Using strategic collaboration contracts to improve your competitive edge
Infralegal has recently been engaged on a number of strategic collaboration contracts, demonstrating the traction that this form of contracting is gaining in the Australian infrastructure market.
Strategic collaboration contracts are generally multiparty contracts put in place to enhance the relationship of parties involved in long term, strategic collaborations or alliances that extend beyond any single project or transaction.
Their objective is to be a tool for: strategic planning and investment; better integrating owner and supplier teams; breaking the cycle of lost learning associated with standalone projects; achieving continuous value for money improvement for the owner; and sharing the additional value created with the supply chain, thereby building long term win:win relationships.
More specifically, strategic collaboration contracts can provide a framework under which:
an owner can engage with its panel of preferred contractors on initiatives that can be progressed beyond and between individual projects to improve team integration, information sharing (including between competing contractors), productivity, risk management, value and outcomes — for example using modern methods of construction, digital technologies, earlier supplier involvement, supply chain collaboration and joint risk management — to continuously improve outcomes and value for money for the owner;
the owner, satisfied that such initiatives are delivering it improved value for money, can share this value and reward its contractors for their investment in these activities, by allocating projects and other work to them without the need for competitive fixed price tender competitions; and
the money that would otherwise be spent on competitive bidding competitions can instead be invested by the owner, the contractors and their supply chains in the strategic initiatives, to further accelerate value creation and sharing.
Owners win, because they achieve improved value through the investments made by their supply chain in these strategic initiatives. The supply chain wins, because it is awarded more work on a profitable cost plus basis, without the wasted expense of bidding competitions for every project.
Suppliers are also initiating these contracts
The development of strategic collaboration contracts is not only being initiated by infrastructure owners.
They are also being initiated by contractors and suppliers that see the ability to propose these value enhancing win:win arrangements as a competitive edge in bidding competitions for a long term program of work.
Infralegal is currently assisting various tenderers on the development of strategic collaboration contracts that will be submitted to the infrastructure owner, as part of the tenderer’s alternate proposal for a long term program of work.
Want to improve your competitive edge?
If you’d like to discuss how your business could gain a competitive edge through the use of a strategic collaboration contract, contact Owen on +61 2 8226 8896 or owen.hayford@infralegal.com.au
