incredible amount of potential,” says Bob Vickers, who has been managing alliance projects for years at Bilfinger Berger Australia.

“Alliancing is a win-win strategy which is especially useful for complex infrastructure projects,” says Andrew Chew, who explored such alliances within the scope of the Bilfinger Berger Awards. Instead of focusing on determining a price in advance of a project and shifting risks back and forth, client and contractor define common targets which are rewarded through bonus payments if met. These include keeping construction costs within budget as well as maintaining a positive image among local residents or the environmentally friendly execution of a project. “Alliance contracts require a radical re-thinking, but the partners gain the flexibility needed to jointly bring the project to successful completion and to achieve the real goal: the best solution, not the cheapest,” says Andrew Chew.

(Text: Petra Krimphove, Photo: John Gollings)