Price Competitive Alliance Projects: Identification of Success Factors for Public Clients

Abstract

The need to identify the critical factors in the successful development and management of the price competitive alliance model has become a priority for public sector clients, as there is an increasing need to obtain better value for money (VfM) for its infrastructure projects. Yet, there has been limited research undertaken about the nature and use of price competitive alliances. This research determines the success factors (SFs) for price competitive alliances during their relationship development phases as this form of alliance contract is being used extensively by public sector clients to procure critical infrastructure projects in Western Australia (WA). A review of the literature of partnering and alliance contracting is used to develop a conceptual model of potential SFs. Interviews with 21 practitioners who participated in alliances on behalf of a WA public sector client were conducted to determine their perceived SF for price competitive alliances throughout the relationship development process. Contrary to the literature, each of the SFs identified was required in each stage of the relationship development process. In particular, the development of a leadership enriched culture (where people view the project as an extension of themselves and feel good about what they personally achieve through cooperation) was deemed necessary for the successful implementation of a price competitive alliance. Moreover it was revealed that the establishment of trust for the client began to arise at the point when a realistic target outturn cost that was able to deliver VfM, as well as an innovative sustainable outcome could be attained. Price competitive alliance models are considered to be an appropriate procurement method, albeit during the current economic climate an alternative to public private partnerships, for delivering large complex infrastructure projects.