More for Less

11 March 2015

A new report from Consult Australia argues that there are many opportunities for better and more efficient procurement of prfessional services on government projects. 

Consult Australia has released a report titled More for Less: The Economic Benefits of Better Procurement Practices. This follows a comprehensive study of the construction industry commissioned by Consult Australia and undertaken by Deloitte Access Economics on the procurement practices regularly encountered and covers the impact these practices have on the overall Australian economy. It argues that

There are big opportunities for more efficient procurement of professional services for public sector built environment projects. With improvements in briefs, delivery models and contracts, firms can:

– Reduce the costs of projects by 5.4% (comprised direct price increases of 3.6%; indirect price increases of 1.5% from reduced competition; and inefficient costs of bidding worth 0.3% of project prices).

– Reduce delays to projects by 7%

– Improve the quality of projects by 7%

The report provides a number of recommendations for government to achieve these cost savings in the public sector. These include:

  1. Set up procurement teams with a mix of practical, legal and procurement experience.
  2. Reallocate procurement resources towards better specification of project objectives, including early engagement with industry, identifying end user needs, and re-testing business case objectives.
  3. Remove contract clauses that don’t stack up, whether from a cost-benefit perspective, or through the behaviour shaped by the inclusion of those terms.
  4. Develop and apply limited liability guidelines to assist agencies with ensuring that liability requirements do not add unnecessarily to project costs.
  5. Verification of brief information by government to avoid costly duplication by tenderers.
  6. Streamline compliance processes to reduce bid costs.
  7. Evaluate and adapt procurement frameworks to encourage innovation, including being open to new delivery models, early market sounding options and continuing to provide opportunities for unsolicited proposals.

The procurement reform described presents an opportunity to make this happen, and are of particular benefit and interest to procurement specialists in both the private and public sectors.

The summary is available here and the full report is available here.

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