NETWORK RAIL 21. Network Rail Project Alliance Agreement [brief description] Agreement Number: [Insert] VERSION 1.1

Transcription

1 Network Rail Project Alliance Agreement [brief description] Agreement Number: [Insert] VERSION 1.1

2 NOTES This template Project Alliance Agreement ( PAA ) was developed following discussions with various industry bodies and many issues raised were incorporated in the final drafting. It is published to facilitate understanding of Network Rail s intended approach to alliance contracting and to save management time for us and our suppliers and contractors when setting up and managing alliance contracts in the future. However the creation of an alliance is a complex process. This agreement is a template only and subject to tailoring by Network Rail on a project by project basis to reflect the needs of the individual circumstance. NOTES included in this agreement are for information only and do not form part of the contract or any commitment on the part of Network Rail to a particular approach. All NOTES including this note and the Introduction Notes below are to be deleted prior to use. INTRODUCTION NOTES Outline of the PAA The relationship between the parties to the PAA is very different to the Employer and Contractor relationship typically found in more traditional construction contracts. It contains a risk allocation structure where both cost risk and delivery risk are shared between the parties forming the Alliance (the Participants ). Subject to certain rights and obligations retained by Network Rail as Owner, both Network Rail (as Owner Participant ) and its contractor partners (as Non-Owner Participant or NOPs ) are Participants in the Alliance. In addition, the PAA is founded upon a no claim and no blame approach and decisions in relation to delivery of the Project must generally be made on the basis of unanimous agreement between the Participants. All of these features have the same objective in that they are seeking to align the interests of Network Rail and its contractor partners within the Alliance created by the PAA. The intention is that all of the Alliance parties should perform the PAA and make all decisions on the basis of Best for Project rather than best for the individual. In effect, it will be the joint responsibility of the Owner Participant and the NOPs to deliver and complete the Project the subject of the PAA in accordance with the Owner s stated requirements. Therefore the traditional Employer and Contractor divide in relation to performance of the Works is largely removed. In effect the Network Rail and its contractor partners become a virtual delivery vehicle for the Project. Alliancing Principles and NR s Approach to Alliancing At its core, the PAA is a target cost based contract - Participants are paid by the Owner on a cost reimbursable basis with gain or pain calculated by reference to a pre-agreed Target Price. In a traditional target cost construction contract, with the exception of the sharing of cost risk through the pain/gain share arrangements, most risks are allocated to either the Employer or the Contractor. However, in the PAA the majority of risks will be jointly shared by the Owner Participant and the NOPs. As most risks are shared between the Participants, most Project related matters that arise are therefore decided by all Participants on a unanimous basis. VERSION 1.1

3 Summary of key principles under the PAA: Network Rail plays a dual role, as owner of the Project and separately as an Alliance Participant jointly responsible for delivering the Project with the NOPs; most Project risks are shared Alliance risks, jointly held between Network Rail and the NOPs; time, cost and quality failures relating to the Works are generally shared Alliance risks, meaning that Network Rail cannot make claims against the NOPs for time, cost or quality failures and vice versa; commercial risk is shared through a joint Alliance target cost and pain/gain share model; most decisions relating to Project matters are generally jointly made between Network Rail and the NOPs. This is different from, for example, Network Rail s NR12 target cost contract. NR12 is part of Network Rail s standard suite of construction contracts. It is based on the Infrastructure Conditions of Contract (ICC) Target Cost Version NR12 is available on Network Rail s website. Some of the key differences are highlighted in the following sections. Employer/Contractor relationship Under the NR12, there is a traditional Employer and Contractor relationship, with each party accepting its own ring-fenced obligations. For example, Network Rail must make the site available to the Contractor and must organise possessions. Network Rail must also of course pay the Contractor. In exchange, the Contractor is generally responsible for carrying out the Works and completing them on time and is liable for any failure to do so. Under the PAA structure, Network Rail has two different roles. In some circumstances it will continue to act in a traditional Employer role (i.e. the Owner). The Owner will still have a duty to pay the NOPs for the work they perform. However, in its role as Owner Participant it will be part of the Alliance team responsible for performance of the Works. In effect therefore, although no legal joint venture or partnership is created, there is a merging of responsibility between the Owner Participant and the NOPs for performing and completing the Works. This joint delivery arrangement is to recognise the fact that efficient performance by both the Owner Participant as well as the NOPs can positively influence the delivery of the Project. Risk Allocation Under the NR12 there is a traditional Employer/Contractor risk allocation and division of responsibility between them. There is no joint delivery obligation in relation to performing the Works although the commercial risk may be shared, for example through pain/gain share arrangements in a target cost contract. Network Rail as the Employer can enforce its contractual rights against the Contractor with regard to time, cost or quality failures in relation to the Works. Under the PAA there are broadly three main types of risk: Owner held risks. If these risks occur, a Target Price change is allowed to compensate the contractor Participants for the resulting cost incurred to deal with the risk. Therefore each contractor Participant obtains full actual cost and fee recovery; Shared Alliance risks. These risks are jointly held by the Participants. The cost of dealing with those risks is paid as actual cost but the Target Price will not be adjusted. The Participants (including the Owner Participant) therefore jointly share the commercial impact of such risks through the pain/gain share mechanism in the PAA; NOP held risks. There are only a small number of these types of risk and they generally cover areas where, for regulatory and governance reasons, NOPs are required to retain full liability. These risks therefore include matters such as breach of statute by the NOPs or fraud. VERSION 1.1

