Wednesday, November 13, 2019
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Relational Contracting

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RELATIONAL CONTRACTING


A.
What is it?

Relationship Contracting (RC) or Alliancing is an alternative project delivery methodology larger and more complex projects, where specific outcomes are required, often in a condensed time frame.  A ‘project alliance’ is a commercial / legal framework between an owner and one or more service providers (designer, constructor, supplier, etc.) where the participants work as an integrated team to deliver one or more projects, which includes:

i)     Collective sharing of risks;
ii)    A no fault, no blame and no dispute culture between all participants (except in very limited cases of default);
iii)    Payment of the Non Owner Participants (NOP’s) under  a compensation model comprising of:

  • Reimbursement of NOP’s direct project costs on an open book basis,
  • A fee to cover corporate overheads and normal profit, and
  • A gainshare / painshare mechanism that rewards outstanding performance but the pain for poor performance is shared equitably.

iv)   Unanimous principle based decision making;   and
v)    An integrated project team based on ‘best-for-project’ selection.

Relational Contract strategically aligns the contracting parties, by creating and developing a values-based relationship between them built upon trust, respect, transparency and open communication. Relational Contracts contain performance measurement and reward structure that recognizes and encourages these values.


B.
Work Process

There are many different forms of Relational Contracting. PROKOM has specifically tailored the following types of relational contracting for use in JKR:-

  • Alliance Contract : a contracted values-based relationship between JKR and the contractor to deliver complex project infrastructure or facilities. RC optimizes the allocation of responsibilities, rights, risks and rewards between the parties, so as to maximise the efficiency and value of public service delivery;
  • Partnering: a workshop-based process that aligns JKR, the contractor and the client, and that helps these parties to collectivity identify and resolve problems between them.

i)     Appointment of Governance Committee and Project Team
ii)     Expression of Interest (EOI) – Pre-Q of Tenderers
iii)    Request for proposal (RFP)
iv)    RFP Workshop
v)     Negotiation
vi)    Approval
vii)   Finalisation of the Legal and Commercial Framework
viii)   Award of Contract
ix)    Project implementation & Contract Admin
x)    Operation and maintenance
xi)    Handing over and closing


C.
Guidelines

i)      Process manual

ii)     EOI (Draft)

iii)    RFP (Draft)

iv)    Alliance Contract (Draft)

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