Getting infrastructure right from the start
Infrastructure is a long-term investment that delivers assets that normally operate for over 50 years.
Therefore, planning, design and construction should deliver assets that serve the community for many decades.
The whole project planning and delivery team must understand the current and future environment in which the asset is being delivered, and the likely impact of challenges, opportunities and risks. This understanding must extend beyond usage to include environmental and climatic factors.
The greatest opportunities to ensure the best solution is identified, and the right infrastructure is built, happen at the earliest stages of the project during problem identification, project origination and design.
Improving how projects are conceived, planned, designed and assured in these early stages has long been regarded the most effective mechanism owners have to consistently deliver superior project outcomes. Australian public infrastructure often misses the opportunity to improve project outcomes.44
The desired outcomes are most easily influenced during the first stage, project origination. This is when the due diligence that informs a more detailed understanding of scope, cost and timeframes can remove challenges that might otherwise appear in later stages.45
Investing time and resources in due diligence in the early stages is therefore essential. If prioritised by all levels of government, it can enhance project outcomes and improve the operating environment for all stakeholders.
Due diligence also reduces project risks by making them less likely to incur a financial loss, miss delivery deadlines or fail to deliver the right operational outcomes.46 Conducting due diligence in the early stages of a project ensures stakeholders have sufficient time to ensure risks can be avoided and/or mitigated throughout a project's life. The practice of due diligence prioritises risk avoidance and mitigation as compared to risk transfer - particularly for parties that require greater assistance to manage those risks.
| 3.2a Recommendation Improve value for money and reduce risk by consistently adopting appropriate best-practice front-end due diligence for projects. Proposed sponsors: State and territory infrastructure delivery agencies | ||||
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| 3.2a.1 Reduce risk, improve competition, lower bid costs and improve project outcomes by consistently applying due diligence activities to the front-end of all infrastructure projects. Proposed lead: State and territory infrastructure delivery agencies Supported by: Industry representative groups | |||
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| Uplift quality of infrastructure decision-making through the development and delivery of training for key decision-makers on due diligence and de-risk, construction innovation, timing of project announcements, commercial and legal, and project governance. Proposed lead: State and territory infrastructure bodies and Department of Infrastructure, Transport, Regional Development and Communications Supported by: State and territory public service commissions and industry representative groups | |||
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| Increase maturity and reporting of project planning and design through public-facing annual reports of de-identified Australian Government funded projects. Proposed lead: Department of Infrastructure, Transport, Regional Development and Communications Supported by: Office of the National Data Commissioner | |||
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| Improve value for money and reduce risk by prioritising resources and time to develop business cases, create reference designs and undertake comprehensive due diligence processes. Proposed lead: State and territory treasuries Supported by: Industry representative groups | |||
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| Ensure a strategic view of risk is appropriately translated to project procurement by developing and applying mature risk allocation processes that comprehensively assess and validate risk and uncertainty and fairly apportion them to the parties best-placed to manage them. Proposed lead: State and territory infrastructure delivery agencies Supported by: Industry representative groups | |||
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| 3.2a.2 Improve infrastructure value for money by applying whole-of-life cost, scheduling and risk management best practices, processes and systems. Proposed lead: State and territory treasuries | |||
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| Improve consistency, efficiency and transparency of project decision-making by developing and promoting nationally consistent project information structures. Proposed lead: Department of Infrastructure, Transport, Regional Development and Communications Supported by: Industry representative groups, including Australian Cost Engineering Society, Australian Institute of Quantity Surveyors, NATSPEC, NBS and BuildingSMART | |||
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| Ensure a consistent focus on value for money by developing in-house capabilities, in areas such as cost management systems and processes, scheduling, risk management, estimating and project controls. Proposed lead: State and territory infrastructure bodies Supported by: Industry representative groups, inclusive of Australian Cost Engineering Society and Australian Risk Engineering Society | |||
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| Enhance the quality of decision-making by developing a nationally consistent whole-of-life infrastructure cost and schedule benchmarking tool and mandate its use on all nationally significant projects. Proposed lead: Department of Infrastructure, Transport, Regional Development and Communications Supported by: Infrastructure Australia, industry representative groups, inclusive of Australian Cost Engineering Society, Asset Management Council of Australia and Australian Institute of Quantity Surveyors | |||
