The Institution of Civil Engineers (ICE) has published a new report that makes the case for redefining productivity to improve infrastructure delivery productivity in Australia.
Findings from report How Can Infrastructure Delivery Productivity In Australia Be Improved? follow a green paper and consultation that gathered input from the ICE’s civil engineering experts and partners in Australia and the UK.
The ICE says productivity improvements are critical to delivering the infrastructure Australia needs to support its growing population, particularly as many projects are currently over budget and over schedule.
ICE Interim Associate Director of Policy, David Hawkes, said, “There is a broad understanding that design and construction practices in Australia are inefficient, but existing approaches to measuring and reporting on productivity are too prescriptive.
“Calculating the ratio of inputs versus the quantity of outputs doesn’t factor in improvements in sustainability, safety or community engagement.
“A key recommendation from the paper is to update the definition of productivity. Infrastructure investment should be driven by delivering better social, economic and environmental outcomes for the broader public – that’s why we must consider the total value and benefits being delivered.”
How is productivity currently defined?
The Productivity Commission typically refers to either labour productivity or multifactor productivity (MFP).
Labour productivity is the ratio of output to hours worked, whereas MFP refers to the ratio of output to the combined input of labour and capital.
The ICE recommends that a collaborative advisory group made up of government and industry representatives is established to update the definition.
An alternative approach might consider the effectiveness and efficiency of processes.
“More effective processes will help deliver infrastructure that benefits society. Being more effective means selecting the right projects, making the right design choices, and choosing the right delivery models.
“However, to be more efficient, we must deliver projects that meet needs in a way that doesn’t create unnecessary waste or cause undue harm to the planet. More efficient processes would consider factors like the consumption of materials, effort, talent, data, energy, carbon emissions, land and ecosystems. In turn, improving efficiency reduces costs and provides better value for money,” said Hawkes.
The Productivity Commission’s latest five-year review, published in 2023, declared that Australia is experiencing its worst labour productivity growth in 60 years.
The ICE’s report makes several additional recommendations to improve productivity, including developing a long-term National Infrastructure Strategy and introducing a new leadership role within government to ensure its longevity through political cycles.
Read the full report here
