In my final newsletter last year I described 2021 as the year industry united for reform. This year I am pleased to say we are all united—industry, government and unions—and a new industry transformation agenda has started, disrupt or die.
Disrupt or die
The 2022 headlines for the construction industry were rarely positive. From price escalation, cost overruns and insolvencies to material and labour shortages, the stories have been grim. This year construction businesses once deemed too big to fail, have failed. The industry cannot afford to continue down the path of slow incremental change.
In our final thought leadership piece for 2022, Disrupt or die, we revealed the construction industry’s woeful productivity performance which is costing the economy $47 billion annually and signalled an emerging new threat—a lack of willing workers.
Over the last 30 years, almost every other industry has advanced yet Australia’s construction industry has gone backwards. Construction productivity today is lower than it was in 1990 and the industry is out of touch with the next generation of workers who no longer view it as an industry of choice. Workers do not want a job in an industry where the hours are long and disputes are commonplace, excel spreadsheets are considered the height of tech and little focus is placed on the impact we are having on the environment.
The biggest opportunity to disrupt the industry and improve productivity lies in fundamentally improving how projects are procured, delivered and governed—essentially white-collar activities. White collar occupations account for the majority of the construction industry’s 105,000 skills shortage estimated by mid-2023.
There is significant wastage of skilled resources through inefficient tender processes, but the bigger problem is the myopic focus on selecting the lowest price at the tender box to the detriment of all else. The lowest bid at the tender box is a completely false economy and is the direct cause of the adversarial contracting environment in which we now find ourselves. All too often, procurement processes encourage competition on willingness to price and accept unquantifiable risk rather than ideas to deliver improved project outcomes.
Everyone has a part to play, including contractors, but it is the government, if it chooses to, that has the biggest power to disrupt. To equip the Federal Government for the role of Disrupter in Chief, the Australian Constructors Association has developed the Future Australian Infrastructure Rating (FAIR) to rate government funded projects on how well they performed against key reform areas such as improved productivity.
The FAIR initiative, or components of it, could be included in the next iteration of the National Partnership Agreement as a requirement for all federally funded projects. But to fully address this problem, government, industry and unions need to come together and collaborate as never before and the recently announced National Construction Industry Forum represents a good opportunity to do this.
The current universal agreement on the need for change provides an opportunity to transform the industry to one that represents global best practice and is looked to as a role model by other industries. But the time to act is now before this window of opportunity slams shut.
Download the report.
2022 in review
The Australian Constructors Association has worked hard this year and we’ve made our presence known. We had a lot to say but it is through our open and honest conversations with government, industry and unions that we really made our mark.
We are working to not just address the industry’s challenges but to transform the industry to one that respects the environment, is innovative and adaptive, and collaborative. It is not only the right thing to do, but it will also ensure our future as an industry of choice for the next generation of workers.
Some of the indicators of the progress this year include:
- Represented the construction industry at the National Jobs and Skills Summit
- Co-presented a new national conference – Future of Construction Summit
- Commenced trials of the new Culture Standard developed by the Construction Industry Culture Taskforce
- Expanded the representation of the Construction Industry Leadership Forum
- Partnered with Consult Australia in the new Partnership for change initiative targeting practical ways to become more productive
- Developed a series of thought leadership pieces all providing solutions to the industry’s challenges.
I was honoured to represent the Australian Constructors Association and the broader construction industry at the Jobs and Skills Summit in September. Our involvement demonstrates a respectful relationship with government and other stakeholders and genuine commitment to working collaboratively to improve the sector.
Download the 2022 Year in review report.
Wind of change
As we released our 2022 Year in review, the Australian Constructors Association announced the appointment of Annabel Crookes as President.
Annabel has served as a Director on the Board since 2019 when she was Vice President and Company Secretary since 2020. She is one of the original members of the Construction Industry Leadership Forum in 2018 and has been instrumental in shaping and driving our agenda on procurement reform like collaborative contracting and more appropriate risk allocation.
She is supported by a refreshed Board Executive comprising:
- Joe Barr, Chief Executive Officer, John Holland – Vice President
- Meg Redwin, Executive Director – General Counsel, Global, Multiplex – Vice President
- Scott Cummins, Chief Executive Officer, McConnell Dowell Corporation Limited – Treasurer
- Michael Degotardi, Chief Operating Officer, UGL Limited – Company Secretary
It is fair to say the Australian Constructors Association is united and stronger than ever and special mention must go to our outgoing President Duncan Gibb. Duncan has relentlessly collaborated in service of a common goal and he has made an enormous contribution to the industry. Thank you Duncan.
Disrupt it is
Ready, set go. We are ready to work with government, industry and unions to fundamentally change how projects are procured, delivered and governed to improve productivity and make the industry a more attractive destination for the next generation of workers. This is the priority for 2023.
In support of disrupting the industry, our annual Future of Construction Summit (FCON) will take the theme ‘FCON disrupted’. Featuring many of our members, FCON will provide an opportunity for leaders representing all sectors of the construction industry to engage in discussions aimed at bringing about change now—not in 10 years.
On behalf of the Australian Constructors Association I’d like to thank our event partner FuturePlace on helping us bring forward this important event.
Visit the FCON website for more information.
FCON23 will be held from 3-4 May in Melbourne and, again, the Australian Construction Achievement Award (ACAA) gala event will be held on the evening of day 1 of the summit. The ACAA is arguably the construction industry’s most prestigious award, recognising the best of the best in construction. It is awarded to projects that meet or exceed substantial criteria incorporating design, innovation, financial and operational deliverability, environmental, sustainability and safety, amongst others.
Visit the ACAA website for more information.
In closing, I would like to thank you for your support this year. We are delivering—the construction industry that is.
With next year set to be another big one, all levels of the industry need time to enjoy a well-deserved, uninterrupted rest over the Christmas break. So again, in partnership with Consult Australia, Australasian Railway Association, Engineers Australia and Roads Australia, we are calling for public and private sectors to close live procurement processes over the end-of-year holiday period. Writing to all government procurement agencies across the nation, we have raised the critical importance of taking a break.
Over the coming weeks we will be running a social media campaign to acknowledge the support received from the request. Please support this campaign by engaging with our LinkedIn posts and, importantly, take time for yourself and your families.