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The APPEA Journal The APPEA Journal Society
Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

An overview of contemporary project delivery methods for major gas infrastructure*

Stephen Callaghan
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Unidel Group UNIDEL Director Level 4, 144 Edward Street Brisbane QLD 4000. Email: scallaghan@unidel.com.au

The APPEA Journal 50(2) 692-692 https://doi.org/10.1071/AJ09056
Published: 2010

Abstract

Recent developments in both relationship contracting and non-traditional project delivery methods have had a substantial impact upon the way organisations within the Australian construction industry carry out their business to achieve successful project delivery.

In the late 1980s, following a period of high-profile disputes, there was a trend towards a more co-operative and collaborative approach to contracting. It was during this time that the concept of partnering was introduced to Australia. Partnering in turn led to the development of relationship contracting.

Relationship contracting has developed into a wide ranging concept which varies from informal agreements to work co-operatively for the success of the project, to the implementation of a pure alliance arrangement and, most recently, the use of ECI.

The concept of relationship contracting brings with it a range of principles and concepts, which include:

  1. shared and common goals;

  2. pro-active objectives and key performance indicators;

  3. issue management and resolution processes;

  4. robust risk and opportunity management;

  5. probity and accountability;

  6. ongoing review and evaluation leading to continuous improvement and team building;

  7. plans and strategies for achieving stretched goals and outstanding performance; and,

  8. pain/gain or incentivised remuneration based on outcomes and performance.

The need for relationship contracting in Australia has increased in recent years due to the substantial growth in construction activity, including a significant increase in the growth of gas sector work. Much of the construction activity has been carried out using a fast track approach in an environment where resources are limited.

This presentation will discuss the development of relationship contracting and, in particular, will look at ECI arrangements and alliance delivery models for gas infrastructure delivery.

Keywords: ECI, alliance, relationship contracting, partnering, litigation, arbitration, traditional approach, gas sector, open book, team, charter, target cost estimate (TCE), resources, EPC, lump sum, risk share, risk adjusted price (RAP), out-turn cost

Stephen Callaghan is a chartered quantity surveyor, a graded arbitrator and corporate member of the Association of Cost Engineers.

During the past 25 years, he has worked extensively in Australia, Southern Africa, southeast Asia and the United Kingdom.

During this time, Stephen has worked on a wide variety of private and public sector building, civil engineering and energy-related projects. In this environment, he has obtained a broad range of experience in all aspects of: construction project delivery systems; construction contract administration; risk analysis assessment (both cost and contract risk); and, construction contract management.

Member: APIA.