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FEATURE
PRODUCTIVITY COMMISSION AND ACCC ADVANCE ROAD FUNDING DEBATE
A
report by the Productivity Commission on public infrastructure and a submission by the ACCC to the Harper Review into Competition Policy have refocused attention on institutional reform and funding mechanisms in the road construction industry. The Productivity Commission Inquiry Report into Public Infrastructure released on 14 June concluded the road reform process was likely to be protracted. It said the process would require “significant commitment and effort� from 2
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all levels of government to build public support. In its submission to the Harper Review, the Australian Competition and Consumer Commission emphasised that the road reform agenda which started during the 1990s was far from fully implemented. The ACCC said current road charging mechanisms and structural arrangements were failing to promote efficient decision by road users and funding bodies in the roads sector.
The PC Report The Productivity Commission said in its report there was no direct link from road-related revenue to road related expenditure and investment in roads was subject to annual budget processes and political cycles. It said in an environment where a high level of future urban development was expected in Australia there was a critical need to move towards alternative institutional models in the roads sector.
FEATURE
The Commission called for the establishment of Road Funds by State and Territory Governments to be the first step in a long-term transition to a more efficient and effective approach to providing and funding of roads. “State Governments, and local government associations, should actively encourage and support local governments to form regional Road Funds for networks of local roads,” the report said. It argued that to be effective, Road Funds should: • have the objective of clearly linking roaduser preferences with investment and maintenance decisions; • integrate the tasks of road funding and provision; • have a significant degree of autonomy; • have access to adequate revenue to meet the costs of the road network they administered, as required by the relevant road users; • entail transparent processes for determining the level and allocation of funds; • include an open and transparent procedure for direct involvement of road users and consultation with the broader community on project selection, funding, and road charging decisions; and • involve systematic post-project evaluation and periodic review of the arrangements. The Commission said there were complex issues associated with establishing Road Funds, such as determining what sources of road revenues should be directed to them and the method of allocation. It said the Federal Government should direct the Productivity Commission to undertake a public inquiry on the design and implementation of Road Funds. Canberra should also encourage State and Territory Governments to undertake pilot studies on how vehicle telematics could be used for distance and location charging of cars and other light vehicles. The government should offer to partly fund the pilot studies and work with the States and Territories to address privacy concerns and share lessons from the trials and overseas experience. The pilot studies should – the Commission argued – be designed to inform future consideration of a shift to direct road user charging for cars and other light vehicles, with revenue designated for roads. Heavy vehicle trials could also be developed on a similar basis. 4
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ACCC Submission The ACCC’s submission to the Harper Review focused on a number of priority areas for potential reform, including roads, congestion pricing, privatisation, shipping, energy and water. In relation to roads, it said: “The ACCC considers the structures underpinning Australia’s current road transport services, including the charging mechanisms, are inefficient.” It said there were three main disconnects that could be identified in the current system: • Prices faced by road users did not reflect the economic costs of using roads; • There was no direct link between the prices charged to road users and the revenues received by road providers; and • Decisions about funding for investment in roads were often made via political processes rather than by an independent assessment of the relative costs and benefits of a proposed investment. “Decisions about road funding made by political processes can lack accountability and transparency,” the ACCC said. The submission said reforms, to date, in the road sector had focused on the demand side, or pricing, with limited change to the supply side, or how the roads were provided. It said that until recently there had not been obvious mechanisms to measure and charge for an individual vehicle’s use of the road network. “However, technological advances are making such options increasingly feasible and they will likely become more so in future. The scope for more substantive reform in the provision of roads is greater now than ever before.”
In regard to supply side reforms, the ACCC said institutional and governance arrangements needed to be altered to change the incentives of road providers to ensure roads were delivered in an economically efficient way. It said this would involve some level of independence from government of investment decisions – possibly the corporatisation or competitive tendering of aspects of road provision and charging. “Promoting greater commercialisation into the sector is also likely to facilitate rational pricing decisions to maximise efficiency of the road system,” the submission contended. In looking at the demand side, the ACCC said reform of user pricing was a key element of any market structure. It said road user prices did not reflect the cost or demand for using the road – a situation that would lead to inefficient decisions by road users and providers and would also be likely to distort competition between road and rail users. The Productivity Commission and ACCC documents can be found at their respective websites.
