New South Wales is the fastest growing state in Australia thanks to an AUD 80bn infrastructure pipeline, but it has become a victim of its own success, the Premier, Gladys Berejiklian, admitted today.
“The sheer scale of the New South Wales pipeline has put pressure on labour, materials and suppliers,” she told the AFR National Infrastructure Summit.
Berejiklian unveiled an overhaul of the bulging NSW project pipeline – a “10 point plan” to increase project transparency, slash bidding costs and streamline the bid process, including shortlisting at most two to three bidders, to make sure all players can join the infrastructure party.
A “whole of government” project pipeline document of NSW infrastructure projects will be released every six months “showing every project planned for the next three to five years,” the NSW Premier revealed.
“The market has changed since 2011, infrastructure hadn’t been built at a proper rate in too long. Contractors say its a completely different market – its important we make sure we’ve an even keel across bidders.
“We will procure and manage projects in a more collaborative way, moving away from reliance on fixed price, lump sum procurement methods,” she confirmed.
The government will also adopt a “partnership approach to risk, which we do already, but we will continue to recognise that not all risks are capable of being fully managed by the private sector”.
Government has to have a stake in those risks, the Premier noted.
The state procurers will also move towards greater standardisation of contract terms across projects, government agencies and reduce red tape – reforms which the industry has long pleaded for.
Australia’s largest state by population will also move to streamline the bidding process – ideally shortlisting at most three and preferably just two. “We want to tell people early on if they’re in with a chance,” she added.
This will slash bidding costs for the private sector and plans are also afoot to minimise project design requirements before preferred bidders are selected, including construct-only projects.
The move will also encourage private sector innovation, she said.
New South Wales will also adopt a “consistent policy on bid cost contributions rather than case by case approach,” Berejiklian confirmed.
Contractors who consistently perform well will also be monitored and rewarded, with the state keeping a record of their track performance.
The move comes as New South Wales is in the middle of its AUD 80bn infrastructure rollout, with a litany of projects currently underway including Sydney Metro, Northconnex and Sydney light rail.
But the NSW government is also currently in the midst of a potentially costly legal dispute with one its PPP partners, Acciona, over Sydney light rail.
“Every major project has its challenges,” Berejiklian responded when questioned about the dispute which is threatening to delay the city’s light rail project further. “The contractors said March 2020 [as a completion date] – we’ve said we want better than that, that’s what we’re having a dispute over.”
The state wants to deliver quality projects “on time and on budget” and to the satisfaction of the taxpayers, the Premier added. “We’ve only been successful due to our partnership with the private sector.”