The Alliance PPP model: Putting partnership back into Public-Private Partnerships
Traditional PPPs in Australia have increasingly resembled fixed-price service contracts rather than genuine partnerships. The Alliance PPP model seeks to change this by embedding principles of collaborative contracting into the PPP framework — aligning incentives and fostering a “we all win together, or we all lose together” ethos. Ideal for complex projects that involve integrating multiple systems.
Core features
Single multiparty contract: Replaces the current hierarchical structure with one agreement between government (the owner participant), the SPV, designers, contractors and key suppliers.
Three-limb payment regime for D&C:
Limb 1: Cost reimbursement of actual costs.
Limb 2: Agreed fee covering profit and contribution to corporate overheads for business-as-usual performance.
Limb 3: Gainshare/painshare based on whole-of-project KPIs such as cost, time and service outcomes.
O&M phase as per current PPPs: Monthly service payments continue. For the SPV, gainshare/painshare from the D&C phase is received or paid over the O&M phase through an agreed-upon increase or decrease to the monthly service payment. Other non-owner participants (e.g. contractors, designers, suppliers) settle their D&C phase gainshare/painshare at completion of construction.
Shared governance: Decision-making shifts from risk-allocated silos to consensus-based approaches, with deadlock mechanisms designed to preserve collaboration.
No-blame culture: Encourages problem-solving by removing most rights to sue other participants for mistakes, focusing instead on collective outcomes.
How it differs from the North East Link ITC PPP
Victoria’s North East Link project introduced an Incentivised Target Cost regime, a welcome step towards collaboration. But it stopped short of true integration: contracts remained hierarchical, risk for late completion sat solely with the D&C contractor, and gainshare/painshare was narrowly based on cost. By contrast, the Alliance PPP spreads both incentives and risks across all key players, aligning everyone with the whole project’s success.
Why it matters
By aligning incentives across government, financiers, contractors and operators, the Alliance PPP addresses one of the biggest weaknesses of traditional PPPs: adversarial behaviour. Instead of maximising individual margins, participants are motivated to deliver best-for-project outcomes. For complex, high-risk infrastructure, this model provides a more resilient way to harness private finance without the pitfalls of rigid fixed-price contracts.
The Alliance PPP reintroduces genuine partnership into PPPs, making them fit for purpose in a market that increasingly demands transparency, flexibility and shared value.