“Promoting greater commercialisation into the sector is also likely to facilitate rational pricing decisions to maximise efficiency of the road system,”
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FEATURE
FOCUS ON TRANSPORT SECTOR TO COUNTER INFRASTRUCTURE ‘HOLDING PATTERN’
P
ublic sector transport projects are shaping as a key driver of future investment in infrastructure in Australia, according to leading analyst, Deloitte Access Economics Partner, Stephen Smith. Commenting on data contained in the latest Deloitte Access Economics’ Investment Monitor, Mr Smith said non-resources projects would carry a larger burden of the investment agenda going forward, including work funded by the public sector. “Indeed, public sector transport projects are shaping as a key driver of future investment activity. The value of transport projects under consideration increased by more than $16 billion in the June quarter, mainly due to State government investment plans.” Mr Smith told Roads and Civil Works Magazine that as the economy continued its transition from growth led by investment in the resources sector, there were signs that investment in other sectors might lift over the coming years. “To the extent that infrastructure spending across other sectors can pick-up, that will help to fill the gap, and certainly the transport sector is one where it looks as though there are some good signs. Construction will be healthy over the next few years.
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“The data we have shows that at the moment $120 billion worth of road and rail projects are currently in planning, and that includes some very significant projects. “That’s about 40 per cent of all planned investment, so the transport sector can provide us with some important spending,” Mr Smith said. “These are multi-billion projects; WestConnex, for example, has a price tag of $11.5 billion. “The nature of these sorts of projects means their construction time is quite lengthy. There are three-to-four-year construction periods from the start to the finish of these projects.
“What works well in a city is a wide availability of transport choice. That’s really the key to ensuring there is an efficiently working transport system.”
“To the extent they can be staggered to any degree, I think it’s possible to see investments in the transport sector supporting broader construction for a good five, six or seven years. “After that” Mr Smith said “there are some longer-term projects in the pipeline, but obviously they are a bit more prospective. As time goes on, it will become clearer just how certain those projects are and whether they can contribute to spending.” Mr Smith said in an environment where there were constraints on public spending, and where finance was available to the private sector, the private sector would play a more significant role in providing transport infrastructure. “We’ve seen already some really interesting and innovative ways in which the public and private sectors are starting to work together. “An example of that is the North Connex project in New South Wales where Transurban approached the NSW Government with an unsolicited proposal. Subsequently negotiations were finalised on that project and it’s going ahead. “That differs a lot from the traditional project model when governments decide when and where roads and rail should be built and then ask the private sector to submit its best price. “We’re seeing now in Sydney increasingly this unsolicited proposal model and other urban models where the private sector with its knowledge of the transport space can really see opportunities. “It can approach government and say ‘we’d like to finance this project – we think it would benefit the economy and the population more generally’. “Obviously, there’s a return that’s required by the private sector, but I think that sort of model will become increasingly common going forward. That’s not to say it would fund the majority of projects, but certainly some larger developments might increasingly fall under that model.”
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FEATURE
Mr Smith said there was an increasing appetite in the private sector for identifying transport sector projects and also taking ownership of those projects. “The availability of capital is a key factor. It’s relatively cheap at the moment, but it won’t last forever. So potentially, for the near-term at least, there is increased incentive.” Mr Smith said it was important there was a continuing healthy balance between road and rail. “Urban infrastructure really only works when there’s choice available to the population. Toll roads; for example, aren’t particularly successful if they are one of a few options and people feel they are forced to use toll roads. “What works well in a city is a wide availability of transport choice. That’s really the key to ensuring there is an efficiently working transport system.” Looking at infrastructure development overall, Mr Smith said major projects were in a holding pattern. He said the total value of all projects had barely budged since June 2013, predominately
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due to the relatively static value of resources projects under construction. The resources sector share of the value of projects under construction slipped to above 50% at the end of 2011 and, on current trends, Mr Smith forecast that share could be back below 50% within the next year. Non-resources projects would carry a larger burden of the investment agenda going forward, including work funded by the public sector. “The biggest driver of the holding pattern at the moment is the mining sector where projects have now peaked. We’re expecting the sector to decline reasonably steadily over the next few years – in fact, it’s surprising on our data that it hasn’t fallen away more quickly. “It’s difficult to see in the short-term any strong lift in investment spending overall, because the decline in the resources sector will weigh on the broader outlook. “But to the extent that transport and other sectors can pick up, that should help offset some of the fall.”
