Further procurement reform needed to lift industry productivity and resilience

Roads Australia (RA) is calling for a range of further reforms to procurement processes that will help the transport infrastructure sector navigate challenging market conditions and strengthen the sector’s productivity.

The call comes as RA releases its Procurement Reform Report Update: Momentum for a sustainable transport sector, which contains 28 recommendations for reform across core areas of procurement designed to foster collaboration, promote innovation, manage risks more effectively and help build a stronger, more diverse workforce for the sector.

“This report builds on the reform ideas first put forward in RA’s Procurement Reform Report: Recommendations and Strategies in September 2020 and adapts them to reflect prevailing market conditions, as industry grapples with challenges that include supply chain disruptions, high inflation and a tightening labour market,” said RA CEO Michael Kilgariff.

“RA conducted a survey several months ago in which two thirds of respondents indicated procurement reform is now even more urgent than it was 12 months ago. This sense of urgency was further amplified during industry workshops RA hosted to support the development of this report.”

“Post-COVID economic factors such as rapidly rising prices, skills shortages and supply chain uncertainty are now clearly exacerbating what was already a complex and challenging operating environment for industry participants.”

“There have been some encouraging developments on procurement reform since RA’s first report in 2020, and this update highlights many of these examples of good practice, to promote knowledge sharing and encourage other parts of the industry to adapt and build on these reform ideas to suit their own circumstances.”

“However, challenges in the market have brought greater urgency to the need for reform. Without further progress in the near term, we are likely to see government clients unable to deliver planned transport projects, industry exposed to increased risk of business failure, and the community not receiving the full benefits of projects, harming our industry’s social licence.”

“This report provides a comprehensive pathway for obtaining better outcomes for all these parties by incentivising collaboration, reducing adversarial approaches and allowing the community to get the best value for money and the best project outcomes for the investments being made.”

“Given the challenging conditions that the market now faces, this is the right time to make further progress on procurement reform. A sustainable, productive and successful transport infrastructure sector where the whole industry works together for better outcomes is an imperative. The recommendations in this report will help bring this objective to fruition.”

RA’s report makes recommendations designed to reverse stagnation in productivity growth in the sector by:

  • encouraging more collaborative approaches to contracting;
  • reducing regulatory barriers to innovation;
  • embracing circular economy opportunities to improve sustainability;
  • facilitating approaches to risk management that result in fewer disputes;
  • ensuring that industry training programs are equipping our workforce with the right skills; and
  • improving the wellbeing of our workforce by sharing knowledge and successes in initiatives that improve industry culture.
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