Govt. Must Lead Construction Paradigm Shift: Industry Chief 2

Wednesday, April 9th, 2014
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State and federal governments within Australia should use their position as major clients to lead a fundamental overhaul of ‘twentieth century’ procurement models for major construction projects, a respected industry figure says.

Australian Construction Industry Forum chief executive Peter Barda called for a paradigm shift in the way the tenders for developments are managed so that head contractors and trade contractors are included upfront in the project design.

 Peterr Barda

Peterr Barda

Barda’s call comes shortly after ACIF released a raft of policies calling for changes not just in procurement but also across areas such as housing affordability, sustainable design and construction, building and planning regulation, occupational licensing, workplace relations and occupational health and safety – policies the organisation says are necessary to drive future gains in industry productivity.

Of all of these areas, Barda says shifting the approach toward procurement is arguably the most challenging in which to implement change but perhaps the biggest area in terms of yielding lasting results.

He says current practices under which a portion of the design work is locked in before calling for tenders means clients miss out on the chance to benefit from the expertise of trade contractors and head contractors regarding how buildings and infrastructure can be designed and maintained.

Instead, he would like to see clients go out into the marketplace and entire teams be put together to work on the design collaboratively.

“In an ideal world you would actually work backwards from maintenance,” Barda said. “You would think about how you are going to commission for example, mechanical services, lift services and then how you are going to maintain them. That needs to be part of the thinking in terms of how you are going to put all of the Lego blocks together.”

He noted that the traditional approach does not allow for that type of thinking.

“The second thing the traditional approach denies the client is thinking about how you are actually going to build the thing,” he said. “Where are you going to put the cranes? How many cranes? How are you going to manage material handling? How are you going to manage onsite storage of materials? How do you co-ordinate the access that different trades need as the building goes up?

“If you actually have the trade contractors and head contractors involved in the design early, all of that gets taken into account.”

The release of ACIF policies come as government tender processes are under the public microscope after a draft report into the delivery of public sector infrastructure from the Productivity Commission called for a comprehensive overhaul of assessment and development processes last month.

Barda says ACIF hopes the release of its policies will help advance discussion of important issues amongst industry stakeholders.

He says current procurement methods will be hard to change, but has challenged governments as buyers to devise new ways which allow for whole of team approaches to design without compromising transparency or probity within the process.

“We are looking for some courage from government buyers to say ‘we are going to do things differently. We’ll actually appoint teams early and as they come up with a model of the asset that will deliver the performance that is required. All of those people will stay together and they’ll do the work and be paid for it,’” Barda said.

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  1. Stephen Ballesty

    Very timely!! thank you for putting maintenance on the industry agenda.

    I've just been able to share this with the ISO/TC-267 meetings in Washington DC, at which I am representing Australia on the international Facilities Management standards initiative.

  2. David Chandler

    The time is rapidly approaching for government and industry to define what a productive and competitive construction industry might look like sans unlawful industrial behavior. Otherwise there will be a return to business as usual. Trailing indicators will be of no use setting the industry's sights on the future. Trailing indicators quote for example a reduction in days lost in industrial dispute or millions claimed in disputed contract claims. Leading indicators point to measures which show progress across the industry in pursuing quantifiable goals towards a more productive industry.
    I have suggested that measures be set to lower on site construction inputs by 30% and to lower on-site construction durations by 50% to be achieved by 2023. I propose that progress towards achieving these goals be a precondition to all future enterprise agreements.
    These measures not only track on-site productivity by encouraging less on-site fabrication and increased incorporation of, or assembly of off-site construction inputs they also measure the pre-project planning and innovation before works starts on the job site. In the end what happens in planning projects before workers even get to site will define the big differences we can make to the industry.
    This is in management's hands. Given that construction salaries closely follow increases in construction wages pressure on these measures as a precursor to future income increases will help focus the workforce and management endeavors to change business as usual.
    These measures are easy to collect as they could come from records already kept on projects. The distinction between project complexities can be accounted for by each measuring the as is workforce and time inputs and tracking these over time. A benchmark pattern will emerge which will enable the innovators to make their leadership case and the laggards to be left to reflect. The time has come to stop processes which allow the lowest common denominator players to survive.
    The Australian construction challenge is to get its costs down by 20% across the board and then to focus on achieving better, faster, cheaper on an industrial scale for the next 20 years.
    Future EBA's which simply buy industrial peace of pay workers to turn up have no place in the future of construction in Australia. Or there simply wont be one.
    Changing tender processes may be a way of achieving these outcomes, but that really should be up to clients to work out with the leaders. My sense is that we have tried changing processes in the past without having pre-set quantifiable goals. The time has come to put the goals up front and let the processes adapt. There will be no one size fits all.
    I recently attended a construction innovation forum in Queensland. There were some pretty experienced construction people present who started by talking of tight margins and little potential to do better. It wasn't long before the focus shifted from margins which are only 5 – 7% of a project cost to ideas for improving the efficiency of the other 93 – 95% of project cost. Suddenly a rich vein of opportunity opened up where wasted time, prelims, rework, unnecessary on-site fabrication, smarter work sequencing, better quality, multi-skilling, less waste of materials and safer work could quickly see a way to a 20% target. That's before you get to reducing un-price-able risk allocation and or duplication, bid shopping and security of payment issues.
    These are the sorts of things that have been the low hanging fruit when industries such as the motor vehicle, camera, computer, printing, air-craft, white goods and phone industries transformed from their once craft origins to industrialized global businesses just as construction is undergoing off-shore. Just in-case no one noticed?