How can procurement support Australia’s
growing infrastructure needs?

If sustainable infrastructure investment and solutions are going to be achieved, we need to rethink procurement to ensure we drive efficient and innovative infrastructure project delivery.

Australia has always been an attractive place to live, raise a family and work. However, Australian cities are combating population growth, ageing assets, transport congestion and growing demands on social and community infrastructure – such as schools, recreation facilities, hospitals, and parks.

Regional and remote Australians are also in need of further infrastructure investment. In recent years much of regional and rural Australia has been impacted by drought, fire, and floods. Large regions of Australia are still without mobile phone coverage and too many remote Indigenous communities do not have water for cooking, drinking or for personal hygiene.

If our infrastructure investment fails to keep pace with demand, this will seriously impact the quality of living in our cities, regional centres, and remote communities.

So how can we rethink procurement to help deliver Australia’s growing infrastructure needs?

Many infrastructure projects get stuck in the procurement process. The procurement process has a strong influence on the ability to increase speed in project delivery.

The right procurement approach is one which removes procurement process waste and governance bureaucracy, and simplifies market engagement documentation. It also is vital that you focus on the identification, understanding, and sharing of risk in your project.

Selecting the right procurement approach will significantly increase project speed-to-market and speed-to-contract award, and will influence project momentum post-contract award.

Getting these factors right increases your projects’ momentum for success!

Infrastructure innovation and value engineering is often constrained by rigid procurement processes and by a closed engagement approach to the market.

Innovative and sustainable designs need to be quickly constructable, to the right quality and to the right cost parameters. To do this, your procurement process must enable innovative and two-way buyer and supplier collaboration.

This means engaging with suppliers early, being more transparent in industry briefings, providing better responses to supplier clarifications and using probity to enable and protect supplier IP. It also means allowing for alternative proposals, and finding ways to better evaluate them against your project requirements.

Opening your procurement process and engagement approaches will enable greater innovation and value engineering!

Large infrastructure projects are notorious for costing more than originally planned, with research suggesting overruns can be as high as 45% for rail projects, 34% for bridges and 20% for road projects. These cost overruns make it harder for projects to progress.

If cost certainty is to improve, the public sector (buyers) and construction industry (suppliers) needs to share more cost data.  

However, it is not just about sharing the costs, it is also about sharing the cost context, reasons, and the level of supply chain volatility behind the costs. An increase in sharing of cost data and context can lead to exploring more agile and hybrid cost models that balance cost containment opportunities against the need for cost rise and fall mechanisms, to manage cost volatility.

Sustainable infrastructure is essential for society to function, and infrastructure investment will be needed well into the future.

New projects not only have to factor in cost and quality, but also the economy, supply chain constraints, sustainability and social value challenges and opportunities.

Rethinking the infrastructure procurement approaches and capabilities will support infrastructure investment, keeping pace with demand as well as achieving economic development, job creation and enhancing the quality of life for citizens, thereby increasing positive social impacts.

If you need support with your next infrastructure procurement project, reach out to us at info@arcblue.com.au.