On 9 December 2022, Infrastructure NSW released its report setting out progress made by NSW Government agencies in embedding the 10-point commitment over the 2022 financial year.
The Australian Constructors Association agrees that the NSW Government is making good progress in developing a transparent project pipeline and improving skills and training—but improvements across other commitments are still desperately needed. In some areas the report’s findings do not translate to what industry is seeing on the ground.
Below is an inside look at our observations on the commitments and proposed recommendations.
Commitment 1 – Procure and manage projects in a more collaborative way
Performance measurement against this commitment is entirely focused on the procurement process. We believe there should be an equal or greater focus on improving how projects are managed. This could include a focus on increased use of integrated/agile project teams and independent Dispute Resolution Boards to manage disputes.
Commitment 2 – Adopt a partnership-based approach to risk allocation
The assessment criteria for this commitment is subjective, and we contend that industry takes a different view of the progress achieved in this area especially given the government’s track record to date in (not) compensating industry for the impact of material price escalation on already awarded projects where no contractual provision exists to do so. In many instances, government will pay less than what it has cost contractors to deliver projects through no fault of the contractor which cannot be considered to be a partnership approach.
This point aside, we believe that there needs to be clarity around when it is appropriate for a contractor to be expected to be liable for a risk. The often-quoted mantra of ‘the party best able to manage the risk” is too simple and guidance needs to reflect the ability of the contractor to quantify the risk and bear the financial consequences if the risk eventuates.
We would also like to see an increased focus on trials of innovative approaches to risk such as those being trialled on Sydney Metro and where appropriate those approaches being documented in government guidance notes and used more extensively.
Commitment 3 – Standardise contracts and procurement methods
Performance against this commitment is entirely based on standardising procurement processes and, whilst some progress has been achieved, we still see significant variations and believe there should be flexibility to use different models to suit different situations.
There has been negligible progress where it really matters in terms of standardising contracts and we believe this must be a significant focus for the year ahead. We also believe that there needs to be a consistent approach to Value for Money (VFM) in terms of the different components of VFM, their weighting (at tender) and transparency of tender assessments in respect of the different areas of VFM. In fact, we would go so far as to suggest the creation of a new commitment to procure based on best value not lowest cost.
Commitment 4 – Develop and promote a transparent pipeline of projects
We acknowledge and congratulation the NSW Government on the significant progress in this area.
Commitment 5 – Reduce the cost of bidding
The areas of progress identified in the report are not major contributors to the cost of bidding. We would like to see a focus on smaller bidder lists, greater use of enterprise delivery models, increased direct negotiation where appropriate e.g. Sydney Harbour Tunnel, streamlined tenders, reliance information being able to be relied upon and early shortlisting/award.
Commitment 6 – Establish a consistent policy on bid cost contributions
We would welcome increased uniformity of bid cost contributions both in respect of amount and projects on which reimbursement will be provided.
Commitment 7 – Monitor and reward high performance
We agree with the proposed area of focus for 2023 but request that, in order to drive significant change in behaviours, consideration be given to providing increased transparency of assessment criteria, weightings and evaluations.
Commitment 8 – Improve the security and timeliness of payments
We propose consideration be given to changing the focus of this commitment to addressing broader industry liquidity issues as detailed in our Credit Where Credit’s Due Report.
Commitment 9 – Improve skills and training
We acknowledge and congratulate the NSW Government on the significant progress in this area.
Commitment 10 – Increase industry diversity
We agree that much more work is needed to increase industry diversity and we believe that Infrastructure NSW and all other partners in the Construction Industry Taskforce (CICT) need to increase the support given to CICT and the trials being undertaken.
In addition, we would like to see a commitment from Infrastructure NSW to build on the 10 Commitments and draw together all subsequent guidance into an overarching resource that makes it easier for government delivery agencies to make informed decisions and for industry to hold government delivery agencies to account.
View the NSW Government’s 2022 Progress report.