Getting results from alliances
It is performance evaluation time on your typical collaborative infrastructure contract. Most who have been there will be familiar with the scramble to gather data and evidence, present it winningly and then refine and improve performance based on the management team’s evaluation and feedback.
The process can be heavy going, especially if there are complex measurements and a whole heap of Key Result Areas (KRAs) to deal with in the middle of a fasttrack project or program.
Thankfully, new approaches are emerging to incentivise and reward breakthrough performance as collaborative contracting for infrastructure delivery continues to mature in Australasia.
One area of new thinking being shared by the Alliancing Association of Australasia with practitioners is how to productively structure KRAs.
Many frameworks used in relationship contracts are developed on the basis that all the core values and objectives of the owner are encapsulated in a KRA. Furthermore, there is a common assumption that each KRA has an associated set of KPIs incentivised though the Project Alliance Agreement.
There is another way though, and we would like to share how to break this nexus. Our view is that incentivised KPIs need to be seen as a commercial investment to achieve outstanding performance in key non-cost areas. Not every KRA needs associated KPIs within the agreement.
We tend to think that less is more when it comes to the number of KPIs to measure. Setting KRAs and associated KPIs, incentivised or not, has immediate commercial implications as soon as the requirements are defined; the owner is adding cost to the project.
We are sharing this approach in one of our training courses, which starts by developing the rational underpinnings for developing a KRA framework and looks at different strategies for defining KPIs to drive productive outcomes. One of the topics looks at gaining a deeper understanding of alternative measurement, incentive strategies and processes.
What is your experience with more streamlined KRA frameworks – do they still meet client expectations and are they easier to calculate and simpler to understand?
And what have you found to be the best way to cascade KRAs and help the workforce understand them?
Share your views about what has and has not worked for you or visit www.alliancingassociation.org to find out more.