Highways England has published its proposal for its new smart motorways alliancing model.
In July this year, the operator announced it was moving to the alliancing procurement model for the next 10 years.
At the time it said the model would move away from its current strategy of procuring on a project by project basis. Instead, it is moving to a “different level of thinking” by setting up a dedicated smart motorways alliance.
Highways England laid out an updated approach to budget setting and incentivisation taking into account feedback from its supplier engagement sessions In its new publication, Routes to Market: Smart Motorways Alliance Commercial Model Summary.
The report states the primary objective for the new model was to balance the ownership of the programme budget and a risk profile which linked alliance partners’ overheads and profits to performance.
Included under budget setting, it said the scope of works would be costed using historic cost data with supporting quantities for those schemes with a preliminary design with special exceptions for those without initial designs or “abnormal elements”.
It also said all foreseeable delivery risks would be included within the budget with adjustment to the budget only envisaged with changes to high level client requirements.
Highways England alliance budget components
In relation to incentives, Highways England said the new model was being set up so alliance partners can recover a “guaranteed” proportion of their fee and retain a remaining proportion based on performance.
It went on to say the alliance lump sum fee would be apportioned into three individual elements; base fee proportion, alliance goals fee proportion, and an alliance budget fee proportion making up the defined cost.
Highways England cost out turn scenarios
The organisation is now seeking further feedback on the commercial arrangements, particularly those which would “influence or impact” the structure of a future tender submission.
Under the move Highways England will become an integral partner of the alliance alongside three tier one contractors and two designers. A specialist logistics hub would also be set up to work across the whole alliance.
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