The importance of the construction industry to the Australian economy cannot be understated.

Every $1 spent on infrastructure boosts economic activity by nearly $3. That’s why governments around the world have invested heavily in infrastructure to rebuild their economies. In Australia, a record $110 billion has been invested by the Australian Government alone.

The construction industry in the midst this exciting but challenging job of delivering the pipeline of projects. The challenge is how to operate in a more sustainable way. Our industry has been slow to adopt technology—construction is the second worst for technology adoption—and not surprisingly productivity growth trails other significant industries by 25 per cent. Despite perceptions the industry is highly lucrative, construction accounts for 20 per cent of all insolvencies. What’s more, women make up 12 per cent of the workforce and construction workers are six times more likely to die from suicide than a workplace incident. Sound appealing? It is no wonder we struggle to attract and retain the workforce.

While there is no silver bullet to these problems, the way government procures projects has the potential to trigger a positive chain reaction. The choice of commercial framework used to procure and deliver a project has a significant impact on how parties collaborate, the number of disputes between them and therefore the culture of the project and the industry as a whole. This in turn impacts the attractiveness of the industry as a place to work.

So when the Australian Government commenced an inquiry into the procurement practices of government-funded infrastructure, the Australian Constructors Association jumped at the chance. Finally, the Federal Government had responded to the calls, and this was an opportunity no one was going to waste.

The Australian Constructors Association and 13 other key industry groups involved in delivering the majority of the Australian Government’s record investment in infrastructure projects quickly came together in a joint letter calling for urgent reforms to address the industry crisis. The request to the Federal Government was simple—Federal Government step up and lead the reform of how major projects are procured and delivered.

The Federal Government, as a direct procurer of major projects and as a significant source of funding for jurisdictionally led projects, can play a major role in resolving these issues and supporting the sustainability of the sector and its supply chain. In particular, urgent reforms are needed to drive an improved industry culture, create increased capacity and capability, and ensure project commercial frameworks are equitable and align the interests of all parties.

The Australian Constructors Association’s submission makes six recommendations for the Federal Government to implement—the first being for the Federal Government to coordinate and incentives reform to accelerate the adoption of best practice. Importantly, we recognise industry has a role to play and several of the recommendations involve initiatives being developed by the Australian Constructors Association.

One such initiative is a Culture Standard. Under development through the Construction Industry Culture Taskforce, the Culture Standard will build the foundations for an improved industry culture. With many construction sites operating 6 to 7 days per week to meet delivery timeframes, the Culture Standard recognises the challenges of long work hours and the need for people working in our industry to have adequate time to rest and pursue life activities outside of work. The Australian Constructors Association’s submission to the inquiry recommends the Culture Standard be adopted as part of government procurement requirements.

Another recommendation is for government to support the development and adoption of a framework to ensure projects are procured based on best value—not lowest cost. To facilitate this, the Australian Constructors Association, through the Construction Industry Leadership Forum is developing a new approach to defining ‘value for money’ in the tender period. This will involve expanding time and cost considerations to include a wide range of social and economic benefits. To enable better evaluation of value for money, performance metrics that will link to outcomes in project business plans are under development. These metrics will be embedded in investment guidance and frameworks used by the NSW and Victorian Governments. Ultimately, broader adoption of these metrics will help create competition without the ‘race to the bottom’ while also combating existing adversarial behaviours within the industry.

Without exception, everyone wants to see a more sustainable construction industry. We all largely agree on the problems that need to be addressed to achieve this and we even agree on what needs to be done to fix them. We just need to find a way to fast track their implementation. To do this, collaboration between all levels of government and industry will be critical with the Federal Government to take the lead.

Jon Davies

CEO, Australian Constructors Association