I am neither Atte nor the CEO, but I’ll answer nonetheless ![]()
These can only be commented on at a general level because alliance contracts are very project-specific (sometimes quite complex setups) and are not usually public. In general, cooperative project delivery models, such as alliances, do not use traditional bonuses and sanctions; instead, the contractor’s entire billing is based on realized construction costs and various fees.
Contractor fees typically consist of a fixed portion and several incentive components. The fixed portion (including overheads, staff costs, and margin) is what the contractor provides in their bid in addition to the target price (sometimes the final target price is not determined until the development phase). The incentive component is based on a contract-specific incentive system with various targets defined by the client. These targets almost always concern the target price, schedule, quality, safety, and environment, though there can be others as well.
For example, if the target price or schedule is beaten, the contractor receives an additional fee based on a percentage defined in the contract (on top of the fixed fee).
If, on the other hand, the target price is exceeded, the excess costs are shared between the client and the contractor at an agreed-upon percentage, thereby reducing the contractor’s fixed fee. And so on.
A specific calculation basis for the fee/sanction is defined for each target.
Of course, a contract can also have so-called direct sanctions or grounds for termination in cases of gross negligence, such as gray economy activities or work safety violations, but enforcing these is rare in general and, at the listed company level, should certainly never be an issue.
Cooperative models (including construction management contracts) are often favored by large contractors (read: construction companies listed on the stock exchange), and they lobby heavily for these, especially to clients subject to the Public Procurement Act. In competitive bidding for cooperative projects, quality (usually company and personnel references) is given more weight, meaning the selection is not as brutally based on the lowest price as it is in fixed-price turnkey contracts. In addition, these almost always include a development phase, during which the contractor can invoice the client for the salaries of the staff participating in the project’s design phase (as part of the fixed fee or as a separate development phase fee). Clients also have a very high threshold for changing contractors after the development phase, meaning the contractor’s foot is already firmly in the door.
Overall, it can be said that the contractor’s financial risk is much lower in an alliance project than in a fixed-price contract. On the other hand, the margin potential is capped.
This is, of course, a purely general-level answer. I know nothing about the specific contracts Kreate has entered into.