4 The majority of risks under the PAA are shared Alliance risks in order to firmly establish the concept of joint Alliance responsibility that underpins the PAA. Therefore under the PAA Network Rail cannot generally make claims against the NOPs for time, cost or quality failures in relation to the Works and nor can the NOPs make equivalent claims against Network Rail. In the event that problems arise, the onus is therefore on the Participants to seek to resolve the issues without resorting to trying to enforce their rights under the contract. The longer it takes to resolve a problem, then typically the more it will cost all parties financially through the operation of the pain/gain share arrangements. Note also that, in line with many UK construction industry alliances, Network Rail will typically maintain an Owner Controlled Insurance Policy (or OCIP policy) to cover public liability and certain other claims arising from performance of the Project. Delivery Risk Under the NR12, the Contractor generally takes the risk of performing and completing the Works, including the risk of latent defects in the design, construction, workmanship or the cost risk involved with late completion. The Contractor is therefore potentially liable for the costs of failing to deliver the Works in accordance with the Employer s requirements, including liability for paying liquidated damages if completion is late and for rectifying post-completion defects at its own cost. Under the PAA, the Participants (including the Owner Participant) share the risk of delivery including defects in design, construction or workmanship. The NOPs are therefore not solely liable for delivering the Works, as the risk is an Alliance risk shared through the pain/gain share cost model. This means that the NOPs are not liable for liquidated damages if the Works are completed late. In addition, the NOPs are paid their actual cost for rectifying defects subject to the pain/gain share arrangements. In the event of late completion delay costs incurred by Network Rail may be charged as actual cost to the Project, again on the basis that the liability for most costs incurred by the Alliance relating to the Project will be shared between all the Participants. Commercial Risk In the traditional NR12, the target cost includes only the Contractor s costs. The onus is therefore on the Contractor to control its own costs in order to achieve gain through the pain/gain share mechanism. The Contractor s target cost will be adjusted where typical Employer risk events occur, for example as a result of all instructed variations. In many NR Suite contracts such as the lump sum NR9 or target cost NR12 versions, the Contractor s liability is capped in certain areas, such as in relation to reimbursing NR for railway costs incurred by it due to the Contractor s performance. Under the PAA, the Participants (including the Owner Participant) share the commercial risk of delivering the Project through a joint target cost and pain/gain share mechanism which includes both the Owner Participants and the NOPs incurred costs. The target cost will only be changed as a result of a small number of Owner held risks and is not changed at all as a result of the occurrence of Alliance risks. The net result of this approach in the Project Alliance Agreement is that both Network Rail and the NOPs have some skin in the game commercially. It is therefore in all of their interests to collaborate and work in an integrated way in order to help each other minimize each other s costs incurred in relation to the Project. The lower the actual cost collectively incurred to perform the Project (in NR s case meaning the cost notionally reimbursed to it and charged to the Project s actual cost) then the greater the reward for all of the Alliance members though increased gainshare. No Claims Agreement As noted above, in the NR12 there exists a traditional Employer and Contractor relationship with each party retaining its own rights and remedies against the other party. For example: VERSION 1.1

5 Network Rail will typically possess a right to be paid liquidated damages in the event of late completion by the Contractor; and the Contractor will be obliged to indemnify Network Rail for public liability claims or breaches of statute. However, the PAA is founded on the basis that it is largely a no claims contract under which Network Rail and the NOPs waive many of their rights to take action against each other for events that would traditionally be a breach of contract. A small number of items are excluded from this no claims arrangement, including: the Owner s obligation to pay the NOPs for their work; and each Participant s liability for breaches of statute or wilful default/fraud. The reason for the no claims approach is again to encourage all Alliance members to focus on problem solving rather than taking legal action against each other when a problem occurs. Variations In the NR12, Network Rail is generally entitled to instruct any variations to the Works, usually through the Employer s Representative. Unless caused by the Contractor s breach, instructed variations generally result in a change to the contract price or target cost making variations a full Employer risk. Under the PAA, Network Rail generally remain entitled to instruct any variations to the Works without the NOPs consent. This includes variations which are needed to address Reserved Powers, which include the occurrence of events that potentially have a major impact on the Works. For example, Network Rail would need to rapidly instruct a variation to deal with any event that jeopardizes the operation of its railway network or could result in a statutory or regulatory breach. However, in terms of payment for variations, under the PAA only Scope Variations, which are material changes to Network Rail s original required scope, result in a change to the Target Price. A guidelines document must be agreed between the parties in each Project to assist with the definition of what constitutes a Scope Variation. The reason why only larger variations will result in a change to the Target Price is to discourage the Alliance from looking to claim for reimbursement of cost for minor variations. This seeks to avoid a claims culture. When a minor variation is needed, the focus of the Alliance must be on treating it as an issue for all Alliance members to resolve in the most cost and time efficient manner rather than seeking to treat it as a claim. Decision making Under the PAA, except in the very limited circumstances noted earlier where Network Rail is acting as Owner, Network Rail (as Owner Participant) and the NOPs must make all decisions in good faith in the best interests of the Project and not just in their own interests. In the event of any disagreement, including failure of the joint Alliance Leadership Team to unanimously agree on any matter, then unless that matter is one that is excluded from the no claims agreement, it may not be referred to arbitration, litigation or to an expert for final determination. In order to preserve the Alliance the Participants must agree a way forward. Summary of key principles General VERSION 1.1

