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Relationship Contracting: The Main Roads’ Perspective

Relationship Contracting: The Main Roads’ Perspective. Alan McLennan. Why is Relationship Contracting Topical? Success with full Alliance Contracts e.g. Norman River Bridge Alliance “principles” helpful in internal Main Roads Projects.

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Relationship Contracting: The Main Roads’ Perspective

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  1. Relationship Contracting:The Main Roads’ Perspective Alan McLennan

  2. Why is Relationship Contracting Topical? • Success with full Alliance Contracts e.g. Norman River Bridge • Alliance “principles” helpful in internal Main Roads Projects. • Success of relationship management on the Pacific Motorway.

  3. Why do we need to develop Relationship Contracting? • Industry reaction to contracting “failures”: • ACA “Relationship Contracting” proposals • Construction Queensland – a more equitable form of contract • Main Roads “Failures”: • Cost over runs • Difficulty in managing the Roads Program • Poor and unacceptable quality • Poor relations, blame culture • Waste of emotional energy in adversarial conflicts • There has to be a better way.

  4. What is the Present State? • Main Roads history of success in Contract Management. • “One size fits all” type of Contract OK for normal road projects, with single objective. • Recent years, larger projects becoming very complex: • community involvement • political pressures • native title • environmental issues • traffic management etc. etc. • Now, poor alignment between inflexible AS2124 contract and complex projects. • Traditional contracts lead to separation and adversarial behaviours.

  5. Reflections of Pacific Motorway • Largest project ever undertaken by Main Roads • 43km : 8 and 6 lanes • $750m • “World Class” • “traditional” contracting • Project is extremely complex • 4 years from conception • 85,000 vehicles per day • Interaction with community • Difficult site conditions • Major service relocations etc. • Contractual relations became stressed • Variations, claims • Self-serving behaviours • Adversarial relations • Quality issues, under strain of time, cost, quality equasion

  6. Reflections of Pacific Motorway (cont.) • Respond by creating Relationship Management Unit • Separate to Contract • Re-establish supremacy of project goals • Engender commitment to goals • Focus on delivery • Strengthen relationships first • Relationship Processes • Partnering agreements, charters • Constant follow–up • Outcomes • Provided essential forum to relate and negotiate • Maintained central focus on achievement • Regular evaluation demonstrated steady improvement in relations • On-going role in resolution of issues • Fostered 2 major contractual changes i.e. transitions to alliances

  7. A possible Future State • Project performance will be measured in 4 quadrants of Balanced Scorecard. • Success will include: • excellence in all IMP objectives • win:win:win outcomes • enduring relations • improvement and learning • Relationship Contracting Form: • relevant to a wide range of projects • suitable for complex projects • flexible • satisfies many objectives simultaneously • co-operative relationships

  8. Features of Relationship Contracts • Mutual commitment to project vision, mission and objectives. • Success measured across several objectives. • Win:win:win. • Balanced application of relationship management and project management. • Innovative contractual arrangements. • Client leadership; informed buyer. • Recognition and rewards.

  9. Application in Main Roads • Relationship Contracting applies across spectrum • Alliance Contracts for: • very complex projects • many stakeholders • many objectives, e.g. community • Relationship Contracts for: • moderately complex • several objectives • range of constraints • Traditional Contracting for: • straight-forward projects • contractors well experienced

  10. Spectrum of Contract forms RelationshipContracting Traditional Special Relationship Alliance Hard $ Contracts Contracts Contracts - positive alignment steps - partnering processes - relational skills - improvement processes

  11. A Special Relationship Contract Package for Main Roads: • Key elements: • Alignment between contract provisions and relationship processes • Partnering process - a co-operative single team. • Relationship skills, attitudes and values. • Review, evaluate, improve.

  12. Conclusions • Relationship Contracting is one way to address contract “failures”. • Traditional contracts not best suited for complex, multi-objective projects. • Relationship and Alliance Contracting have potential for Main Roads. • A flexible form of Relationship Contracting is being developed. • Pilot projects will be used in development. • Concepts apply equally to Design and Planning Contracts.

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