How serious are we about improving construction?

20 years ago at a conference in London, I co-presented the results of a successful project that used a multi-party project alliance - the first projects to use the approach on a relatively small project. It was a great success, and since they it has been my preferred project procurement strategy.

I was reminded of this when I watched a recent #ConstructingExcellence webinar. This was reporting on progress of the trial "new" models of procurement launched seven years ago in the UK Government's 2011 Construction Strategy. The project alliance was one of the trial methods, and the results were very similar to those I experienced on my first alliance 20 years ago, including a client who was delighted with the value they received, and team members delighted to have worked in such a fun and professional environment.

But I was also left worrying. This was a single trial project of a method proposed seven years ago - ￡12M out of a public sector spend of over ￡100B a year. Over a similar seven year period 2010-2016, Finland has tested, and subsequently used, project alliancing on 46 projects worth €2.7 billion.

Why the slow progress here in the UK? Was this a true trial....or procrastination?

Anyone want to speculate why the UK seems so reticent to seriously try project alliancing?

Many people talk about the need to "collaborate" on projects. A project alliance is the best way I have seen to establish a collaborative team, with aligned incentives, and with members selected early in the project. Project Alliances have been demonstrated to be successful for over 25 years. From the UK oil and gas industry to public sector infrastructure in Australia, and Finland. I come across the odd example of ongoing use, but not of any systemic movement towards more-and-more use.

Even if you are skeptical, surely it is worth a serious test? But one project in seven years? ￡12M out of ￡800B? Within this initiative, the other "new" models of procurement were trialed within long-term framework relationships, meaning just one project tested an approach that can be used on one-off projects without having to have a long-term commercial relationship in place.

In the UK Government Construction Strategy, the project alliance method was hidden behind a slightly misleading name - it was called "Integrated Project Insurance" (IPI). Even I - as a big fan of the project alliance - didn't realise that is what this was until I studied the topic. I am glad to see the name of this method has now been changed to "Insurance Backed Alliancing".

But even that is slightly off-putting. The insurance product they have developed looks to be a great innovation. But insurance is not necessary to make a project alliance work. It helps for sure, especially with clients who have firmly capped budgets, but it isn't a prerequisite, as can be seen from the hundreds of successful case studies on project alliance and IPD (= Integrated Project Delivery - a close relative of the project alliance).

Are project alliances not just for big/complex/risky projects?

All the downsides I have heard people mention, seem to be either misunderstandings, or the result of clunky implementation. For example

• Aren't Project Alliances difficult or complex to implement - at least beyond what 'average' project teams can handle by themselves? This isn't my experience. Whilst outside facilitators can be helpful, they are not absolutely necessary if your existing project team has the right skills. And in terms of cost, even if you do use external facilitation, you should also be reducing administration cots compared to more common procurement approaches. If not something isn't being done right.
• Are they only for the biggest and most complex projects? Not at all. The smallest I was involved in was about ￡3M in 2002. The recent UK case study mentioned above was less than ￡12M, and I recently worked with a project in Russia that is building just 18 luxury apartments. 
• Doesn't it cost more? It shouldn't do - it should cost less. An alliance should be faster to set up, and use less resource in contract controls and administration. You should expect a better plan and design, and an asset that is easier to build and operate. Overruns should be significantly reduced, and disputes - at least those requiring expensive legal resources - should become a thing of the past. I would say if your alliance's target and outcome costs are not less than a typical benchmark, something is seriously wrong.
• Doesn't it need long-term supply relationships? Nope. A project alliance is a one-off arrangement for a specific project, and it will deliver improvements on that single project. Sure long-term relationships can add a further dimension and help in continuous improvement, but they are not a necessary condition, and sometimes they can have negative consequences.

What have I missed - please comment to get a some discussion going. What are the perceived obstacles and downsides to using a Project Alliance?

Of course making a change like setting up a project alliance will need managing as a change, as people learn new skills and get out of old habits. But the benefits are well worth it, and it isn't as difficult as many fear. Most people talk about being 'liberated' to do their jobs.

If you want your projects to be delivered faster and at better value for money, and you are not using project alliances extensively, I suggest you change something. Either forget faster/cheaper, or stop doing things the same way everybody else is.

If you want to know more about project alliances, you can watch this webinar that I ran last year, or just get in touch.