6 1. The Alliance comprises the Participants. 2. NR acts in two capacities under the PAA: (1) as Owner (i.e. the client) and (2) as Owner Participant. 3. The Owner Participant is a Participant and therefore an Alliance member. 4. The NOPs are the Participants other than the Owner Participant. 5. The Owner has the right to instruct the Participants to undertake Works under the PAA in relation to the Project. 6. The Project is the whole of the project. Works are the works and services to be performed by the Participants following the issue by the Owner of a Proposal Approval Notice see below. 7. The Alliance Leadership Team ( ALT ) is the leadership team for the Alliance. It operates similarly to an executive group. NR and each NOP will each have representation on this team with all members having equal rights and responsibilities. 8. The Alliance Manager is the person selected by the ALT to lead the Alliance. He or she reports to the ALT and is responsible for the delivery of the Project. 9. The Alliance Management Team ( AMT ) is the management team responsible for day-today delivery of the Project. Normally NR and each NOP will each have at least one representative on this team. This team is appointed by the Alliance Manager (subject to ALT approval). 10. The Alliance Project Team ( APT ) is the integrated, collaborative team of NR s and the NOPs professional and support staff that plan, design and manage construction and delivery of the Project. 11. The Responsibilities Matrix sets out the division and description of roles and responsibilities within the Alliance between the ALT, the Alliance Manager, the AMT and/or the APT. Key Alliancing Concepts 12. The Participants agree at all times to act in Good Faith. The Owner is not subject to the Good Faith obligation in order to preserve as distinct from the Project its commitments and responsibilities as operator of the rail network. 13. Each approach, decision, solution or resolution that is taken or made by the Participants must be developed collaboratively and agreed by the Participants on the basis that it is Best for Project. 14. Best for Project does not mean just delivery of the Project under budget, to programme and specification. It means meeting the VFM Statement and Alliance Charter 15. The VFM Statement is an Owner document. It sets out the project deliverables to be achieved by the Alliance and the success criteria by which it will ultimately be judged. This is crucial for establishing what is meant by Best for Project. The content will vary depending on the procurement strategy and individual project but typically it would include (amongst other things): the Owner s objectives and outputs for the Project; requirements relating to health, safety, environment and governance; process for development of Sections (see below); rules for performance of design/works e.g. standards, requirements for consultations, VERSION 1.1

7 compliance with laws; process such as reporting and auditing requirements. 16. The Alliance Charter is an Alliance document. It comprises the Alliance Principles, the Alliance Purpose and the Alliance Objectives for the performance of the Works. This sets up a model of agreed behavioural principles to drive decision making processes and issue resolution as between the Participants. This is crucial in establishing how the Alliance will behave in seeking to achieve Best for Project. 17. The PAA contains no claims provisions which prohibits the parties to the PAA bringing claims for breaches of contract (subject to certain exceptions e.g. where a claim under a Statutory Requirement cannot be excluded by law). 18. The no claims principle underpins the no blame culture envisaged by the PAA where an error, mistake or poor performance will not result in the assignment of blame but acceptance of joint responsibility (financial or otherwise). Similarly no delay damages will be payable to the Owner if the Works are not completed by the Date for Completion. 19. The operation of the Risk or Reward Regime is essentially a pain/gain mechanism. The Owner Participants costs are included within this mechanism in addition to those of the NOPs. It is the principle tool which aligns the achievement of the Owner s project objectives with the commercial objectives of the NOPs. Participants share the benefit of cost underrun and the pain of a cost overrun. 20. The Participants make an open book commitment to each other, the Owner, the Office of Rail and Road, the Department for Transport and to the Alliance Auditor. The Alliance Auditor is an independent auditor appointed by the ALT and has a defined audit role under the PAA. 21. The open book commitment is subject to an express statement that it will not apply in the following circumstances: to NR when exercising rights and performing obligations under the PAA in its capacity as Owner; to records/documents which may be subject to legal professional privilege or are confidential lawyer/client communications; and to information which the ALT determines could (if disclosed) breach a Statutory Requirement, involve a breach of recognised best practice corporate governance guidelines or a Participant s existing confidentiality obligations. Roles and Responsibilities 22. NR s role as Owner includes: Defining the contractual matrix of the alliance by agreeing and finalising the PAA; Setting out its objectives in the VFM Statement; Instructing and approving/rejecting Section Proposals; Approving Adjustment Event Guidelines and Scope Variation Benchmarking Guidelines proposed by the Alliance; Making payments to the NOPs; Issuing directions (i.e. instructions which may change the Works); Exercising rights of suspension and termination; and VERSION 1.1

