A new report from PwC has found that collaborative contracting could unlock significant productivity improvements that would allow the construction industry to deliver more infrastructure for less.
The recent uplift in government expenditure on public infrastructure in New South Wales and Victoria has caused the construction and engineering market in those states to overheat.
This is likely to require project owners to adopt more collaborative contracting approaches in response, as project participants become more selective about the work that they will tender for and the risks that they will accept.
The report states, “Conventional procurement models have long been preferred by most project owners for their simplicity, and for the certainty and risk transfer that they provide to owners. But conventional procurement models create commercial incentives for non-owner participants to act in a manner contrary to the interests of the project owner, and vice versa. This misalignment of commercial interests discourages the collaboration between project participants that is needed to improve construction productivity.”
PwC’s paper outlines the various forms of collaborative contracts and argues that not only is a swing towards more collaborative contracting inevitable, but should be a positive development from a productivity and value for money perspective.