Key points include: • As the Australian economy continues its transition away from growth led by investment in the resources sector, there are signs that investment in other sectors may lift over the coming year. • Value of major projects is currently in a holding pattern – total value of all projects has barely budged since June 2013. • Non-resources projects will carry a larger burden of the investment agenda going forward. • Public sector transport projects are shaping as a key driver of future investment activity - value increased by more than $16 billion in the June quarter.
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FEATURE
BIM TECHNOLOGY: A CATALYST FOR BUSINESS CHANGE BY ROB STUMMER, MANAGING DIRECTOR, IFS AUSTRALIA & NEW ZEALAND
A
s Australia nears the end of a huge construction boom driven by the mining and resources sectors, the time has come to take steps to ensure our continued competitiveness. The best way to do this is for governments and industry to encourage innovation. That is why we should pay close attention to what is happening in the United Kingdom right now with Building Information Modelling (BIM) and seriously consider adopting it here as well. In the UK the government will require all project and asset information, documentation and data on its projects to be BIM-compliant by 2016. Despite much debate about what BIM is, the UK government has clearly taken a data-driven approach to changing how the construction industry works. The goal is to make both construction and assets – whether roads, buildings or plant – more efficient to reduce upfront and operational through life costs.
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IFS sees great potential for efficiency improvements in the construction of these assets from the data-driven approach to process efficiencies that BIM encourages. These efficiencies are at three levels: within construction companies themselves, throughout the supply chain more generally, and in the ongoing management of the assets that are constructed. It’s not that the industry is not already using technology. Everyone now has access to computing devices of one sort or another to enhance their individual productivity. But due to underinvestment and a lack of innovation the systems most people use do not talk to each other and many opportunities for enterprise or supply chain efficiencies are lost. While technology is only part of the solution – people and processes are equally if not more important – technology can act as a catalyst for change and innovation. This is certainly how things are playing out right now in the UK with BIM. Instead of thinking
about it as a 3D design model – probably a fair assessment of how it is mostly viewed in Australia – the UK government and industry are now talking about how to capture and share data throughout the construction and asset management supply chain to encourage new, more collaborative and more efficient ways of working. What has become clear to industry is that BIM is not about buying a 3D modelling product. What BIM is really about is better management and use of information across all stages of an asset’s life. It involves the integration of processes, information and technologies. It is more about changing the way we do business and embracing continuous improvement based on a more integrated systems approach. In particular, BIM is driving a move away from primarily document-driven processes to an integrated data-driven approach. The adoption of more sophisticated information inputs enables organisations – and potentially entire supply chains – to move away from isolated business processes, with their corresponding information silos, to processes that are integrated throughout the whole design, construction and asset management lifecycle. Ultimately this requires an integrated systems approach that supports accurate and timely information management across business processes including Tendering, Estimating, Design, Program Management, Procurement, Construction, Sub Contract, Plant and Equipment, Materials Management, Risk, Progress, Cost Control, Quality, Health and Safety, Asset & Facilities Management, Document Management, Human Resources and Finance. Of course, there is a cost to something like BIM. The initial investment is not huge in terms of dollars but it is larger in terms of people and processes and the integrated information systems to support them. We can see from the UK that there is some pain involved with predictions that some construction companies may fail to make the transition in time and be locked out of government business until they do. Even if we don’t see BIM mandated by Australian federal, state or local governments in the short term, the industry can still learn from the UK experience about the changes that more pervasive use of technology will bring. As the industry in that country is discovering, many of the changes that need to take place are cultural, including:
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FEATURE
• A need to invest in innovation and education; • Embracing new ideas from the younger generation; • Learning from other industries (e.g. Lean Construction, Workface Planning); • Encouraging a collaborative and open culture and eliminating the fear of sharing data; and • Challenging traditional ways of working (e.g. Bill of Quantities based contracts) While there is nothing to stop Australian companies adopting BIM right now, the lack of skills and expertise mean the benefits to a single early adopter will not be as great as those that would flow from the UK scenario where the government kick-starts innovation. It is a classic case for government action, where the benefits of the initial investment flow to the entire economy. As a single large
“While there is nothing to stop Australian companies adopting BIM right now, the lack of skills and expertise mean the benefits to a single early adopter will not be as great as those that would flow from the UK scenario where the government kickstarts innovation.”
