Infrastructure Australia has released its Delivering Outcomes report, which provides a roadmap for the long-term reform the sector needs to overcome skills and procurement challenges, and deliver the critical infrastructure Australia needs in the decades to come.

Currently, infrastructure planning, decision-making and delivery falls short of consistent best practice in Australia. Procurement and contracting arrangements are driving poor investment outcomes, a lack of project coordination is creating capacity constraints, and the potential of digital transformation remains unharnessed.

Informed by extensive consultation with more than 200 industry leaders, this new report underscores the need for Australia’s governments and industry to work collaboratively to advance sector-wide reform.

Infrastructure Australia’s Chief Executive, Romilly Madew, said, “This roadmap sets out tangible actions over the next ten years to transform how infrastructure is planned and delivered in Australia to support a more productive, innovative, and financially resilient infrastructure sector.

“As we highlighted in the 2019 Australian Infrastructure Audit, 2021 Australian Infrastructure Plan, and 2021 Infrastructure Market Capacity report, national infrastructure sector reform is critical to successfully deliver Australia’s historic infrastructure pipeline and support the national economic recovery, including from the COVID-19 pandemic.”

With a record $225 billion in major infrastructure investments committed by governments across the country between now and 2023-24, as well as investments being planned and delivered by the private sector, Ms Madew said that it is vital that infrastructure is planned, sequenced, procured and delivered effectively to ensure that Australia reaps the economic and social benefits.

Delivering Outcomes amounts to an industry change plan. Developed in partnership with the very leaders who are critical in driving transformational change, it is a roadmap to improve the productivity of the sector, lift capacity and capability, promote innovation, embed sustainability and strengthen the Australian industry in the face of shocks and stressors.

“These reforms will ensure the sector is well placed to withstand disruptions, such as the challenges facing supply chains during COVID-19, but also ensure infrastructure better addresses the needs of the community,” Ms Madew said.

The report’s key reform recommendations include:

  • Shift from a focus on manual work on-site to off-site digitally enabled, pre-fabricated production processes, in line with international best practice
  • Develop and publish jurisdiction-wide, cross-sectoral infrastructure investment pipelines that outline current, funded, committed and planned public and private infrastructure activity over a ten-year horizon
  • Shift from current combative contracting models to longer-term, collaborative models that integrate the supply chain
  • Support the financial sustainability of the infrastructure industry by adopting principles of fair return, improving benchmarking, reviewing payment terms and risk allocation
  • Establish and embed equality, diversity and inclusion objectives through each infrastructure investment

Infrastructure Australia Chief of Policy and Research, Peter Colacino, said, “During the 1990s and 2000s, Australia led the deployment of private capital into the infrastructure sector. However, our trading partners and competitors have caught up. It is time for a new wave of reform.”

Australia’s infrastructure industry is now in competition for resources and investment with leading Southeast Asian economies, like Singapore, as well as other traditional leaders in the sector – the United Kingdom, Canada and New Zealand. Governments in each of these jurisdictions are committed to adopting international best practice, streamlining delivery, supporting collaboration and shifting gears through adopting digital practices and modern methods of construction.

“To deliver the record infrastructure pipeline, it will be essential for the Australian sector to demonstrate it is globally competitive,” Mr Colacino said.

“The United Kingdom’s Transforming Infrastructure Performance, the UK Construction Playbook and Project 13 represent signposts to the Australian industry. Through Delivering Outcomes we have refined the concepts in these publications for Australia.

“The structure of government and the size of our industry mean it is not possible to imitate this international experience. In developing Delivering Outcomes, we sought perspectives from industry on local conditions and implementation. The reforms we offer are a practical platform for collaboration and meaningful progress.”

Australian Constructors Association CEO, Jon Davies, has welcomed the reform roadmap, and said it’s time for industry to start taking action.

“What is now needed is a mechanism to ensure the recommendations are implemented,” said Mr Davies.

“Owners and delivery agencies are positioned to implement the best practice framework but without a clear mandate at a national level, change will continue to be slow and piecemeal.”

The Australian Constructors Association has developed a way for the Federal Government to expedite these reforms through a new ratings initiative called the Future Australian Infrastructure Rating (FAIR). FAIR is proposed for implementation in the next iteration of the National Partnership agreement.

“If implemented, the FAIR initiative would create an environment where participating organisations work together to deliver the best possible outcomes for all,” said Mr Davies.

Roads Australia (RA) said the Delivering Outcomes roadmap underscores the urgent need for action to reform procurement practices and enhance industry culture.

RA CEO, Michael Kilgariff, said, “This report presents a practical pathway to achieve much-needed reform that will reverse declining productivity, put our industry on a more sustainable footing and ensure we have the skilled and diverse workforce that will be needed to deliver a record transport infrastructure pipeline.

“There are many pressures now combining to create a challenging operating environment for those engaged in the design, construction, operation and maintenance of integrated transport infrastructure which are resulting in negative outcomes that include delays, cost-blowouts, labour shortages and problems attracting and retaining skilled workers.”

Mr Kilgariff said that over the past two years, several industry reports have highlighted how outdated and inflexible approaches to procurement, contracting, risk allocation and workforce management are affecting industry’s ability to plan and deliver infrastructure projects. These have included RA’s Procurement Reform Report, IA’s 2021 Infrastructure Market Capacity Report, the Construction Industry Culture Taskforce’s work to develop a Culture Standard for the industry, and the House of Representatives inquiry into procurement for government-funded infrastructure.

Mr Kilgariff welcomed the alignment between the roadmap’s key reform recommendations and reform priorities that RA has pursued over recent years. These include a greater focus on digital design and asset management, a nationally coordinated long-term project pipeline to aid planning and investment decisions, a more collaborative approach to contracting and risk allocation and supporting measures that aim to enhance equality and diversity across the industry’s workforce.

“The challenges have been clearly and consistently articulated. Industry now needs the Federal Government to work with all jurisdictions to deliver consistent, nationally coordinated action that addresses the underlying causes of these problems and promotes better outcomes for industry and the community.”

“RA’s submission in the lead-up to next week’s Federal Budget pointed out opportunities for the Federal Government to invest in initiatives that will help facilitate these outcomes. This includes investing in measures that will incentivise procurement reform and establish a nationally coordinated project pipeline, support a shared data resource tracking acute skills shortages that will produce more responsive decisions around skilled migration and training,” Mr Kilgariff said.

Infrastructure Australia engaged HKA to support the development of the reform roadmap, including engagement with domestic and international infrastructure leaders. The engagement included working with international and Australian leaders from across industry and government infrastructure sectors, as well as working with leaders of industry and other policy areas to understand counter-culture perceptions on the performance of the sector and opportunities for reform.

The engagement, alongside the parallel process to support the development of the 2021 Australian Infrastructure Plan and 2021 Infrastructure Market Capacity program, represents one of the largest consultation exercises undertaken by Infrastructure Australia to inform reform.

The reforms put forward in this report reflect the current state of the sector, key challenges and root causes impeding productivity and innovation, and collective understanding of the desired future state for the sector.

 

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