Following a series of high profile contract disputes, most notably the Sydney Light Rail Project, the NSW government recently announced a new 10-point plan that will look to change the way it tenders for and delivers infrastructure projects.
The ten-point plan, announced earlier this month by Premier Gladys Berejiklian at the National Infrastructure Summit in Sydney, should be welcomed by the construction industry, which has been calling for reform in the way of more collaborative relationships with contractors for some time. The industry has long complained that the current bidding process is too adversarial.
The 10-point “action” plan is seeking to add more collaboration and transparency to the tendering process.
“We know a project is at its best when the interface between government and industry is a positive one. If we can work harder collaboratively to improve the interface between government, industry and all the various other parties that are part of a major project, then, of course, we will do that."
“We know a project is at its best when the interface between government and industry is a positive one. If we can work harder collaboratively to improve the interface between government, industry and all the various other parties that are part of a major project, then, of course, we will do that,” Ms Berejiklian told the assembled construction industry heavyweights.
This view was echoed by crucial construction stakeholders, with Western Sydney Airport’s head of Corporate Affairs Maryanne Graham saying: “Gone are the days of the contractor being whipped by Government. We’re now in a position where we can work in a very collaborative way, and both parties can win out in the long run.”
Part of the 10-point plan will include moving away from “fixed price, lump sum” procurement requiring contractors to deliver by a specified date and for a fixed price or face massive fines.
The high-profile light rail project is already running a year late and is estimated to be $1 billion over budget, resulting in an acrimonious court case between lead contractor Acciona and the government.
At the Infrastructure Summit, the Premier conceded there needed to be improvements.
“It is about reducing bid costs and improving quality, but it’s also about acknowledging that relationship building and relationship maintenance during a project is critical,” said Ms Berejiklian.
The Government’s 10-Point Commitment to the Construction Sector includes:
Procure and manage projects in a more collaborative way, which included an expedited engagement process and inception workshops to establish behavioural alignment and shared objectives between the parties soon after a contract is awarded.
Adopt a partnership-based approach to risk allocation, which included recognising not all risks should be fully assessed, priced, managed or absorbed by the private sector and must be shared ‘collaboratively.’
Standardise contracts and procurement methods such as reviewing NSW’s standard contracts for large projects against international benchmarks, and where relevant, harmonising those to encourage overseas firms to bid.
Develop and promote a transparent pipeline of projects, including publishing a “whole of Government” NSW major project pipeline document at least twice a year, detailing potential future projects.
Reduce the cost of bidding which would mean reducing the shortlists to no more than three parties for major contracts and to reduce the amount of time unsuccessful bidders are required to remain on “hot standby” pending the contractual close with the preferred bidder. It also involves reducing administrative bureaucracy.
Establish a consistent NSW Government Policy on bid cost contributions with an agreement to partially reimburse unsuccessful bidder costs.
Monitor and reward high performance such as giving consistently high-performing contractors the opportunity to win repeat business.
Improve the security and timeliness of contract payments which incorporates amendments to GC21 and other standard contracts so agencies can make contractual payments ahead of project mobilisation to ease upfront cash flow pressures.
Improve skills and training which would mandate minimum levels of training in all major government construction contracts and allow for 20 per cent of the total labour force to be learning workers (apprentices), which will boost construction skills and increase employment for young tradespeople.
Increase industry diversity including doubling the number of women in trade-related work and meeting the requirements for Aboriginal participation NSW Government Contracts.