Contractor series 02 (alliance behaviour and no sue cultures: what teams should understand)

Putting alliance principles into practice

Alliance agreements typically rest on a cluster of interdependent principles: best for project decision making, transparency and integration, a no sue culture, unanimous governance and joint risk ownership. Although drafting varies, these concepts are consistent across markets.

The shift to best for project decision making is often the most confronting. Participants are required to prioritise project outcomes over organisational preferences and act as a unified enterprise. For teams accustomed to advocating solely for their employer’s position, this behavioural pivot is counter intuitive and is often the first principle to erode under programme or cost pressure.

True integration and transparency demand that costs, design assumptions, procurement strategies, emerging risks and programme status are openly shared. Any attempt, intentional or otherwise, to withhold information undermines trust, weakens decision making and compromises risk mitigation. A “no surprises” culture is an everyday discipline rather than an aspirational slogan.

The no sue culture sits at the intersection of legal and behavioural expectations. Although the mechanism itself is straightforward, the behavioural implications are not. Teams must move away from defensive correspondence and the preservation of claims “for later”, and instead raise issues early, test them openly and escalate through alliance governance rather than through legal posturing.

Unanimous governance and joint risk ownership provide the structural support for these behaviours. Alliance leadership boards do not operate by majority rule; unanimity forces robust debate, shared ownership of decisions and shared accountability for outcomes. Risk, whether design, interface, procurement or delivery stage, is treated as a jointly owned operational issue, not a contractual burden to shift between parties.

Where New Zealand teams commonly come unstuck

Recurring issues continue to appear on New Zealand projects. Alliances are sometimes treated as cost reimbursable contracts with “softer language” rather than true alliance mechanisms. Cost and procurement information is withheld or curated. Commercial, design and construction teams continue to operate in functional silos despite the appearance of a single, integrated project office.

As cost or programme pressure mounts, teams often revert to adversarial habits. Defensive correspondence increases, and participants quietly reposition themselves in anticipation of potential disputes. Staff turnover compounds this: new or rotating personnel are inducted into the project, but not into the alliance model, meaning behavioural expectations are never fully internalised. Over time, these patterns erode transparency, weaken trust, and hollow out the very benefits that alliancing is designed to deliver.

Learning from UK and Australian frameworks

Both the United Kingdom and Australia confronted similar challenges and responded by codifying behavioural expectations. In the United Kingdom, HM Treasury and the Infrastructure Client Group have published detailed alliancing guidance including Alliancing Best Practice in Infrastructure Delivery and an Alliancing Code of Practice, and standard forms such as the NEC4 Alliance Contract (ALC) and FAC 1 embed best for project behaviours directly into governance and commercial structures.²,³

Australia has taken a similar approach. The National Alliance Contracting Guidelines and the accompanying template Project Alliance Agreements provide clear expectations on governance, performance management, pain/gain regimes and typical ‘no blame / no dispute’ clauses. These frameworks also set out structured mechanisms for handling under performance, realignment and termination or transition.⁴

When Alliances deteriorate: working around the no sue roadblock

When alliances function well, they can deliver exceptional outcomes. When they fail, the consequences are often severe: significant overruns, governance deadlock and relationship breakdowns that are difficult to recover from. In these situations, no sue regimes can complicate resolution, particularly where participants assume the no dispute culture prohibits escalation or transition.

Before legal tools are considered, governance tools must be used as intended. Board level resets, external facilitation, structured behavioural interventions and targeted performance plans are designed to address misalignment from within the alliance. Commercial settings can also be adjusted, re baselining the target outturn cost, recalibrating pain/gain arrangements, carving out discrete work packages under more traditional contracts or reallocating key leadership roles to restore alignment.

Understanding the legal limits of no sue cultures is equally important. Even robust no blame clauses cannot exclude courts entirely or override mandatory statutory rights. International practice typically includes carve outs for fraud, wilful default and similar misconduct, and recognises that statutory adjudication or security of payment regimes continue to apply in parallel with collaborative provisions.⁴ Many well designed alliances also anticipate that an orderly exit may be the best for project outcome. Termination for convenience or material under performance, followed by a structured transition to a different model, is preferable to improvised decisions made in the midst of crisis.

Conclusion

Alliance contracting requires more than familiarity with a contract document. It relies on disciplined transparency, integrated teams, shared ownership of outcomes and sustained commitment to best for project behaviour. When these disciplines are absent, alliances drift back toward adversarial norms, without the contractual tools that traditional models rely upon to allocate and manage risk.

Experience from the UK and Australia demonstrates that structured behavioural frameworks, clear governance mechanisms and carefully designed no sue regimes not only support high performance but also provide credible pathways forward when relationships deteriorate.

If you would like to discuss how these issues affect your projects or alliance arrangements, our construction team would be pleased to assist.

References

¹ New Zealand Government Procurement, Alliance delivery model – Construction Procurement Guidelines (Information Sheet) (October 2019).

² UK Infrastructure Client Group / HM Treasury, Alliancing Best Practice in Infrastructure Delivery and Alliancing Code of Practice.

³ NEC4 Alliance Contract (ALC) and FAC 1 Framework Alliance Contract.

⁴ Australian Government, National Alliance Contracting Guidelines – Guide to Alliance Contracting and template Project Alliance Agreements.

Relevant articles

• Contractor series 01 (internal contract review & risk governance for contractors)
• Contractor series 03 (retraining delivery teams after alliance projects: avoiding “alliance hangover” on fixed price jobs)
• Contractor series 04 (subcontract alignment)
• Contractor series 05 (claims hygiene and notice discipline)

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Disclaimer: The content of this article is general in nature, does not constitute legal advice and should not be relied upon for that purpose.  Parties should seek specific legal advice tailored to their circumstances before acting on any of the matters discussed.