With infrastructure set to play a driving role in Australia’s economic recovery, Infrastructure Australia’s Chief of Policy & Research, Peter Colacino, outlines the key issues that will define the sector this year.

Australia is on the cusp of an unprecedented wave of investment in public infrastructure projects. Investment in major public infrastructure over the next five years will exceed $218 billion.

The peak of annual investment, estimated at over $52 billion in 2023, reflects a dramatic increase beyond spending rates delivered in response to the Global Financial Crisis.

As well as supporting the recovery from the pandemic, this investment by Australia’s governments will lay the foundation for future economic growth and lift our standard of living.

However, this trend is also likely to create national pressure on the sector, as well as localised shortages of skills and materials. These challenges present compounding delivery risks that are difficult to predict or plan.

COVID-19 is materially compounding these challenges with border restrictions impacting access to skills and labour, disruptions to interstate and global supply chains, and worker shortages and illness acting as a handbrake on productivity.

These challenges are persisting, and in some cases growing, as the pandemic enters its third year. These constraints add further weight to the need to prioritise infrastructure industry reform in 2022. To deliver the record rates of investment, government and industry in partnership need to take steps to ensure the industry is more innovative, productive and financially sustainable in the year ahead.

Skills shortages are forecast across all infrastructure-related occupations

Infrastructure Australia’s inaugural Infrastructure Market Capacity report provides a comprehensive understanding of the supply and demand of skills and materials critical to deliver Australia’s major infrastructure pipeline.

It finds that the peak of demand for skills is 48 per cent higher than supply. Meeting this demand would require annual growth of 25 per cent over the next two years, which is more than eight times higher than the projected annual growth rate of 3.3 per cent over this period. Some shortages appear to be ongoing and systemic, for example building surveyors and many rail occupation specialisations.

Engineering occupations are currently most at risk of shortage. Over 41,000 skilled workers are estimated to be required to fill engineering occupations including positions in civil, geotechnical, structural and materials engineering.

Shortages are particularly acute for a range of senior, experienced positions. The shortages impact both the public and private sectors, with potential severe consequences for the ability of projects to be delivered on-time, in-budget or within the desired scope.

As a starting point, three in four transport projects globally run over budget. Australia is no different. With more than 80 per cent of the future major project pipeline devoted to transport, the consequences of capability shortfalls could be substantial budgetary pressure on government or the continuation of the so-called ‘profitless infrastructure boom’.

Migration will have a role in addressing workforce demand and may be the difference between capacity or shortage for some occupations like electrical engineers or specific highly skilled individuals at senior levels. However, even with migration playing a significant role, access to some skills, such as to specialised engineering roles, are still likely to be inadequate.

This is due to the global nature of the talent pool, and strong global demand for these skills as G20 countries leverage USD $3.2 trillion of infrastructure investment as part of post-COVID stimulus strategies.

Plant, materials and equipment will also come under pressure

Materials demand accounts for the second largest proportion of expenditure in the pipeline over the next five years. Demand for materials is projected to grow for three consecutive years, representing annual average growth of just over 30 per cent per annum between 2021 and 2023.

Demand for quarried material and cement are likely to produce the most significant challenges due to their reliance on local supply chains. Steel, bitumen and electrical control equipment are likely to be exposed to international demand and supply chain pressures.

The increasing and significant concentration of mega-projects, transport and rail investment drives unprecedented demand for materials. This includes an average annual growth rate for rock/bluestone approaching 60 per cent over the next three years. Demand for rail track will grow by 250 per cent over the three-year period.

Changing the way we work will be key

Collaboration and integration across the ecosystem will drive a financially sustainable and high-performing infrastructure industry. To achieve this, a new model for delivery is required to transform the infrastructure sector in Australia, one founded in long-term, collaborative, and trust-based relationships.

This also requires regular two-way dialogue between the government and industry. It also requires an integration of delivery teams with the client. The relationship must extend beyond the prime contractor into the supply chain and supporting team.

This enterprise-based model of integrated delivery teams has been pioneered by the Project 13 Initiative, including Sydney Water as an early Australian adopter, and elements of this approach have been embedded in major transport projects, particularly in Victoria.

Effective public sector project leadership and governance is a key enabler, ensuring the focus is on the right outcomes, framing relationships for success at the outset, and driving collaborative behaviours.

Such a model will represent a departure from current practice, where transactional bi-lateral relationships that largely exist on a project-by-project basis, which along with unbalanced risk and commercial models, drive an adversarial culture and a financially unsustainable industry.

Moving to digital by default

Digital has the potential to transform the infrastructure sector and support enhanced productivity and innovation. Digital is a core enabler to achieving transformation change across the sector, and at its heart is about the better collection, analysis, storage and sharing of data and information.

Digital transformation will drive better information and knowledge sharing, drive a reduction in whole-life costs of infrastructure, and will play a core part of improving the future development, construction, and operation of infrastructure assets.

Through digital transformation, the value achieved by information can be bigger than the sum of its parts – enabled through a common national information framework, smart adaptable assets that can gather information, and more widespread use of Building Information Modelling (BIM) and digital twins.

Despite the practice, here-and-now the opportunity to embrace digital solutions is often put in the ‘too hard basket’ or misrepresented as a technology product. The information, rather than the technology component has the potential to transform infrastructure planning, delivery and whole-of-life management, driving genuine productivity change.  We need to get back to digital basics to support adoption with a focus on common definitions and processes, moving to at scale, consistent deployment.

Creating genuinely diverse and inclusive workplaces

Ultimately, infrastructure delivery requires more than steel and concrete. It is also about the workers, engineers and project teams who design and build it, in addition to the users who rely on it. Infrastructure planners, financiers, builders, operators and community engagement teams are all part of the tens of thousands of people that make up the sector.

A positive and effective industry culture is led from the top and creates the conditions that ensures the working environment caters to the broadest range of talent – this is particularly pertinent at a time when our sector is reputedly moving toward peak capacity. By taking deliberate and meaningful action to address the industry’s inflexible, confrontational and at times aggressive culture will be critical.

The Construction Industry Culture Taskforce (CICT) Culture Standard should provide the vehicle for change, however it will require adoption and leadership from government in valuing its objectives. Creating a more attractive industry for younger workers, and women, can unlock the potential to foster a more resilient workforce, and one that is capable of delivering the future infrastructure needs of the diversity of the people of Australia.

Genuinely diverse and inclusive workplaces consistently report higher people engagement, resilience, productivity and performance, all of which lead to better business and societal outcomes. Diverse teams provide different perspectives, approaches and experiences, and these diverse views lead to better decision making. Reports show that when employees are confident there is a commitment to equality, diversity and inclusion they feel more included and the drive to innovate increases.

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