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Context

The commercial framework for an alliance method of project delivery is a key component in the success of the project, particularly in terms of the total cost incurred by the Principal as well as the performance of the Alliance in non-cost related key performance indicators (KPIs).

In setting the commercial framework, the Principal must consider if the risk/reward structure offers sufficient incentive for the Alliance to limit the project direct cost and to complete the project within the allocated time period. The Principal must also understand the impact of the total project cost for different scenarios of project durations and scored KPIs for a particular risk/reward structure being analysed.

Modelling Approach

Evans & Peck developed an Executive Dashboard for a government agency which allowed scenario analysis on the potential impact to the overall cost of the project (for the agency) using variations of risk/reward structures in an alliance commercial framework. This tool enabled the government agency to select a suitable alliance commerical framework, based on a greater understanding of the likely outcomes.

Key features of the modelling tool developed include:

• All key aspects of an alliance commercial framework displayed in a single page
• Ability to analyse the effectiveness of risk/reward incentives
• Use of "smileys" to convey model logic and improve understanding

Demo Model

Click on image below to activate demo - requires free Adobe Flash Player plug-in (www.adobe.com)

Other Applications

The same decision modelling method can be applied to:

• comparison of key result areas for various policy scenarios
• comparison of negotiation positions for parties in contractual dispute
• analysis of cash flow, resources and schedule implications for a project portfolio

Contact info@decisionmodelling.com for further information.

Key Modelling Technique: Executive Dashboards
Modelling Software Used: Microsoft Excel