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actor, a government can quickly create critical mass where individual companies cannot. Given traditional cultural and business ties, Australia is also well placed to benefit from what is happening in the UK. Similar initiatives here would undoubtedly see significant skills transfer between the two countries that would accelerate BIM adoption. This process has already started in a small way. IFS has already been asked by local construction companies about what BIM support we can offer, due to the fact that they have operations in the UK. We have also seen an uptick in technology investment generally by firms that have benefitted from the resources investment boom. Many of them understand the need to improve their enterprise information systems in order to compete and survive in the times ahead. Mandating BIM would give
these firms an extra incentive and a focus to their investments. It would also ensure better quality and more complete information for sharing along the supply chain and with the eventual asset owner. Action on BIM on the part of the Australian government – perhaps not as an absolute trailblazer like the UK but as a fast follower looking to capitalise on what has been learnt there – would spark much needed innovation and change in our own industry with benefits to the economy as a whole. About the Author Rob Stummer is Managing Director, Australia and New Zealand for global enterprise applications company IFS. He holds a Masters in Information Technology from Melbourne University and has consulted to many of Australia’s Top 500 companies.
4th
11-12 November 2014 Rydges World Square Sydney
Local Government & Public Sector
Building Maintenance & Management Conference www.buildingmaintenanceconference.com.au
ABOUT THE CONFERENCE · Make your buildings and facilities more sustainable - save energy and water · Improve occupant comfort, productivity and safety · Improve building systems and services
OUR SPEAKERS ALREADY INCLUDE: ASSET MANAGEMENT OF BUILDINGS – THE HOLISTIC PLANNING OF COMMUNITY FACILITIES Jonathon Merrett, Facilities & Buildings Asset Planner, City of Greater Dandenong
· Improve maintenance practices · Improve operational efficiency · Lower costs This practical conference will cover all the key issues relating to the maintenance and management of Local Government, Government and Public Sector buildings, including the implementation of technology solutions. This year’s conference expects to attract 200+ building maintenance managers/ officers, leisure centre managers/officers, facility managers, engineers, surveyors, consultants and building asset managers over two days. A comprehensive conference program will include two speaking streams to allow for a wide coverage of different building types and uses, rural and urban locations as well as issues that will be addressed.
SPONSORSHIP, EXHIBITION & ADVERTISING OPPORTUNITIES To obtain a prospectus, or for further enquires, please contact Scott Matthews.
