Significant changes are needed to underpin greater productivity and sustainability within Australia’s infrastructure sector, industry leaders have warned.
In a panel discussion which took place during Infrastructure Australia’s launch of its 2021 Australian Infrastructure Plan last Friday, leaders warned that action is needed to improve the sector’s ability to deliver best possible outcomes on the current record pipeline of public sector capital works.
The session was chaired by Business Council of Australia Chief Executive Officer Jennifer Westacott. Panellists included Romilly Madew, Chief Executive Officer of Infrastructure Australia; Scott Charlton, Chief Executive Officer of Transurban Group; and Larry McGrath, Managing Director of Rainhill Consulting.
The warning comes as the plan called for action across several areas to assist the infrastructure sector and to improve project delivery and performance.
- Better management of the pipeline portfolio
- Greater emphasis on front-end design
- Better engagement with industry and suppliers
- Encouragement toward greater uptake of digital technologies; and
- Having governments act as model clients and custodians of industry health and productivity. This includes through adopting fair practices in terms of risk allocation, contracting and payments.
The call also comes as Australia is expected to deliver a record level of new public infrastructure over coming years – especially in the transport sector.
According to BIS Oxford Economics, the value of work done on construction of road, rail, bridge, port/airport and harbour assets is expected to surge from already elevated levels of $32 billion in 2020/21 to reach almost $50 billion by 2022/23.
All this is happening at a time when borders remain closed and job vacancy data indicates skilled people are becoming harder to find across various disciplines of engineering as well as in numerous trade and technical roles.
What should be done?
According to McGrath, several things need to happen.
On the government side, reform of procurement practices needs to accelerate and collaboration with industry needs to improve.
Whilst ‘pockets of excellence’ have led to ‘fantastic’ outcomes on some projects, McGrath says practices on many others have been sub-optimal.
Indeed, he says there can be inconsistency of practices even within individual delivery agencies from one project director to another – a phenomenon which he attributes to a high degree of decision-making flexibility which is afforded to individual project directors.
This leads to inconsistent outcomes and contributes toward greater uncertainty, a lowering of trust and a greater tendency toward litigation.
Next, more needs to be done to manage the project pipeline. Whilst many individual agencies have a reasonable grasp on their own program of works, McGrath says efforts to coordinate the delivery pipeline across agencies and jurisdictions has been lagging.
For two reasons, this matters.
First, it creates difficulty for contractors and project teams. On occasions, McGrath has seen cases where tenders for two different megaprojects across different states have been due on the same day. For contractors who bid on both projects, this creates difficulty.
In addition, the breakdown in coordination has led to ‘lumpiness’ within the pipeline and has exacerbated challenges in developing and maintaining an adequate level of industry skills and capacity. This, McGrath says, is especially difficult considering that some roles require specific sets of abilities which are not always easy to source.
To manage large-scale megaprojects, for example, project directors need to coordinate an enormous range of technical competencies, manage stakeholder relations, understand workings of government and lead and manage people. Whilst finding people who can do this may be manageable when only one megaproject is underway, it becomes more difficult when multiple megaprojects are running simultaneously.
As well as governments, McGath says industry itself needs to act.
One area which stands out is the need to improve culture and to attract a retain a greater number of women across the sector’s workforce.
Whereas many contractors work hard to achieve a roughly equal balance in graduate intake, McGrath says too many women are lost during the early years of their career.
One problem is that some women find that the industry fails to provide the conditions, flexibility or career pathways which they are seeking.
Another difficulty is the lack of females in senior roles to whom young women can look up and from whom aspiring female engineers and technicians can draw inspiration.
Whereas every company listed on the ASX 200 now has at least one female member on its board of directors, McGrath says all-male boards remain a reality for around one third of major civil construction contractors. Male domination is also prevalent throughout the sector within executive roles and roles which involve profit and loss responsibilities, he adds.
Charlton and Madew agree about the need for action.
On the government side, Charlton says departments and agencies need to develop and retain their own skill set and address the drain of public sector talent.
As much as possible, meanwhile, both processes and the number of parties that contractors and delivery partners need to deal with should be streamlined. In the early stage of planning and delivery of NorthConnex, for example, Charlton says a small number of people were given responsibility and authority to ensure that value for money was protected. This created an arrangement which not only protected outcomes but was done in a manner which resulted in clear authority, accountability and responsibility.
On risk allocation, Charlton stresses that this must be equitable for both contractors and clients alike – the latter of whom should be fair but should not accept excessive risk on their own side.
Most importantly, skilled migration must restart when borders reopen. Whilst acknowledging that the sector’s local skills set can and should be built out over time, Charlton says shorter term demand associated with the massive volume of work will not be met unless migration is restarted.
On the contractor side, Charlton says more could be done to help governments to work with communities both before and during project delivery. As well as communicating wider project benefits, this involves preparing them for anticipated disruptions and helping to minimise disruption during project delivery.
Madew says the need for reform is clear.
Top of the priority list is a more collaborative approach along with active management of the infrastructure pipeline.
Stressing that the latter does not involve slowing down some projects to enable others to forge ahead, she says this entails a transparent discussion about the range of megaprojects and how the overall pipeline will be delivered.
Madew says governments and industry have an opportunity to address the issues.
“There has been a lot of unemployment around Australia with COVID,’ she said.
“Let’s use this time to attract people into our sector. Let’s train them. Let’s look at the culture of our sector.
“Let’s be transparent about what these capacity issues are.”