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Australian Constructors Association unpacks NSW progress report

Australian Constructors Association unpacks NSW progress report

The Australian Constructors Association has welcomed the release of the NSW Government’s progress report on agency performance against the 10-point commitment to the construction sector.

Australian Constructors Association CEO Jon Davies said the NSW Government is to be commended for making good progress in a number of areas including developing a transparent project pipeline and improving skills and training – but the pace of reform needs to significantly increase to address issues being faced by industry.

“There is still a long way to go in procuring and managing projects collaboratively, adopting partnership-based approaches to risk allocation, standardising contracts and reducing the cost of bidding,” said Davies.

“Major improvements in these areas are needed to improve productivity and the financial health of the industry.”

One area Davies said needs more improvement is in risk allocation and industry liquidity, with construction still accounting for more insolvencies than any other industry.

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“A true partnership-based approach does not see contractors delivering projects at a price less than what it costs to deliver through no fault of their own,” he added. “Governments need to start compensating contractors for unquantifiable risks like material price escalation if they want to avoid more contractors going to the wall and projects and supply chains put at risk.”

“The often-quoted mantra of “the party best able to manage the risk” is too simple and guidance needs to reflect the ability of contractors to quantify risks and bear the financial consequences if the risk eventuates.

“We would also like to see an increased focus on trials of innovative approaches to risk such as those being trialled on Sydney Metro and where appropriate those approaches being documented and used more extensively.”

The need to reform how projects are procured, delivered and governed has never been greater and the 10 commitments remain as relevant today as when they were first published four years ago. But as highlighted in the Australian Constructors Association’s report Disrupt or Die, incremental change is not enough and arguably there needs to be an additional overarching commitment to drive change.

“We are calling on government to commit to procuring projects based on best overall value to the taxpayer not lowest cost at the tender box – as the two are rarely the same thing,” said Mr Davies.

“The Australian Constructors Association congratulates Infrastructure NSW on providing transparency of industry feedback in the report and commends the body for the leadership they provide delivery agencies across the state.”

Further information

For an inside look at the Australian Constructors Association’s observations of agency performance against each of the 10 commitments, including proposed recommendations, click here.

Download the NSW Government’s 10 Point Commitment Progress Report.

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