8 Matters of operation or safety concerning the Network ( Reserved Powers ). 23. Reserved Powers are decisions expressly reserved under the PAA for the unilateral decision making of the Owner (rather than the ALT). 24. The Owner must perform its role through the Owner s Representative. This person represents NR as Owner and NOT as Owner Participant. The Alliance is not permitted to accept directions from any other person on behalf of the Owner other than the Owner s Representative. This is to avoid confusion over whether a representative of NR is acting in an Owner or Owner Participant capacity. 25. NR s role as Owner (including the Owner s Representative) does not include: Certifying interim and final payments (the Alliance Manager certifies); Certifying incentivisation payments (including measuring KPI performance against each KRA and the resulting financial effects) (the ALT certifies); Determining Completion (the ALT determines and gives notice to the Owner s Representative who is required to then issue a certificate); Determining whether an Adjustment Event (including a Scope Variation) has occurred (the ALT determines this); Determining adjustments to the Section Target Price for Adjustments Events (the ALT determines this with the Alliance Auditor); or Determining whether the exercise of the Reserved Powers amounts to an Adjustment Event or not (the ALT determines this). 26. In addition to being the executive body for the Alliance the ALT must therefore also in effect undertake some of the features of the role of the contract administrator under a traditional contract. 27. The ALT must undertake all the roles placed on it in accordance with the PAA; the PAA does not give the ALT a discretion to decide a matter on any basis it sees fit. It must do so on a Best for Project basis (see above). 28. Decisions of the ALT are on a unanimous basis only, with no deadlock resolution or referral to an Expert resolution procedure. This should ensure the ALT makes difficult and/or contentious decisions, and is not tempted to avoid such decisions by passing responsibility onto someone else. 29. Whilst the ALT is the final decision making body for the Alliance, it should ensure that decisions are delegated to an appropriate level (and only referred to the ALT if deadlock is reached at AMT or APT level) and/or ensure appropriate alliance or external expertise is utilised on a non-binding basis to assist the ALT make informed decisions. Project Proposal 30. The Project Proposal is the Participants proposals for delivering the Works and meeting the VfM Statement and is set out as a Schedule to the PAA. 31. Typically it will include: Design and engineering strategy Organisation structure Target cost validation strategy Adjustment Event Guidelines VERSION 1.1

9 Scope Variation Guidelines Governance Plan Project Management System including: Environmental & Sustainability Strategy; Safety and Health and Management Strategy; Contracting Strategy; Training and Skills Strategy. Section Proposals 32. The PAA envisages that the Works will be delivered in Sections. A Section may either be: A stage in the overall development of the Alliance. For example Section 1 could be Mobilisation, Design and Consents and Section 2 Single Option Development/Outline Design. Works which comprise: o a smaller discrete project within the overall Project. For example Section 3 could be electrification ; o works to be undertaken within an area forming part of the Project. For example Section 4 could be works to be undertaken between x and y ) 33. A Section may be further sub-divided into Section Elements. The content of the Section Element depends on the nature of the Section. For example, the Section Elements for the example Sections described above might comprise: Section 1: 1.1 Mobilisation, Section Target Price Development, Exit strategy; 1.2 Option selection, AiP design and development; 1.3 Planning and consents application. Section 2: 2.1: Section Target Price Development; Design and methodology; Planning and consent process and approvals. Section 3: 3.1 Detailed design; 3.2 Construction. Section 4: 4.1 Detailed design; 4.2 Construction. 34. Where agreed prior to the date on which the PAA is entered into the Proposal for one or more Sections or Section Elements may be included within the Project Proposal (see above) i.e. it is in effect pre-approved. 35. To the extent a Section or Section Element is not pre-approved the Owner initiates a Section Proposal by issuing a Section Development Notice. A Section Development Notice may be for either a whole Section or for a Section Element. 36. Each Section Proposal is prepared by the Participants in accordance with rules and parameters to be set out in the PAA (including the Project Proposal). The PAA lists the information to be set out in the Section Proposal. 37. The Section Proposal is either accepted or rejected by the Owner. The Owner is not bound to accept any Section Proposal. 38. If the Owner elects to accept a Section Proposal, it issues a Proposal Approval Notice. On receipt of Proposal Approval Notice, the Participants proceed to deliver the relevant design services and/or construction works by the Date for Completion for that Section or Section Element in accordance with that Section Proposal. Design standard 39. In providing the Works and the design of the Works, each Participant must exercise Diligence (meaning the degree of skill, care, expertise, diligence and foresight which would be expected of skilled and experienced professional persons engaged in VERSION 1.1