VOLTAGE OPTIMISATION Adrian Evans, Associate Director, Operations and Services, Swinburne University CASE STUDY: RAILCORP - SECURITY MONITORING FACILITY Mark Edmonds, Sydney Trains, Rail Corp, NSW ENERGY EFFICIENT LIGHT REPLACEMENT PROJECT Dean Farnsworth, Group Environmental Engineer, St John of God Health Care
CALL FOR SPEAKERS Please submit an abstract of 100-300 words to Scott Matthews via scott.matthews@commstrat.com.au or + 61 3 8534 5004
e: scott.matthews@commstrat.com.au t: +61 3 8534 5004
WHO SHOULD ATTEND • Building Maintenance Managers/Officers
CONFERENCE TOPICS As a guide, topics and papers may be in the following areas:
• Facility Managers/Officers • Leisure Centre Managers/Officers
• Building Systems
• Asset Management
• Building Asset Managers and Owners
• Smart Building Technologies
• Green Power
• Engineers, Building Surveyors and Consultants
• Buildings Management
• Air conditioning
• Building Information Modelling
• Security & CCTV
• Project Delivery and Financing
• Contracts and Models
• Maintenance Delivery & Management
• Building Condition
• Design, Management & Operation of Specific Building Types
• Cleaning
FROM • Local, State and Federal Government • TAFE, Universities and Schools • Not-For-Profit Organisations • Art Galleries, Museums, Libraries • Sporting Facilities, Leisure Centres, Swimming Pools • Any organisations that are within the broad Public Sector
• Energy Efficiency, including Retrofitting
• Building Audits • Toilets • Ground Maintenance • Building Repairs
• Power for Buildings + Facilities
Early Bird Registration Closes July 4 | Book now for only $800+gst Register at www.buildingmaintenanceconference.com.au p +61 3 8534 5050 e registration@commstrat.com.au
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FEATURE
INVESTING IN THE FUTURE OF ENGINEERING BY MIKE SHACKLETON, EXECUTIVE MANAGER, ARRB ACADEMY, WHO LOOKS AT PROVIDING THE BEST ENVIRONMENT FOR YOUNG INNOVATIVE ENGINEERS IN THE TRANSPORT SECTOR. At the recent B20 Summit held in Brisbane, infrastructure was slated as a critical area for investment, having huge potential to be a driver of economic growth in the near future. However, the B20 also flagged that there is a global $57 trillion shortfall in funding for such projects. In Australia, there too is ongoing tension between the demand for innovative and cost-effective roads, and the finite pool of funding to conduct these projects. But funding isn’t the only issue. The key to achieve more on our road networks in the most cost-effective way is to invest in innovation through a process of research and development. Roads present a complex series of questions which require the brightest minds to solve them. But while there may be a steady demand for new infrastructure projects and regular upgrades to existing infrastructure, there is a shortage in the supply of skilled up and coming engineers and scientists pursuing a career in transport engineering. An ongoing challenge for ARRB Group, engineering consultancies and road agencies in Australia, is to make road and infrastructure engineering a desirable career option for young engineers. So who is going to solve our infrastructure challenges?
The solution – investing in young engineers We identified that there is a pool of talented young engineers and scientists researching a broad range of issues at university who weren’t being encouraged to move into the field of transport engineering. It is these bright minds we want to cultivate through ARRB Academy programs designed to encourage more young engineers and scientists to consider road engineering as a viable and rewarding career option. The program comprises of a Research Grant Scheme and a Student Transport Research Prize Scheme, along with a successful intern program.
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The ARRB University Research Grant Scheme The grant scheme has been created to support and encourage research into road infrastructure and operations at universities around Australia and New Zealand. The scheme offers grants of up to $50,000 over three years to fund new research projects that presented new ideas and technologies for the benefit of road agencies and road users, aiming to improve and better road networks. The research grants were available to university research projects and are intended to fund the training for future researchers.
The ARRB Student Transport Research Prize Scheme A $2,500 prize (part of a larger $15,000 prize pool) is awarded to individual students who devised an elevator pitch to a road agency executive, aimed at attracting their interest in their research findings and demonstrating how they could help the agency achieve their goals
for the road network. The winners are eligible for the peak Australasian Prize, comprising a further $2,500 for the winner, based on an article exploring their research idea.
