Reduce uncertainty for industry and improve value for money by improving engagement with industry and the supply chain.
- Economic benefits
Key messages
Governments can deliver better project outcomes through procurement that recognises long-term collaboration as an inseparable component of a sustainable industry. Governments should collaboratively partner with industry to mitigate risks when defining and delivering infrastructure.
Consistently using standard form contracts that support more collaborative behaviours and allocate risk to those able to manage it are immediate opportunities for reform.
Governments should seek out and address other industry pinch points, such as payment certainty, access to insurance, contract complexity and market deliverability.
Governments should see infrastructure design and delivery as both a long-term endeavour and one of continuous improvement. Areas of opportunity include embracing focused innovation, increasing transparency and improving long-term estimating.
What are the impacts?
Early market engagement to discuss project risk with potential delivery partners can reduce the likelihood of market failure and increase competition, improving economic outcomes.
Early and frequent collaboration between government and industry improves governance, reduces risk and establishes a clear direction for innovation. Early and open engagement also supports improved transparency and improves social acceptance.
A more collaborative infrastructure sector will likely attract more businesses to the industry, potentially from the global market, and can help to create a higher-quality workforce through a more attractive working environment.
How easy is it to implement?
Improved collaboration with industry will facilitate value for money, reducing costs for industry and taxpayers.
With the recent prevalence of megaprojects and megacontracts, governments have experience to draw from that enables this reform to be readily implemented, thereby minimising complexity. Earlier market engagement should also improve the industries’ capacity to deliver the reform.
How certain are the outcomes?
Improving market capacity effectively requires collaboration with governments and industry, placing them in control of the reform.
Should governments apply innovative contract models such as the UK Institute of Civil Engineers, New Engineering and Construction (NEC) Contracts, there should be a high degree of confidence in reform success and acceptance by industry stakeholders.
| Governance |
Standard contracts
|
| Quality |
Valuing innovation
|
| Quality |
Early provider engagement
|
| Governance |
Security of payment
|
Read more about this recommendation in 3.2 Enhancing project outcomes in the 2021 Australian Infrastructure Plan.
Reform implementation pathway
This recommendation comprises of outcomes and activities, which form the reform's implementation pathway.
The implementation pathway is designed to guide change agents on the supporting activities necessary to achieve the overall reform.
For each outcome and activity, we propose change agents to act as:
- Proposed sponsor: facilitate, coordinate and champion the recommendation
- Proposed lead: deliver specific activities or lead related outcomes
- Support: share ownership, contributions or knowledge to enable the reform process.
Reduce risk and improve value for money by using common and best practice commercial arrangements, standard contract forms and delivery approaches to infrastructure.
0-5 years
Unlock market equality and lower risk by utilising more collaborative commercial models that facilitate value for money and smaller engagements directly with contractors and consultants.
0-5 years
Apply appropriate consistency and improve certainty in procurement by developing a procurement decision-making tool to more effectively understand and allocate scope in line with project fundamentals.
0-5 years
Improve consistency, certainty and value for money by developing and implementing a new nationally consistent contract suite to support a spectrum of procurement models.
0-5 years
Maintain a viable, competitive industry and supply chain by ensuring insurance is available for consultants, contractors and sub-contractors involved in major projects. This may include brokering insurance on behalf of industry on a pro rata basis and changing existing policies on retention or insurance limits.
0-5 years
Increase competition in the industry by developing guidelines and training programs on market engagement best practices that are accessible to all project practitioners. Cover topics such as multi-stage bidding, fair risk appropriation processes, bidding requirements at each gate, receiving industry feedback, using nationally consistent contract forms and the supporting procurement decision-making tool.
0-5 years
Maintain the financial health of the supply chain by reviewing payment certainty and payment security legislation in light of current practice. Focus on compliance with requirements and consider whether the scope of these frameworks sufficiently addresses poor practices.
0-5 years
Create a culture of genuine innovation by clarifying the desired project outcome innovation criteria in bid requirements, including outcomes, value for money, risk and embedding successful innovation in future projects.
5-10 years
Normalise risk appetite and use of innovation by aligning innovation criteria in bid assessment with project and organisational needs, including tangible measurable outcomes that are owned by a project leader.
5-10 years
Reduce risk and lower the likelihood of variations by conducting constructability, operability and maintainability reviews on projects. Repeat reviews at multiple stages of each project’s lifecycle, particularly in the early stages before awarding main works contracts.
0-5 years