10 undertakings of a similar size, scope, nature and complexity as the Works). 40. Participants take responsibility for any design in a Proposal including any design which has been provided by the Owner before or after the date of the PAA or the date of the Proposal Approval Notice for the relevant Section. 41. There is an express statement that nothing in the PAA implies a fitness for purpose obligation. 42. The fact that the Participants take responsibility for design does not remove the need for appropriate NR design approvals to be obtained. The role of Design Authority is the defined person authorised to confirm the safety case compliance of a design. Sharing Arrangements 43. The NOPs provide a commitment that there are no sharing arrangements in place between them not documented in the PAA. This is to ensure that there are no hidden arrangements which may distort the Best for Project decision making process. Defects 44. The Participants must rectify Defects notified to them during the Defects Correction Period. The Defects Correction Period for each Section starts on the Date of Completion of the relevant Section and ends 2 years later. 45. The NOPs are entitled to the Actual Cost incurred in rectifying Defects is a Reimbursable Cost and is therefore included in the Painshare/Gainshare calculation. The cost of rectification of Defects may therefore reduce Gainshare or increase Painshare. 46. Participants cease to be responsible for rectification of Defects following the issue of the Final Certificate for the relevant Section. Further NOTES are included as footnotes to the PAA terms and conditions. End of Introduction Notes VERSION 1.1

11 Contents Part 1 DEFINITIONS AND INTERPRETATION DEFINITIONS AND INTERPRETATION Definitions and interpretation... 1 Part 2 ALLIANCING PRINCIPLES AND COMMITMENTS THE OWNER AS CLIENT AND AS OWNER PARTICIPANT Distinction between Owner and Owner Participant Owner s Representative Exercise of rights by the Owner VALUE FOR MONEY STATEMENT Value for money outcome Achieving the VFM Statement Amendment of the VFM Statement ALLIANCE CHARTER Purpose of Alliance Charter Compliance with Alliance Charter Amending the Alliance Charter THE PARTICIPANTS COMMITMENTS Good Faith obligation Achievement of Objectives Best For Project Open book commitment Commitment to no-blame culture Sharing Arrangements NO CLAIMS BETWEEN THE PARTIES Commitment to avoid and resolve issues No litigation, arbitration or adjudication Non-application of enforceable rights or obligation Saving of certain legal and equitable rights Early notification of issues ALLIANCE LEADERSHIP TEAM Membership of the ALT Appointment of chairman Roles and functions of the ALT Authorisation of ALT representatives ALT Meetings ALT decisions must be unanimous Implementing ALT decisions Consultation with Others... 9 VERSION 1.1

12 7.11 Disclosure of conflict of interest ALLIANCE MANAGEMENT TEAM ALT to appoint the Alliance Manager Membership of the AMT Owner Participant to nominate its AMT representatives Participants to ensure continuity of membership of the AMT Functions of the AMT ALLIANCE PROJECT TEAM Membership of the APT Owner Participant to nominate its APT representatives Participants to ensure continuity of membership of the APT Functions of the APT PROJECT OFFICE Provision of Project Office STAKEHOLDER ENGAGEMENT WITH THE ALLIANCE Definition of Stakeholder Consultation with Stakeholder Attendance of Stakeholders at meetings Representations by Stakeholders at ALT meetings Participants to develop proposals with Stakeholders Owner s direction in respect of a proposal Costs of Stakeholder attendance and representations Stakeholder is not a Party Part 3 SECTIONS SECTIONS Instruction of Sections Section Element Owner s Brief Revisions to the Owner s Brief SECTION PROPOSALS Preparation of a Section Proposal NOPs Costs of Preparing a Section Proposal Review of a Section Proposal Approval of a Section Proposal Rejection of a Section Proposal Revision of a Section Proposal Effect of a Proposal Approval Notice VFM Statement Discretion on Approval of Section Proposals Design responsibility for Section Proposals Part 4 DESIGN PHASE DESIGN OF THE WORKS Instruction by the ALT Standard of design Design Authority Owner is responsible for the contents of the VFM Statement Participants Design Responsibility Whole of Life Cost VERSION 1.1

13 14.7 Exclusion of fitness for purpose Part 5 WORKS PHASE COMMENCEMENT OF THE WORKS Instruction by the ALT Commencement of the Works SITE Access to Sites and Consents Access for the Owner The Owner s other Contractors CONSTRUCTION OF THE WORKS Quality of the Works Project Management System Care of the Works Health and safety measures to be taken by the Participants Prevention of nuisance and environmental damage SITE SECURITY Appointment of Relevant NOP by ALT Prevention of unauthorised access Access over the Owner s land Trespass onto the railway Issue of Owner passes Record of visitors CDM REGULATIONS Alliance as only client Principal Designer Principal Contractor Other designers and contractors Compliance with directions STATUTORY REQUIREMENTS AND CONSENTS Compliance with Statutory Requirements and Consents Enforcement and exceptions to clauses 6.2 and SUBCONTRACTING Subcontracting to be authorised by the ALT Subcontracting on a Best For Project basis Subcontracting with connected persons IMPLEMENTATION WORKS SUBCONTRACT Existence of Implementation Works Subcontract Incorporation of Implementation Works Subcontract TRACK POSSESSIONS Track possessions as stated in the relevant Proposal Additional, adjusted or cancelled track possessions Owner s right to cancel or adjust track possessions Adequate arrangements to complete track possessions Cancellation of track possessions due to Participant default Adjustment of track possessions due to Participant default Owner s costs due to unplanned track interruptions USE OF THE WORKS BY THE OWNER PRIOR TO COMPLETION The Owner s use of the Works pre-completion VERSION 1.1