| 3.2b Recommendation Reduce uncertainty for industry and improve value for money by improving engagement with industry and the supply chain. Proposed sponsor: State and territory treasuries Supported by: State and territory infrastructure delivery agencies | ||||
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| 3.2b.1 Reduce risk and improve value for money by using common and best practice commercial arrangements, standard contract forms and delivery approaches to infrastructure. Proposed lead: State and territory treasuries Supported by: State and territory infrastructure delivery agencies and industry representative groups, such as Institution of Civil Engineers | |||
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| Unlock market equality and lower risk by utilising more collaborative commercial models that facilitate value for money and smaller engagements directly with contractors and consultants. Proposed lead: State and territory treasuries Supported by: State and territory delivery agencies and industry representative groups, such as Consult Australia, Australian Contractors Association and Australian Owned Contractors | |||
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| Apply appropriate consistency and improve certainty in procurement by developing a procurement decision-making tool to more effectively understand and allocate scope in line with project fundamentals. Proposed lead: Department of Finance Supported by: State and territory treasuries, Australasian Procurement and Construction Council and Infrastructure Australia | |||
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| Improve consistency, certainty and value for money by developing and implementing a new nationally consistent contract suite to support a spectrum of procurement models. Proposed lead: Department of Finance Supported by: State and territory treasuries, industry representative groups, inclusive of Institution of Civil Engineers and Society of Construction Law Australia | |||
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| Maintain a viable, competitive industry and supply chain by ensuring insurance is available for consultants, contractors and sub-contractors involved in major projects. This may include brokering insurance on behalf of industry on a pro rata basis and changing existing policies on retention or insurance limits. Proposed lead: State and territory insurance policy-holders and their insurers Supported by: State and territory insurance agencies and industry representative groups, including Insurance Council of Australia, EngInsure and Consult Australia | |||
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| Increase competition in the industry by developing guidelines and training programs on market engagement best practices that are accessible to all project practitioners. Cover topics such as multi-stage bidding, fair risk appropriation processes, bidding requirements at each gate, receiving industry feedback, using nationally consistent contract forms and the supporting procurement decision-making tool. Proposed lead: Australasian Procurement and Construction Council Supported by: Industry, state and territory treasuries, and state and territory infrastructure delivery agencies | |||
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| Maintain the financial health of the supply chain by reviewing payment certainty and payment security legislation in light of current practice. Focus on compliance with requirements and consider whether the scope of these frameworks sufficiently addresses poor practices. Proposed lead: State and territory treasuries Supported by: Industry representative groups | |||
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| 3.2b.2 Create a culture of genuine innovation by clarifying the desired project outcome innovation criteria in bid requirements, including outcomes, value for money, risk and embedding successful innovation in future projects. Proposed lead: State and territory infrastructure delivery agencies Supported by: Australasian Procurement and Construction Council | |||
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| Normalise risk appetite and use of innovation by aligning innovation criteria in bid assessment with project and organisational needs, including tangible measurable outcomes that are owned by a project leader. Proposed lead: State and territory delivery agencies Supported by: Australasian Procurement and Construction Council | |||
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| Reduce risk and lower the likelihood of variations by conducting constructability, operability and maintainability reviews on projects. Repeat reviews at multiple stages of each project's lifecycle, particularly in the early stages before awarding main works contracts. Proposed lead: State and territory infrastructure delivery agencies Supported by: Industry representative groups, including Facility Management Association of Australia, Asset Management Council of Australia and Australian Constructors Association | |||
Measuring progress
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| Standard contracts Percentage of projects or programs over $250 million (2021 $) that use a nationally standard contract suite, with the integrity maintained | ||
| Governance | Target: Over 80% | Timeframe: |
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| Valuing innovation Percentage of projects or programs greater than $250 million (2021 $) specify project scope to be prioritised for innovation | ||
| Quality | Target: Over 80% | Timeframe: |
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| Early provider engagement Percentage early contractor and operator engagement for projects over $250 million (2021 $) | ||
| Quality | Target: 100% | Timeframe: |
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| Security of payment Percentage compliance with security of payment legislation
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| Governance | Target: 100% | Timeframe: |
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