Case study Dr Jennifer Bonham, Adelaide University Senior lecturer and her research team has been awarded the ARRB University Research Grant Scheme for their cycling safety study, On-road infrastructure treatments for safe cycling. The project reviews what is currently being done to accommodate cyclists on Australian roads and will assist road agencies in providing best-practice infrastructure to improve cyclist safety. Little research has been conducted on the performance of cycling infrastructure in Australia, despite cyclist safety being a topical and important issue for some time. The research grant awarded to Dr Bonham and her team will not only aid their research to inform road agencies, but also build academic capability in the field of cycle engineering, and set a precedent for other academic interest in this area to gain momentum. As a female working in engineering research, Dr Bonham hopes that programs such as ARRB’s grant scheme will encourage more women to pursue a career in the field. While often seen as highly technical, road design also comprises a social element, in ensuring roads are designed with user safety as the prime consideration. Dr Bonham also believes engineering can enable better outcomes for road users; for example, improving bike lanes will enable more people to cycle and enjoy greater health benefits. Dr Bonham hopes that her work will highlight these possibilities to female engineers. By investing in talented young engineers and researchers such as Dr Bonham, ARRB hopes to inspire our future engineers to take on the challenge of solving the complex challenges associated with our country’s largest public-owned asset.
10th Australian
Road Engineering & Maintenance Conference 2015
24-25 March, 2015 Australian Technology Park, Sydney
About The Conference The 10th Australian Road Engineering & Maintenance Conference will once again alert state and local government road engineers, councillors, managers, as well as consultants, contractors and suppliers about the most important new developments and issues in roads and their environs. This includes other pavements including carparks, hardstands, bicycle-paths and foot-paths. This long running annual roads conference attracts over two hundred participants each year and provides an opportunity for you to interact with hundreds of your peers from around Australia and New Zealand. What sets this conference apart is its practical presentations and workshops. The Conference has two streams at all times with a mixture of speaking sessions and practical workshops. Delegates may freely swap between both streams at no additional charge.
Sponsorship & Exhibition We offer a variety of sponsorship, exhibition and advertising opportunities that can be tailor made to your requirements. To obtain a prospectus or for further enquires please contact Scott Matthews. e scott.matthews@commstrat.com.au t +61 3 8534 5004
First Speakers Include SEARCHING FOR FINANCIAL SUSTAINABILITY IN ROAD BUILDING Mick Raby, Group Manager Infrastructure Operations, Fairfield City Council EAST WEST LINK PROJECT Ken Mathers, CEO, Linking Melbourne Authority NORTHLINK WA – KEY DECISIONS FOR PROJECT DEVELOPMENT Anthony Wood, Associate Director, BG&E and Doug Stewart, Principal, Golder Associates SURFERS POINT - REDEVELOPING A SURFING ICON AND TOURIST DRAWCARD Wayne Prangnell, Project Manager, Shire of Augusta Margaret River, Coastal Infrastructure, Department of Transport FIBRE REINFORCED SPRAY SEALS – A COST EFFECTIVE MAINTENANCE OPTION FOR LOCAL & STATE GOVERNMENT ROADS John Lysenko, Technical Development Manager, Binders, Fulton Hogan Industries NSW
Who Should Attend • • • •
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Road & Pavement Engineers Road Maintenance Staff Road Designers and Consultants Local, State and Federal Road Authorities
Contractors Consultants Landscape Architects Road Planners
Call For Speakers Individuals interested in speaking at the conference are invited to submit a synopsis of approximately 100-150 words to Scott Matthews via scott.matthews@commstrat.com.au
Key Conference Topics May Include Super Earlybird Registration closes October 15 To register, or to view the full speaking program when available, please visit www.roadconference.com.au Phone: +613 8534 5050 Fax: +613 9530 8911 Email: registration@commstrat.com.au
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Roads Safer by Design - Road Safety Traffic Engineering Design Construction ITS for Roads – New Technologies Local and Rural Roads Road & Pavement Maintenance Practices • Roadmarking & Signage • Asset Management • Good Paving and Sealing Practices
CASE STUDIES Organised by:
Practical case studies are a featurae of this conference
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Cracks: Treatment and Prevention Service and Utility Reinstatement Pavements, Hardstands, Car-parks Bicycle-paths, Pedestrian Precincts & Foot-paths Achieving Sustainability on Projects Delivery Models and Contracts Culverts, Services and Drainage Road Planning Landscape & Urban Design of Roads & Pedestrian Precincts
WORKSHOPS
EXHIBITION
A series of Workshops will be conducted parallel to the speaking stream
Update your knowledge at the Conference Road Exhibition