Question on Project Alliance.
Been doing some mock exams. See the following 2 questions.
Q1 (from Gang Chen PcM Mock Exam Question 28, the correct answers are b and e.)
Which of the following are true regarding a project alliance? Choose the two that apply.
a. Parties waive liabilities against each other.
b. This practice is often used in IPD.
c. A project alliance is a single-purpose legal entity, similar to a corporation.
d. a project alliance is a form of design-build.
e. Project teams make a consensus-based agreement.
The solution explains why a is wrong because liabilities against each are limited, but not waived.
Q2 (From PPI Practice Questions, Page 3-1, Question 5, the correct answer is a, c, d.)
Which statements are true of a project alliance? (Choose the three that apply)
a. Non-owner parties receive payment of overhead costs, profit, and bonuses only upon successful completion of the work.
b. The agreement among the parties establishes a new legal entity.
c. all decisions are made by consensus.
d. no mechanisms for dispute resolution are included in the agreement.
e. liability of one party to another is limited but not waived.
f. a project alliance closely resembles the traditional design-build agreement.
So my question should be pretty obvious... In project alliance, is liability to each other waived or not?
(p.s. while I enjoy PPI mock exam and Gang Chen Mock exam, I found out their questions are pretty much the same. Some questions are exactly the same, including one of the case studies. So just don't waste money on both, get either one of them is fine).
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'Project Alliance' is not a term I ever recall encountering in any of my studying or exams, but would tend to think these questions are geared toward IPD project team agreements. For reference, read AHPP chapter 9.3 & 17.2 backgrounder (and pages 1068 & 1101, specifically), AIA transitional forms A195, A295, & B195, as well as AIA multi-party agreements C191 & C195.
The intent of the IPD approach is to share risk and reward for the entire project team, where all dispute resolution is handled internally. Using C195, all project participants mutually agree to waive claims; using C191, claims are typically (but not always) waived.
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Assumption of Expanded Liability Exposure. Collaboration between the parties during design and construction raises the concern that the parties may be assuming liability for both design and construction functions. For example, contractors participating in IPD are required to provide data and information to the design professional for incorporation into the design, and to engage in conflict checks and compatibility reviews during the design process. Contractors may be concerned that by so doing, they are taking on responsibility and liability for the design. Although IPD does not require this type of risk shifting, the agreement must clearly identify the participants’ roles, responsibilities, and scope of services and clearly delineate the extent of liability.
Waivers of Liability/Third-Party Liability. The liability waivers typically found in IPD agreements represent a major shift in construction contracting. The participants usually agree to waive claims against each other arising out of the performance of each team member’s duties under the contract (except for willful default). This is consistent with the “teamwork” concept and allows the parties to freely exchange data, information, and ideas without fear of liability to other team members. IPD agreements typically also establish that the entire project team is jointly liable to third parties; team members are not individually liable to third parties for injuries or damages arising out of the project unless those injuries or damages arise out of one team member’s negligence.
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