Critical success factors for capital works projects

Heavy spending in this year’s state budget has put NSW in the middle of one of the biggest infrastructure booms in Australia’s history. Government agencies will be responsible for delivering more than $30 billion of critical infrastructure projects over the next five years, with big ticket investments in health, education, transport and water infrastructure on the agenda.

Queensland has also splashed out through its State Infrastructure Fund, breathing life into signature projects like Cross River Rail and a number of projects in central, north and far north Queensland.

Graham Cox, former owner and Executive Director of international project management firm TBH, recently joined McCullough Robertson to head up its project advisory team. Graham’s deep sector expertise will complement the firm’s legal practice to provide government agencies, financiers, owners and contractors with an end-to-end service to help plan and deliver successful projects.

Having managed more than $3 billion of government capital works and social infrastructure projects, Graham knows what works and what doesn’t. His core message to those responsible for delivering critical government infrastructure projects is that public expectations have changed. “These days government is no longer judged by what it delivers with public funds but increasingly, how it delivers and potential lengthy delays and costly disputes,” he says.

Procurement of advisors, consultants and industry experts should be well planned and delivery authorities should ensure they canvas and engage with more than just the cheapest or most commonly used consultants. Significant time delays on projects can be overcome by engaging with experts to help plan the activities and timeframes required and build a detailed master schedule.

Graham follows this advice with what he believes will be the critical success factors for planning and delivering public sector projects in the coming years.

Build a winning team

In any building and construction boom, capability and capacity are critical. The tendering process sets the scene for the project so make sure you are agile with procurement processes and have the autonomy to reach out to as wider market as possible during EOI and RFT phases. It is crucial that the tender and selection process results in a team which has the financial capacity and technical capability to deliver a value for money and innovative project.

A winning team is also an integrated team. The more effectively a team is integrated, particularly at the front end of a project, the greater the opportunities to gain maximum benefit from project team collaboration and cooperation and the better it can perform.

Get the right advice, early

While Graham is cognisant of government procurement processes and budget pressures, he insists that agencies and project directors engage industry experts as soon as possible. Getting expert advice may seem expensive, but the cost of getting it wrong on a $100 million project, let alone a $500 million project, is what keeps Ministers and DGs awake at night.

“Government agencies go to great lengths to establish expert panels of appropriately skilled advisors and consultants. These panels could be used more frequently and to greater effect to engage with industry experts who can provide rapid and precise expertise where required. This ‘best of breed’ approach will assist in setting the project up to transition into the delivery phase and beyond,” says Graham.

Incentivise and reward performance

As Donald Rumsfeld once said… “Your performance depends on your people. Select the best, train them and back them. If errors occur, give sharper guidance. If errors persist or if the fit feels wrong, help them move on. The country cannot afford amateur hour in the White House”.

The tendering process offers the opportunity to be flexible and create incentives and the opportunity to reward and encourage innovative and fast tracked delivery. It is important that project owners engage consultants, advisors and contractors using a performance management approach.

Delivery authorities should embrace the use of incentivised contracts where appropriate. Advice should be taken from industry experts who can draft suitable KPIs, milestone payments, incentive structuring and equitable risk allocation for each contract, based on experience and past projects. While it may be obvious, it’s important to state that what might work well for one project might not work at all for another project.

Plan beyond the boom

It must be acknowledged that government employees are put under immense pressure to deliver at times of peak demand and heightened political sensitivity. Government agencies and delivery authorities must appreciate that building booms do not last and that detailed resource planning, not just for the project itself but for when projects reach completion and beyond, will ensure agencies are not left with large teams and larger overheads to wind up.

By using the private sector where appropriate, government agencies and delivery authorities can leverage efficient and innovative solutions for projects and avoid the legacy of ongoing overheads.

Delivering urban initiatives for the benefit of the community is complex. With a swag of botched infrastructure projects fresh in the minds of tax payers, community expectations have never been so high. Quality assets and cost efficiency are no longer the sole criteria on which project outcomes are measured. A robust mix of transparency, process thoroughness and accountability are now just as important to the communities we serve.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.