The Project Alliance Agreement (PAA) is utilized in the United States when traditional contracting models are insufficient for complex, high-risk projects. It emerged as a response to the limitations of adversarial contracting approaches, particularly in large infrastructure and construction projects. The PAA creates a legal framework for genuine collaboration, establishing joint management structures, shared risk/reward mechanisms, and collective decision-making processes. It typically includes provisions for target cost arrangements, performance incentives, and transparent pricing mechanisms. This agreement type is particularly relevant in jurisdictions where collaborative contracting is recognized and enforced, with U.S. courts generally supporting its unique risk-allocation approach.
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1. Parties: Identification and details of all alliance participants
2. Background: Context of the alliance and project objectives
3. Definitions: Key terms used throughout the agreement
4. Alliance Principles: Core principles of collaboration and risk/reward sharing
5. Governance Structure: Management framework and decision-making processes
6. Commercial Framework: Payment mechanisms and compensation model
7. Risk Allocation: Shared risk principles and exceptions
8. Term and Termination: Duration of the alliance and termination provisions
9. Dispute Resolution: Procedures for resolving disputes within the alliance
1. Government Compliance: Specific provisions required for public sector projects and government compliance
2. International Considerations: Provisions addressing cross-border requirements and international compliance
3. Innovation Rights: Intellectual property arrangements and rights for new technology or methods
4. Environmental Compliance: Specific environmental requirements and sustainability provisions
1. Schedule 1 - Project Scope: Detailed description of project works and deliverables
2. Schedule 2 - Target Cost Breakdown: Detailed cost estimates, assumptions and financial models
3. Schedule 3 - KPIs and Performance Measures: Performance metrics, measurement methods and targets
4. Schedule 4 - Risk/Reward Calculation: Formula and methodology for calculating gain/pain share arrangements
5. Schedule 5 - Governance Procedures: Detailed procedures for alliance management and decision-making
6. Schedule 6 - Insurance Requirements: Required insurance coverage, limits and certificates
7. Schedule 7 - Form of Subcontract: Template agreements and terms for engagement of subcontractors
Relevant legal definitions
Clauses
Relevant Industries
Relevant Teams
Relevant Roles
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