14 25 COMPLETION Obligation to complete the Works Completion of a Section Element Completion of a Final Section Element Issue of Certificate of Completion ALT decides Completion has not been reached Certificate of Completion does not constitute approval No liability for delayed Completion DEFECTS Care of the Works during Defects Correction Period Rectifying Defects and completion of outstanding works Actual Cost for rectifying Defects Network Operation Issue and Defects No liability for latent defects Completion of the Project SECTION FINAL CERTIFICATE Issue of Section Final Certificate for each Section Section Final Certificate is evidence that all payments have been made Final Completion of the Project Part 6 DIRECTIONS, SCOPE VARIATIONS AND ADJUSTMENT EVENTS DIRECTIONS Directions by the Owner s Representative only Type of Directions Reserved Powers Scope Variations Scope Variation Report Adjustment to the Target Price Directions do not invalidate this Agreement ADJUSTMENT EVENTS ALT determines an Adjustment Event has occurred ALT to determine adjustment to Target Price Owner s acknowledgement of adjustment to Target Price ALT may engage independent adviser Participants to mitigate effects of an Adjustment Event Part 7 PAYMENT, REPORTING AND AUDITING PAYMENT General principles of payment Payment of Reimbursable Cost Payment under Risk or Reward Regime Sole right to payment Payment is not evidence of satisfactory workmanship BENCHMARK PERFORMANCE OF THE PARTICIPANTS Benchmarking to demonstrate value for money Disclosure of information for benchmarking Exemption to disclosure for benchmarking REPORTS, RECORDS, ACCESS AND AUDIT Retention of Records for each Project Audit by the Alliance Auditor VERSION 1.1

15 32.3 Reporting Requirements Content of Works Status Reports Reporting to the Owner Cost control and recording Part 8 SUSPENSION, DEFAULT, EXPULSION AND TERMINATION SUSPENSION Suspension by the Participants Suspension by the Owner Costs of suspension Adjustment Event arising from certain suspensions Re-mobilise after suspension DEFAULT NOTICE Default by a Participant Default by the Owner Default Notice due to Default by a NOP Default Notice due to Default by the Owner Default Notice due to Default by the Owner Participant Payment on termination for Default NO FAULT TERMINATION The Owner s right to terminate at any time Payment on no fault termination Release agreement EXCLUSION OF DEFAULTING PARTICIPANT Exclusion of Defaulting Participant CONSEQUENCES OF TERMINATION Immediate cessation of Works The Owner s directions on termination The Owner s right to continue with others Materials, Construction Plant etc. on default termination Survival clause Part 9 INSURANCES, INDEMNITIES AND LIABILITIES INSURANCES The Owner insurances The Owner s insurance manual Insurance to be taken out by each NOP No relief from obligations under this Agreement Insurance claims procedure Payments received from insurers INDEMNITIES Non-compliance with insurance requirements by a NOP Non-compliance with insurance requirements by the Owner Wilful Default by a NOP Wilful Default by the Owner Participant Proportionate liability under the indemnities LIABILITY OF NOPS Liability of the NOPs is several NOP s Liability under the Risk or Reward Regime LIMITATION OF LIABILITY VERSION 1.1

16 41.1 Cap on Liability Exclusion of consequential loss Exception to the exclusion of consequential loss Liability of the Owner Participant SUBCONTRACTOR CLAIMS Suspension or adjudication by Subcontractors Obligation to recover from Subcontractors Losses recoverable from a Subcontractor to be repaid Subcontracts to exclude no loss claims Repayment of amounts not recovered from defaulting Subcontractors Costs of proceeding are Actual Cost Part 10 MISCELLANEOUS PROVISIONS PARENT COMPANY GUARANTEE Form of guarantee Failure to provide guarantees by the Commencement Date Recourse by the Owner Maintenance of guarantees Demand is without prejudice to other rights Costs of procuring guarantees are within the Fee INTELLECTUAL PROPERTY Intellectual Property remains vested in owner Grant of licence to use Sub-licences and transfer Extent of licences for software and proprietary equipment Infringement indemnity No liability for unlicensed use Waiver of moral rights TUPE TUPE provisions NOTICES Form and methods of delivery Notice by Notice by a corporate entity GENERAL Costs of this Agreement Severability Waiver Amendments to this Agreement Entire Agreement Assignment Change in Control Confidentiality and Comptroller and Auditor General Freedom of Information Information Security No partnership created Power to enter into this Agreement Inability to comply with financial obligations No fetter of the Owner s statutory rights and obligations VERSION 1.1

17 47.16 Compliance Equality and Diversity Third party rights excluded Governing law BIM Building Information Modelling Corporate Tax [London Living Wage Intermediaries Legislation Engagement of Off-Payroll service providers through the NOPs Schedules 1 DEFINITIONS AND INTERPRETATION SECTIONS REPRESENTATIVES OWNER S AND PARTICIPANTS CONTACT DETAILS OWNER S REPRESENTATIVE ALLIANCE CHARTER RESPONSIBILITIES MATRIX VFM STATEMENT PROJECT PROPOSAL ACTUAL COST FEE [TARGET PRICES] RISK OR REWARD REGIME PAYMENT PROCEDURES VESTING CERTIFICATE INSURANCE POLICIES GUARANTORS PARENT COMPANY GUARANTEE EXCLUSION AND TERMINATION TUPE VERSION 1.1

