For more than six months, the Productivity Commission has been reviewing how major public infrastructure can be financed and managed in light of the costs and lead times associated with these types of projects.
Hopefully, the final report due to be presented to the Federal Government on May 27 will feature collaboration as the centrepiece for reform and technology as the catalyst.
Being productive is not just about being efficient
Doing something more efficiently is not as effective as innovating a process or technique that results in doing it in a different way. The invention of the blue banger hangers is a classic example of innovative thinking changing an entire process and creating increased productivity opportunities industry wide. The current onset of prefabrication across construction sites of a number of building elements, materials and wholesale mechanical and electrical sections of a build are also increasing evidence of the productivity gains available on a project.
Governments can be particularly successful in developing widespread efficiencies in processes and workflows during times of cost cutting and calls for greater accountability of the public purse. This often manifests as a squeezing of labour costs where someone is willing to do something faster so that fewer people are involved in the process. However, the process itself may remain unchanged and may continue to be unproductive.
In its draft report released in March, the Commission outlines the opportunity to improve public infrastructure tender processes, recognising that for large and complex projects, bidding costs can be as much as one per cent of the project’s value.
Making the procurement process more efficient (i.e. formal consultation, stringent tender guidelines, uniform documentation and policies designed to award the lowest price) does not necessarily equate to productivity gains. The process may be more efficient but the outcome may still translate to higher turn-out costs at the end of the project.
Often, within a rigid and efficiently applied tendering process, it is innovative concepts that are annexed or removed altogether under the policy of ‘non-conforming tender.’ This also removes any opportunity to generate productivity which is often the outcome of innovation.
The Commission points directly to the need for change in the bid process and for it to recognise and remunerate innovation even where the tenderer is not the preferred bidder. It also points to a need to distinguish between an initial tender process focussed on cost and working with preferred tenders at a much more developed level.
It is this level of innovation that the Productivity Commission report should focus on in developing bid processes that bring about innovative change from industry providers.
Official call for coordinated approach
The Commission’s draft report galvanises global calls for certainty in construction. Much of the discussion continues to focus on creating certainty of the information and the data through collaboration.
The March report cites evidence of poor project management that results in unacceptably high project variations. Poor scoping and initial cost estimates directly contribute to cost overruns and variations.
Rightly so, it also recognises that certainty reduces risk (and, in turn, costs) and is created through model data validation and collaboration. Indeed, there are a number of examples in which this has been the case. In one residential project in which our team was recently involved, for example, use of 5D processes in a reverse tender saw a builder’s price obtained with just one builder that was within two per cent of our initial estimates.
The draft report, however, only references the benefits for projects of a ‘sufficient complexity’ and does not appear to recognise the ability of BIM to achieve certainty for any size project at any stage in the design process. Hopefully, following the public consultation process, the final report will deliver a better recognition of this.
BIM mandate inevitable for productivity goals
As an innovation, BIM changes both the process and the technique of the way we do things. It enables us to reduce the number of steps involved in the process and make the model certain earlier through collaboration to bring about innovative opportunities for the construction which produces better buildings for a lower cost.
So, will the final report tell us anything new? While it probably won’t shine a light on anything surprising for those at a more developed stage of BIM implementation, it will hopefully provide the official collection of all the research and data analysis in order to make far reaching and progressive steps in Australia to bring about a change to project management to improve productivity through BIM and mandate this change for Government projects nationally.
The draft report makes it clear that reforms can begin immediately and can realise economic benefits in the short term. This says that if we do anything rather than what we are doing now we are most likely to be better off. The call for a national approach will add an even greater weight to the opportunities for productivity gains across the supply chain for construction in Australia and for BIM to take the lead role.