Page 2426 - Week 08 - Tuesday, 9 August 2016
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As noted in the audit report:
The scope of the audit included consideration of ACTEW’s activities to manage and establish the alliance contracting arrangement, to manage costs and its communication with key stakeholders …
The audit did not include consideration of the appropriateness or otherwise of ACTEW, or ACT Government, decisions to proceed with the water infrastructure projects.
The concept of project alliancing underpins the bulk water alliance and that was the focus of the audit. Project alliancing differs from traditional procurement with regard to risk sharing and, in the main, uses a selection process for alliance partners focused on qualitative criteria with less of a focus on price as a key criterion.
A landmark study called “In pursuit of additional value—a benchmarking study into alliancing in the Australian Public Sector (2009)”:
… confirmed that alliancing can provide real benefits in the delivery of public infrastructure and has a place in the suite of other established procurement methods that are available to governments. This is welcome where it can demonstrably deliver incremental public value over other alternatives and reduces the cost of industry engaging with governments.
That study also identified that the:
… adoption of alliancing by government raises some matters which must be carefully managed in the interest of delivering value to the taxpayer. Alliancing is a very sophisticated development in delivering major infrastructure and agencies must fully understand the opportunities and tradeoffs that may be required.
In considering the audit report and its findings, in its report the committee has made comment across five areas, specifically: development of the audit objective and scope, suitability of the alliance model, the bulk water alliance projects, communication matters, and lessons learned. And in its report the committee has made four recommendations, all of which are focused on lessons to be learned.
The committee emphasises that there is now a considerable body of research on the use of project alliancing in Australia that has distilled important benchmarks for its best practice. The committee considers that it would be remiss of any territory entity either currently using or considering alliance contracting arrangements not to heed this best practice.
In summary, the committee is of the view that the audit has been important for two major reasons. Firstly, the use of project alliancing by territory entities is not commonplace, that projects suitable for this form of procurement are of a long-term nature, and as a delivery methodology it is complex and technical. Accordingly, the audit documents a series of valuable lessons for any current and future alliance contracting arrangements that may be entered into by an entity on behalf of the
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