18 THIS PROJECT ALLIANCE AGREEMENT is dated BETWEEN: (1) NETWORK RAIL INFRASTRUCTURE LIMITED, a company registered in England and Wales (company number ) whose registered office is at 2nd Floor, One Eversholt Street, London, NW1 2DN ( the Owner ); (2) [NOP 1], a company registered in England and Wales (company number [ ]) whose registered office is at [ ] ( NOP 1 ); (3) [NOP 2] a company registered in England and Wales (company number [ ]) whose registered office is at [ ] ( NOP 2 ); and (4) [NOP 3] a company registered in England and Wales (company number [ ]) whose registered office is at [ ] ( NOP 3 ) 1. (together the Parties ). BACKGROUND: (A) (B) (C) (D) (E) The Parties have agreed to enter into this Agreement for the delivery of the Project and the performance of the Works in return for specified payments. The Owner has developed the VFM Statement for the Project and which may be further developed by the Owner. The Participants have developed a Project Proposal for delivering the Project in accordance with the VFM Statement. The Participants have undertaken to enter into an alliance and perform their respective roles in relation to the Project in a spirit of co-operation and openness with the objective of delivering the Project using an alliance relationship. The Participants are committed to: achieving the Owner s VFM Statement; and meeting the Alliance Objectives. (F) The Risk or Reward Regime incentivises the Participants to meet or exceed the Alliance Objectives. IT IS AGREED: Part 1 DEFINITIONS AND INTERPRETATION 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions and interpretation The definitions and interpretation are set out in Schedule 1 (Definitions and Interpretation). 1 NOTE: To be amended to reflect the relevant number of NOPs 1 VERSION 1.1

19 Part 2 ALLIANCING PRINCIPLES AND COMMITMENTS 2. THE OWNER AS CLIENT AND AS OWNER PARTICIPANT 2.1 Distinction between Owner and Owner Participant Although the Owner and the Owner Participant are the same entity, throughout this Agreement references are made to Owner and Owner Participant respectively to indicate the distinction between when that entity is acting as the client for the delivery of the Works and when it is acting as one of the Participants in the alliance for the delivery of the Works. 2.2 Owner s Representative The Owner may perform any of its obligations under this Agreement through the Owner s Representative The Owner must ensure that the Owner s Representative promptly performs the roles and functions and is given the powers and rights allocated to the Owner s Representative as set out in Schedule 5 (Owner s Representative) The Participants will provide all assistance necessary to ensure the Owner and the Owner s Representative can fulfil the responsibilities, perform those roles and functions and exercise those rights The Owner has initially selected the person named in Schedule 3 (Representatives) as the Owner s Representative The Owner may, from time to time, change its representative by giving notice to the Participants All Notices to or from the Owner under this Agreement must be sent to or from the Owner s Representative The Owner s Representative may from time to time on prior notice to the ALT appoint named delegates to perform any specified role or roles of the Owner s Representative (including specifying limits of authority) and may vary or remove any such appointment or authority at any time on prior notice to the ALT The ALT and the Participants are entitled to rely on any act or omission of a delegate of the Owner s Representative which such person is authorised to make in accordance with clause as though it were a direction of the Owner s Representative. 2.3 Exercise of rights by the Owner Notwithstanding the alliance relationship established under this Agreement, the Participants acknowledge that, where the Owner is exercising its rights (including the Reserved Powers under clause 28.3) and performing its obligations under this Agreement in its role as client for the delivery of the Works (rather than as a Participant in the alliance), the Owner will not be subject to the commitments made under clauses 4 and VALUE FOR MONEY STATEMENT 3.1 Value for money outcome The Participants acknowledge and agree that the key purpose of this Agreement is, and they commit themselves to achieving, a value for money outcome in respect of the Project. 2 VERSION 1.1

20 3.2 Achieving the VFM Statement The Participants acknowledge and agree that the key purpose referred to at clause 3.1 is achieved by the Participants meeting the VFM Statement. 3.3 Amendment of the VFM Statement The VFM Statement may be amended by the Owner for the purpose of developing a Section pursuant to clauses 12 and 13 or by a direction pursuant to clause The VFM Statement cannot be amended by any Participant or the ALT An amended VFM Statement is deemed to be a Scope Variation. 4. ALLIANCE CHARTER 4.1 Purpose of Alliance Charter The Alliance Charter (including the Alliance Objectives) has been developed with the aim of carrying out the Project and performing the Works so as to achieve the VFM Statement. 4.2 Compliance with Alliance Charter The Participants will perform the Works in accordance with the Alliance Charter The Alliance Charter, together with the other terms of this Agreement, will govern the relationship between the Participants at all levels of the alliance. 4.3 Amending the Alliance Charter The ALT may review and amend any part of the Alliance Charter. 5. THE PARTICIPANTS COMMITMENTS 5.1 Good Faith obligation In exercising their rights and performing their obligations under this Agreement, the Participants agree at all times to act in Good Faith. 5.2 Achievement of Objectives In delivering the Project, the Participants commit to working together to: achieve the VFM Statement; and meet the Alliance Objectives. 5.3 Best For Project The Participants commit to establishing an alliance culture based on the Alliance Charter and to act at all times in a manner that is consistent with a Best For Project approach. 5.4 Open book commitment Each Participant commits to: maintain, for at least the Relevant Period, all of their records and other documentation referred to in this Agreement that relate to 3 VERSION 1.1

