This article was written by Chris Mitchell, Larissa Buriak and Arvin Nitchingham
Major infrastructure projects procured by Federal and State governments are fuelling continued Australian growth and the pipeline of future projects continues to be strong.
On 24 June 2021, the Department of Premier and Cabinet issued Premier’s Memorandum M2021-10 (Memorandum) as a follow up to the NSW Government’s ten point commitment to the construction sector that was made in 2018.
The Memorandum responds to the increasing demand for infrastructure in NSW, by introducing “default procurement practices” which standardise the approach to the procurement of large, complex infrastructure projects. The Memorandum demands co-operation between Government and industry participants to increase participation, competition and efficiency and to improve public confidence in infrastructure investment. The Memorandum recognises that not all projects are the same and prescribes an ‘if not, why not’ approach to the disapplication of practices not suited to the circumstances of a project.
Default procurement practices
The default procurement practices address:
- de-risking pre-construction (e.g. early contractor engagement, early works and early works procurement);
- procurement approach (e.g. project packaging to enable wide industry participation, contracting for high risk project elements by utilising open book or target cost mechanisms for project elements that cannot realistically be determined or priced, and early engagement on proposed contract terms); and
- reducing costs and improving timeframes (e.g. use of realistic tender timetables, efficient and timely completion of tender and contract award).
The Memorandum applies to all NSW government agencies and State-Owned Corporations delivering large, complex infrastructure projects. That includes projects in the following categories:
- Roads and motorways;
- Rail and metro projects;
- Light rail projects;
- Dams, pipelines (new or major augmentations); and
- Buildings or precincts with highly complex elements (complex design, technical specifications or uses, sensitive sites).
and projects listed as “High Profile High Risk” (HPHR) under the Infrastructure Investor Assurance Framework.
The Memorandum came into effect from 1 July 2021 and applies, as far as practicable, to all projects in development or procurement (elements of the Memorandum may also apply to HPHR projects in delivery).
KWM’s infrastructure specialists are able to assist with the development or amendment of your procurement procedures in accordance with the Memorandum and additional innovative solutions for successful project delivery. Please don't hesitate to reach out to any of the contacts on this article.