New code of practice provides guidance on alliancing and supply chain integration
Alliancing is a form of collaborative working being adopted in the UK and other countries for cost-effective delivery of infrastructure projects. In November last year the UK Infrastructure Client Group launched Improving Infrastructure Delivery: Alliancing Code of Practice at the ICE to provide guidance on how to roll out alliances effectively.
The code was prompted by the significant performance improvement delivered by a number of infrastructure alliances, when compared to more traditional models.
The first notable alliances were in the delivery of investment in the North Sea oil fields during the 1990s. Internationally, alliances have been used successfully in a range of circumstances, most notably in Australia where there are numerous examples of alliances effectively delivering infrastructure investment.
More recently a number of infrastructure clients in the UK have delivered improved performance through alliance arrangements. There are a range of UK case studies that show where effective alliances have been established long term performance improvement has been achieved. There is now an industry wide track record that supports the business case for alliances.
The code was developed by carrying out a detailed review of best practice across a range of infrastructure alliances and identifying the common and underpinning characteristics. Four themes emerged from the review:
- A focus on enabling and developing behaviours that deliver value;
- The capability to develop and sustain integrated supply chain teams;
- A commercial model that creates collaboration and drives the required behaviours;
- The leadership required to deliver a different way of working.
Shift in behaviours
The research demonstrated that alliances understand how value can be created by putting behaviours at the heart of their procurement and organisational development processes. And that significant benefits can be delivered through aligned and collaborative relationships –that go beyond efficiency and into service.
Integrating the supply chain
One of the common themes in best practice alliances is the integration of organisations and teams. The capability to develop integrated supply chain teams is a core competence of an effective alliance. However, creating these high performing teams requires a very different approach to procurement and requires clients to engage in the delivery of outcomes rather than simply tendering for the delivery of already defined scope and solutions.
Early engagement allows supply chain partners to contribute to the design and planning process, bringing significant cost savings.
The review of best practice clearly demonstrated that the organisations who have developed effective alliances understood the significant change required − and that they had the leadership to deliver this change. Leadership that spans client and partner organisations underpinned by a deep seated belief in more collaborative and integrated working.
Alliances adopt commercial models that place an emphasis on creating the right environment and the right behaviours. Best practice alliances have challenging commercial models that provide clear and collective performance incentives. Successful alliances respond positively to challenging targets with teams that demonstrate a relentless desire for improvement and are invariably based on ‘back to back’ commercial arrangements that create direct alignment between client and partners.
The Code of Practice aims to make this best practice available to infrastructure organisations, both clients and partners.
For more information, to download the Code of Practice, and to read case studies of alliancing in action, visit the ICE’s best practice website.