You’ve seen it satirised on the ABC’s Utopia. Major infrastructure projects delayed and over budget. A culture of risk aversion leading to projects bogged down in litigation. Despite record infrastructure spending, major contractors (such as ProBuild) are collapsing. 

In a bid to at least partly stop the easy parody of inept big-build agencies Infrastructure Australia on Monday released a 15-year industry roadmap to address the long-term issues facing the infrastructure sector.

Key reforms recommended in the report include:

  • a shift in production processes from manual work on-site to digitally enabled off-site pre-fabrication 
  • developing and publishing current, funded, committed and planned infrastructure activity across 10 year jurisdiction-wide, cross-sector infrastructure pipelines
  • shifting contracts from combative models to longer-term collaborative partnerships that integrate the supply chain
  • supporting the financial sustainability of the infrastructure sector by adopting principles of fair return, improving benchmarking, reviewing payment terms and risk allocation
  • establishing and embedding diversity and inclusion goals in each infrastructure project

In an interview with The Fifth Estate, Consult Australia chief executive officer Nicola Grayson says her members are “extremely supportive” of the recommendations, calling for them to be implemented immediately instead of over 15 years.  “Consult Australia and others have called on governments to reform procurements long before the release of the plan.”

Don’t blame Covid

Contrary to recent commentary that has suggested major infrastructure contractors are under pressure solely because of Covid-19, Grayson says underlying issues with infrastructure procurement policies are to blame. 

“Yes, Covid-19 has really highlighted some of the weaknesses in the industry, it’s shone a spotlight. But these are legacy issues that we’ve known about for a very, very long time.

“We’re now in a situation where we’ve just seen a major contractor in ProBuild collapse. Sadly, that really does not come as a shock to anyone who’s working in the industry at the moment. We’ve seen these red flags for a long time.

“Industry productivity is going backwards, which is something that shouldn’t be happening when you’ve got an infrastructure boom. That seems very counterintuitive. 

“We’re observing that issues in industry have escalated substantially. And that ties back to the squeeze on margins and the sort of the lowest cost wins approach [to tendering]. Inefficiency is driving cost blowouts, time blowouts and all of that leads to litigation or disputes. Of course that’s causing tremendous pressure across our sector.”

Haven’t we been here before?

The reforms proposed by Infrastructure Australia echo the commitments of past federal governments from both major parties. However, these past efforts have failed to tackle one of the root issues: a devolved approach to contracting.

“Governments or ministers have talked about resolving this … Unfortunately, I think [reform efforts] lose a bit of impetus when [politicians] realise that there is this devolved approach [to procurement],” Grayson says.

“In other words, there are agencies that will say, ‘Well, okay, you’re trying to centralise contract terms and conditions, but actually, that policy doesn’t apply to me. So we’ll go down the route of creating a bespoke contract [that’s] very risk averse. We’ll spend taxpayers’ money on external lawyers.”

The bespoke contacts that come about through devolved contracting can create an adversarial relationship between contractors and agencies, leading to information silos.

“We have a very poor track record of sharing the learnings that come out from procurement. Did the procurement model deliver aspirations that were set out at the very start of the project? We’re not very good at measuring that,” Grayson says.

“I think there is this sort of culture where we deeply fear failure and therefore that makes us very risk averse. But we’ve become so risk averse that the results we’re getting are not good, because we’ve constrained everybody so much, rather than an environment where you’ve got more collaboration and a solutions based approach to working through problems. 

“Let’s face it. When you’re delivering infrastructure projects of this scale, there are going to be challenges. So you need to have a contracting and procurement environment that allows for that flexibility and brings the parties together, rather than one that spreads them apart and puts them in silos.”

Instead of taking a combative approach to contracting, Grayson says governments should aim to be a “model client” that works “collaboratively with industry to ensure that we go slow to go fast.

“The more time we take doing that planning upfront, the less time and costs will come down the track in the project on reworking, remediation, and all of the inefficiencies that we see in the way that we’re doing things now.

“At the moment we rush things out to market, without scoping them properly. And this is where projects are going wrong. It’s happening again and again, and we’re not learning from these mistakes.”

Changes needed to meet climate commitments

Big investments in public transport and energy are needed in order to reach zero emissions by 2050. The need to deliver these projects makes the need for reform all the more urgent.

“The infrastructure we’re building now will have a very long legacy. And one of the mischiefs of not addressing these issues is that, because the environment and the delivery environment is so risk averse, there is very little scope for innovation,” Grayson says.

With little scope for innovation, it will be too difficult to meet the challenges head around climate change, adaptation, resilience and reducing carbon emissions. 

“Our members are world class design and engineering companies,” Grayson says. 

“They need the ability and flexibility to bring forward innovative design solutions. 

“They need the ability to use cutting edge technology and digital platforms so that we can ensure that we are creating a legacy of infrastructure environments that can withstand future climate change, and that can also reduce carbon emissions.”

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