Collaborative delivery aligns the commercial interests of owners, designers, contractors, and key suppliers through multi-party contracts, shared risk and reward, and "best-for-project" decision-making. Rather than allocating risk adversarially, collaborative models embrace risk jointly, on the premise that the party best placed to manage a risk at any given moment should do so, regardless of contractual boundaries.

The three principal collaborative delivery models are alliance contracting, integrated project delivery, and progressive design-build. While each has distinct origins and structural features, they share a common set of principles and exhibit significant overlap in practice.

1. Alliance contracting

Under an alliance contract, the owner (typically a government agency) and one or more non-owner participants (NOPs, which generally include the designer, civil contractor, and key systems suppliers) enter into a single, multi-party contract. All participants commit to delivering the project collaboratively, with costs reimbursed on an open-book, cost-plus basis. A jointly developed Target Outturn Cost (TOC) that benchmarks performance is measured. If the project is delivered under the TOC, the savings are shared among participants through a gain-share mechanism. If costs exceed the TOC, the overrun is shared through a pain-share mechanism. NOP pain-share is typically capped at profit, so the owner bears residual cost risk beyond that cap.

Alliance contracts also feature a "no blame, no dispute" clause under which participants waive their rights to bring legal claims against one another, except for voluntary default and other specified events. Governance sits with an alliance board comprising senior representatives of all participants, with decisions made unanimously.

Various associations and governmental agencies have published alliance contracting guidelines and templates, including policy principles, guides and so on for owners and other participants.1

2. Integrated project delivery

Integrated project delivery (IPD) draws on lean construction principles, concurrent engineering and on collaborative delivery. IPD shares many features with alliance contracting (multi-party contracts, shared risk and reward, open-book accounting, and joint governance) but places greater emphasis on Building Information Modelling (BIM), "Big Room" collocation, and target value delivery.

Under a typical IPD contract, the owner, architect, and general contractor (and often key trade contractors) sign a single multi-party agreement. Compensation is structured around a "Risk Pool" that holds participant profits at risk subject to the achievement of project objectives. If the project meets or exceeds its targets, participants earn their full profit plus a share of the savings. If the project underperforms, profit is reduced or forfeited. In Canada, the CCDC 302 is the standard-form multi-party contract for IPD projects, developed by the Canadian Construction Documents Committee. It features a validation phase, design and procurement phase, construction phase, and warranty phase.3

3. Progressive design-build

Progressive design-build (PDB) is a two-phase delivery model in which the owner selects a design-builder primarily on qualifications (rather than price) and then collaborates with the selected team during a development phase to advance the design, develop a cost estimate, and agree on a firm fixed price or target price before proceeding to construction. If the parties cannot agree on commercial terms at the end of the development phase, the owner retains an "off-ramp" (i.e. the right to terminate the relationship and either negotiate with the next-ranked team or re-procure).

PDB evolved from the traditional design-build model in response to the limitations of hard-bid, fixed-price procurement on complex projects where scope is not fully defined at procurement. The collaborative development phase allows the owner and design-builder to optimize scope, reduce risk, and develop a price reflecting actual conditions rather than the conservative contingencies embedded in competitive lump-sum bids.

PDB has been used extensively in North America, including in Canada, on healthcare and transit projects.4

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  1. Introduction
  2. Why does financing remain necessary under collaborative delivery?
  3. What is bankability? 
  4. What are the collaborative delivery models? 
  5. Core principles of collaborative delivery models 
  6. Core principles of traditional project finance 
  7. The issues between collaborative delivery models and traditional project finance 
  8. Available solutions and potential structuring 
  9. Conclusion

[1] For instance, the Australian Department of Infrastructure and Transport publishes a comprehensive suite of national policy principles, guidelines and templates. Refer to National Guidelines for Infrastructure Project Delivery | Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts. In the UK, the most commonly used standard form alliance contracts include the TAC-1 (Term Alliance Contract); the FAC-1 Framework Alliance Contract; the NEC4 Alliance Contract; the PPC2000 Project Partnering Contract; and the JCT Constructing Excellence Contract 2016; refer to Alliance Forms for a general description.

[2] To be read with the CCDC 30-G-2025 Guide to the CCDC 30 Integrated Project Delivery Contract.

[3] For more information, the Integrated Project Delivery Alliance is the primary Canadian body for IPD education, research, and advocacy. See www.ipda.ca

[4] For additional reference, refer to Infrastructure Ontario Procurement and Delivery Model Selection Process: Delivery Models Overview and Infrastructure BC Alliance | Infrastructure BC.