- The construction industry is the third largest industry in Australia.
- Construction generates over $360 billion in revenue.
- In 2019, over 1.15 million people were employed in construction (it’s 9.0% of all jobs in Australia).
- Only 12.1% of the construction workforce is female
Early last month, Roads Australia held a Reform Strategy Workshop in Melbourne to discuss improving major construction project outcomes across the nation; Agonis Group was fortunate enough to be invited to participate.
The following is a summary of the Process Recommendations that came from the workshop, with further commentary now required following the resultant economic conditions from the COVID-19 pandemic that are still unknown. As an Industry, we understand that the time for revolutionary change to provide greater budget and project surety is on our doorstep and will no doubt be the catalyst for positive change. We will continue to monitor the situation closely and provide further information at an appropriate time in the near future.
Regardless of the what changes COVID-19 will bring to the industry, the key process recommendations from the workshop will remain relevant.
Background
In November last year, Roads Australia, the Major Transport Infrastructure Authority (MTIA) and the Department of Treasury and Finance (DTF) held a roundtable with key industry personnel to discuss and unravel key issues that currently affect the financial state of the industry; primarily with procurement of mega projects and risk allocation. This was the first of a sequence of events and workshops to address the current reform process.
Overview from the March Workshop
The industry working group (put together by Minister Daniel Andrews) convened again in Melbourne last month at the Roads Australia’s Procurement Reform Strategy Workshop as a follow on from the initial roundtable. Amongst this group was Agonis Group’s David Kennard and Director-General, Major Transport Infrastructure Authority (MTIA) Corey Hannett, who also heads up the government authority that was established at the start of 2020 to oversee Victoria’s major transport projects. The outcome of the workshop was to develop a set of recommendations and a strategy to address the core issues, in preparation to deliver to government.
Work pipeline
- Visibility of work pipeline in NSW and Vic (Pre-qualified work for tier 1,2,3 contractors to bid on)
- Regular industry engagement (every 6 months)
- Procurement strategy and model (break down mega projects to match industry capability and capacity)
- Review tender procurement models for future projects to achieve better and more innovative/engineering outcomes (ie is ref design the best solution – use industry more effectively)
Risk, commercial and contractual:
- Consistent contracts across states
- Governance (delivery model, risk allocation, disputes and escalation)
- Learn from international best practice
- Commercial frameworks that enable projects to be delivered profitably and in alignment with values and behaviours we aspire to
- Stakeholder management – third party risks need to be mitigated prior to procurement
- Utilisation of Construction Industry Leadership Forum (CILF)
Capability and Capacity:
- Promote skilled migration to support delivery programs
- Skilled workforce forecasting
- Positive sell of the construction industry to the public and media (learn from Mining industry)
- Social inclusion and diversity to be promoted through the construction industry
Design Process:
- Try to capture innovations on losing bids and incorporate on the wider industry
- Good quality reference design (reduce design loops)
- Collaborative and clarity with the client from the start
- Less involvement with the independent certifier – evolving into a road block. Advance the design process before locking down TOC. Using overseas models, independent certifiers are not used.
Culture and Inclusion:
- Geography pipeline of projects to enable contractors to maintain resources (LXRP model) (job security beyond the project)
- Bad culture is borne from projects in survival mode (losing money/tight program)
- Mutual trust between all parties
- Capable leadership (coaching and mentoring of PMs)
- Shared values
- Agreed legacy target of the project from the start
- Women in construction to be promoted
The work undertaken by this group will also complement the work that the Construction Industry Leadership Forum (CILF) is completing in this space, adding further weight and substance to the current reform process.
For more information on the current reform process, contact Dave Kennard on david.kennard@agonisgroup.com.au.