21 the Works in accordance with, where applicable, good accounting practices, standards and procedures; fully disclose any corporate or other objectives or affiliations that could reasonably be considered to have an adverse impact on the achievement of the VFM Statement or the Alliance Objectives; make their records and other documentation referred to in this Agreement that relate to the Works available to each other, the Owner and the Alliance Auditor on request; and make available to each other, the Owner and the Alliance Auditor any existing documentation or information in whatever form relating to the Works, including documentation and information relating to its Actual Cost incurred by it directly or relating to any of its Affiliate Undertakings or Subcontractors undertaking any part of the Works The obligation to make records and documentation available pursuant to this clause 5.4 does not apply to records or documentation that may be the subject of legal professional privilege or are confidential lawyer/client communications For the purposes of this clause 5.4, references to the Owner include the Office of Rail Regulation and the Department for Transport. 5.5 Commitment to no-blame culture The Participants acknowledge and agree that a key purpose of this Agreement is, and they will commit themselves to: the promotion and maintenance of a no-blame culture between the Participants in relation to disputes, errors, mistakes, Defects, poor performance and other issues which may arise within the Alliance; and the prompt and mutual resolution of all disputes, differences and other issues by all Participants within the framework created by this Agreement. 5.6 Sharing Arrangements The Participants acknowledge that the transparency and visibility of the legal and commercial arrangements between them and between the Participants and the Owner is essential for the successful delivery of the Project and in order to deliver the commitments set out in this clause Accordingly, at the Commencement Date and at all times thereafter, each Participant severally warrants to each other Participant and the Owner that it and none of its Affiliated Undertakings have entered and will not enter into any sharing arrangement, joint venture, partnership or other similar arrangement with any of the other Participants or any of their Affiliated Undertakings in relation to any legal or beneficial interest in its: allocation under this Agreement of any Reimbursable Cost; or rights or liabilities arising under clause 6.4, ( Sharing Arrangement ), and that all legal, commercial and financial arrangements between it or any of its Affiliated Undertakings and the other Participants or any of their Affiliated Undertakings in relation to the Project and its rights and liabilities under this Agreement are exclusively and exhaustively set out in this Agreement. 4 VERSION 1.1

22 5.6.3 A breach of this clause 5.6 will be deemed to be a Wilful Default by any Participant who is party to the relevant Sharing Arrangement. 6. NO CLAIMS BETWEEN THE PARTIES 6.1 Commitment to avoid and resolve issues The Participants must acting in accordance with the commitments given under clause 5 seek to avoid issues arising as between each other and, to the extent an issue arises, must resolve the issue within the Alliance. 6.2 No litigation, arbitration or adjudication Subject to clause 6.4, the Parties agree that there will be no litigation, arbitration or adjudication between them arising out of or in connection with this Agreement. 6.3 Non-application of enforceable rights or obligation Subject to the exceptions listed in clause 6.4, a failure by a Party to perform any obligation or to discharge any duty under, or arising out of or in connection with this Agreement, or which is otherwise an obligation to or duty owed to another Party however arising, does not give rise to any enforceable right or obligation at law and, to the extent that it does, the other Parties releases that Party from any consequences at law for that failure Subject to the exceptions listed in clause 6.4, the sole remedy arising under contract, tort, statute or otherwise for failure by any Party to perform any obligation or to discharge any duty under, or arising out of or in connection with this Agreement, or which is otherwise an obligation to or duty owed by it to another Party however arising is the operation of Schedule 13 (Risk or Reward Regime) and Schedule 14 (Payment Procedures). 6.4 Saving of certain legal and equitable rights Clauses 6.2 and 6.3 have no force or effect: in respect of a Wilful Default by a Party; [in respect of a Parties construction and equipment insurer, motor vehicle insurer or employer s liability insurer exercising a right of subrogation, to the extent it is permitted to do so, against another Party] 2 ; where a Party has a right to bring a claim or cause of action against under a Statutory Requirement which cannot be excluded by the Parties as a matter of law; in respect of any claim for breach of any Statutory Requirement (including any prosecution brought against a Party by a Relevant Authority) in connection with the Works, except and to the extent: any claim for legal expenses, demands, losses, costs, expenses, damages and/or fines arising from such breach (including additional Reimbursable Costs incurred by any Participant) is or ought to be reimbursable under the insurances required to be taken out by the Parties pursuant to clause 38.1 or 38.3; and/or 2 NOTE May only be excluded where confirmed by the Owner s insurers 5 VERSION 1.1