ENGINEERING: We need up to 70,000 additional engineers to deliver the pipeline of projects that we know about in the next few years. But why would young – or any – talent come to a country where adversarial contracts that mostly benefit lawyers still rule? And where insurers are left to pick up the pieces.
The current skills crisis is not a surprise to anyone in the Australian construction industry, particularly in the consulting sector made up of more than 50,000 engineers, advisors and designers. Although the health pandemic has intensified the issues, a lack of engineering talent has been discussed as an ongoing systemic issue for many years. But now, with data produced by Infrastructure Australia (IA) we can finally see the enormity of the crisis. IA’s 2021 Market Capacity report identified a need for over 50,000 additional engineers to deliver the known pipeline of projects in 2022-23 – reaching a deficit of over 70,000 in just a few years.
To retain current talent and attract new people to the industry, Consult Australia has been advocating on behalf of its members to governments to become a smarter buyer of design services, releasing our Model Client Paper in 2018. Although we have been encouraged by some commitments from state governments to do better, the reality is nothing has changed on the front line.
Although no one group is to blame for this situation, the only winners have been the top end of town legal advisers who have created unique and complex contracts for each major project on behalf of successive state and commonwealth governments.
Due to the way risk is apportioned in these bespoke contracts they create an adversarial and litigious project culture, where these same firms are subsequently paid to represent the various parties in the costly litigations that follow.
Engineers and designers with international experience who step into Australian projects ask “why are we making it so hard on ourselves?”
Why aren’t we mandating the use of a standard suite of contracts such as NEC which has been successfully adopted in the UK as a basis for major project contracts?
Those who suggest that these standard contracts are not appropriate for complex projects need only look at Snowy 2.0, the largest renewable energy project in Australia, which will link two dams through 27 kilometres of tunnels and provide on-demand renewable energy.
The contract used has been based on a client consultant model services agreement developed by the International Federation of Consulting Engineers. Sadly, it is the exception not the rule.
The costly and very public legal stoushes between state governments on major transit projects like Sydney Metro and Melbourne’s West Gate Tunnel would not have occurred if more collaborative contract models had been adopted
Put simply, if we want to deliver the major infrastructure projects that will enhance liveability and productivity, designed by the world’s best engineers, and built by innovative local and international contractors, we must address these contracting issues as a matter of urgency and make long term changes that will create a more sustainable industry.
The costly and very public legal stoushes between state governments on major transit projects like Sydney Metro and Melbourne’s West Gate Tunnel would not have occurred if more collaborative contract models had been adopted. Hardly the best advertisement for local and international talent considering a career in the Australian infrastructure sector?
It isn’t just our members who are telling us there is a major problem.
The industry left to pick up the pieces are the insurers, and they have had enough as well. And who can blame them, when insurers pay out on average $1.20 for every $1 of coverage, these claims are the tip of the iceberg.
Most consultants can’t afford to pay the excess and settle well before insurers get involved. Often putting the rest of their business on the line to cover the financial losses of one government contract.
Unsurprisingly, those insurers that remain have hiked up excesses, reduced what’s covered and ratcheted up premiums to a level where professional indemnity insurance costs have become the second largest outgoing for small consulting firms after salaries.
The upcoming federal election is the ideal time to remind government at all levels that they have a responsibility, to take a more collaborative approach to the procurement and delivery of major projects, where risk is shared, and goals are aligned. That’s the only way we will get more Australians to become engineers and attract more global engineers to our shores. That would be a fitting legacy for the current infrastructure boom.