Investigating into the Risks of Forming Alliance

Many large and highly complex engineering projects present enormous technical and financial risk to organisations. This is especially true in the defence industry where budgets can potentially run into the billions and the project lifecycle may extend over many years. In frequent cases, such projects are too much for a single organisation to undertake. One option that is becoming ubiquitous within contemporary defence projects is to spread the risk by forming an alliance between several organisations. Unfortunately, forming an alliance between several competing organisations brings its own set of challenges and risks. The operating conditions of the business environment are characterised by frequent changes in products, services, processes, organisations, markets, supply and distribution networks. The partners need to work together as an entity to achieve a goal but the relationships within the alliance are often disrupted by the established practices and culture of the individual companies. This paper starts by examining how risks can multiply when an alliance is formed and what potential impacts these risks have on success. A novel 3PE method for modelling the structure of an alliance with the three elements being product, people, process, and their interactions is proposed within an alliance environment. By examining the relationships among the elements, risks are identified, and the key drivers are exposed. Finally, a case study is presented that focused on risks relating to People and behavioural risks exhibited within an alliance.