As Australia continues to grapple with the economic consequences wrought by the COVID-19 pandemic, there is no doubt that infrastructure projects will play a major role in stimulating our recovery.
As governments at all levels seek to leverage job creation opportunities by fast-tracking projects and undertaking new investments, Australia is likely to witness the greatest infrastructure boom seen in generations.
In such a challenging economic climate, it will be more important than ever that industry and governments work together to make certain projects are delivered in a way that maximises benefits to the community and enables industry to get the best use of its resources.
The nature of the economic crisis is unprecedented - and demands a major rethink of our approach to planning and delivering projects As the scale and complexity of the task grows, expectations and risks must be clearly understood by all parties, so that projects remain commercially viable and the industry remains sustainable.
The public release of the Roads Australia Procurement Reform Report: Recommendations & Strategies is designed to start that process by clearly setting out key areas where governments and industry need to take action.
This Report draws on outcomes from two Roads Australia (RA) workshops in November 2019 and March 2020 which focussed on procurement and risk issues. It brings together perspectives from a wide spectrum of national and regional industry participants including engineering and design consulting firms, project managers, legal and commercial advisors, government agencies, and construction and related services companies.
The main issues identified are:
- The process for risk definition and allocation, particularly on large projects.
- The size and complexity of projects has increased significantly and as a result, small to medium contractors are unable to effectively participate.
- Governments do not lay out a long-term pipeline of work so that companies can invest and gear up.
- The time available during procurement is often not long enough to allow for sufficient risk assessment.
- The time available during the design phase for most big projects is often not adequate for design firms to innovate or explore better engineering solutions.
- Current procurement models which apply ‘hard edged’ risk transfer can often result in significant and complex legal disputes which ultimately create a lose-lose scenario.
- Governments do not engage with industry early enough in the design stage.
- State and territory education systems and the Federal immigration model are not coping with the increased demand for skilled labour and industry does not do enough to encourage women and people from diverse backgrounds into the industry.
Opportunities to address these issues and improve collaboration and processes are set out across seven key areas:
- Issue Area 1: Ownership & Accountability
- Issue Area 2: Pipeline Visibility
- Issue Area 3: Planning & Design
- Issue Area 4: Legal & Risk Framework
- Issue Area 5: Capability & Capacity
- Issue Area 6: Governance
- Issue Area 7: Culture & Inclusion
Given the scale of infrastructure investment currently being undertaken and the COVID-related economic challenges confronting all governments, RA believes now is the ideal time to implement the recommendations contained in this Report.
Doing so will improve planning and design of projects; more appropriately allocate and manage risk; give a more fulfilling role to medium and smaller contractors; improve skills and capacity building and ultimately deliver enhanced benefits for the whole community.
RA is now moving to establish a collaborative partnership between industry and government to pursue the recommendations set out in this Report. This approach will ensure all key stakeholders take ownership and play their part in driving lasting changes to the way we plan and deliver infrastructure projects.
RA is proud to present this comprehensive blueprint for procurement reform – and I encourage you to share it widely with your networks.
Chief Executive Officer