Australia’s contracting model is “unsustainable and outdated” – UK infrastructure group


A shift from cost-driven transactional model of procurement to an enterprise-model based on collaborative relationships is being trumpeted by owners and suppliers in the UK. 

And Project 13, the UK-based group seeking to change the way major infrastructure projects and programs are delivered in their country, believes Australia is primed for the shift. 

Dale Evans, chair of Project 13, is advocating the change to leverage collaborative relationships between owners, partners, advisers and suppliers.

Evans told Government News he believes Australia can learn from the UK experience of infrastructure delivery. 

He says the delivery is characterised by projects that are over-budget, past deadline, innovation-adverse and below par. 

He says Australia faces similar challenges to the UK, but is less ready to embrace reform, leaving it at risk of falling behind.

Dales says Australia’s contracting model is unsustainable and outdated, putting the country at risk of falling behind. 

“Much of this relates back to the recommendations in the government procurement report,” he told Government News. 

“There is still an overriding emphasis on lowest cost, rather than the better outcomes that best practice models now recognise as the focus for infrastructure investment.

“Clients are still looking to transfer rather than allocate risk to the right capability, leading to adversarial and unsustainable conditions. 

“Lowest cost procurement fails to leverage partner and supplier capability and creates a low margin model. Limited engagement with the wider supply system fails to leverage existing capability – and misses the opportunity to develop a broader more sustainable capability.” 

Project 13 has over 2000 members which support “infrastructure delivery models that fail not just clients and their suppliers, but also the operators and users of our infrastructure systems and networks.”

The group seeks to develop a new business model – based on an enterprise, not on traditional transactional arrangement. It says this can boost certainty and productivity in delivery, improve whole life outcomes in operation and support a more sustainable, innovative, highly skilled industry.

Dale said Australia had a ‘stretched market capability’ for infrastructure and the traditional approach to procurement and engagement by government has delivered little innovation.

“The traditional approach to procurement and an emphasis on lowest cost has led to a low margin contracting model where there is little opportunity for delivery partners to invest in future skills and innovation,” he said. 

“This approach to procurement also places an overriding emphasis on the main consulting and contracting partners, with little recognition of or engagement with the wider supply ecosystem. Given the significant capability and innovative potential that exists within this wider group the traditional approach has failed to create the opportunity for innovation that other sectors have shown can come from wider supply networks and relationships.” 

Go to the Government News website to read the story. 

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