Accelerated procurement for major projects

We draw on the lessons learnt during Sydney’s NorthConnex toll road project to outline a new way to procure major infrastructure projects.

urban roads

It traditionally takes a long time from government sign-off to start of construction of big infrastructure projects. In recent years, the process has become even longer, more arduous and more expensive for everyone involved. This is due in part to a government’s desire to get community buy-in, but equally because the process governments use to commission big projects is a series of sequential steps with little or no overlap. This ensures that risk transfer is clear, but takes longer to achieve a result.

In addition, governments usually start their tender processes with a reference design, which provides a detailed concept of what is to be built. They then go to tender and request that bidders submit conforming proposals based on this blueprint. This reference design has also been used to prepare the environmental impact statement – an essential step for granting planning approval.

This has meant that tenderers for large projects – and there are often three – have employed design teams of up to 70 people or more that would spend about 80 per cent of the tender period recreating a tender design that conforms with what the government had already produced. This has the effect of stifling innovation from the market.

There is a better, faster way that provides early certainty of affordability, a shorter timeframe and a more innovative finished product. This is accelerated procurement, where parties dispense with the need for a reference design and can get high-quality projects into the field more quickly and cost-effectively.

Proceeding without a reference design

With accelerated procurement, governments decide what they want as an output, or functional requirement, and let industry solve how to meet the functional requirements and how to build it. Tenderers can start with a blank canvas and develop their optimal design solution with an optimal construction method, as long as it meets the functional requirements.

This takes some finesse, because governments must deal with planning at the same time as procurement. Dispensing with a reference design means using the preferred tenderer’s design for environmental approvals.

To ensure tenderers stay on the right track, confidential interactive sessions take place with each tenderer during the tender period. This allows tenderers to get feedback during the process on how they are tracking with their design solutions to meet the client’s functional requirements. These interactive sessions are also used to obtain early information needed for the production of the environmental impact statement.

Everything happens faster because the major tasks of procurement and planning approval run in parallel and deliver benefits in terms of:

  • Innovation – by mobilising the industry rather than just telling it what to do

  • Time savings – by reducing the time it takes to start construction

  • Money savings – by cutting the cost of the process for all parties

Also attractive for governments is that the accelerated timeframe makes it easier to commence projects within single electoral cycles. Freeing tenderers from the constraints of a reference design can mean an automatic time saving of 6–9 months on a program. Governments decide what they want as an outcome and start straight into their procurement.

Perhaps the biggest benefits come in the social savings because governments can make infrastructure available sooner. In the case of transport infrastructure, people get a better route to work and save on travel time.

NorthConnex shows the way

Advisian has been involved in developing innovative procurement processes for some time. The accelerated procurement process was conceived and used for NorthConnex, the proposed tunnel between the M1 and M2 motorways in Sydney being developed by the private sector. The result was a tender offer that had a design and construct cost of less than $2.65 billion; captured all operational and maintenance requirements; produced an elegant design; generated minimal impacts on the community and environment; and saved 12 months in getting to construction.

This approach was slightly daunting for the construction industry at first because without the reference design there was no clear direction to follow. However, construction companies soon found it liberating to be able to put forward their optimal solution rather than simply a conforming bid.

The NorthConnex tender process produced three different solutions from three tenderers given the same brief. The project sponsors could have built any one of the designs. Advisian believes that for certain projects, accelerated procurement has a position in the way clients procure major projects in the future.

For further information, please contact Patrick Doyle at patrick.doyle@advisian.com

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