AUTUMN 2015
Industry
convergence
Socially network or die To Converge or not to Converge
More for Less: The Economic Benefits of Better Procurement
Addressing pay equity
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Consulting Matters
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CONTENTS
Industry
convergence
Industry updates Industry updates
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2015 Financial Review Client Choice Awards
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What’s happening in Consult Australia From the President
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From the CEO
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Launching: More for Less: The Economic Benefits of Better Procurement State Division updates
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Features A year in review
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Controlling space in the frame – rethinking subcontractor boundaries
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Socially network or die - The future for consulting firms?
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Global engineering convergence on the rise: Reflections from WSP | Parsons Brinckerhoff
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To Converge or not to Converge: it’s a key strategic issue
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Protecting your business Industry Convergence – what it means for your business and how to manage the risk it creates
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Business essentials
Corporate social responsibility Building communities
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Realising a new vision of Indigenous education
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Project case studies Brisbane West Wellcamp Airport and Wellcamp Business Park
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Visitor centre a respectful tribute to its neolithic neighbour
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Industry comment
Addressing pay equity is highly rewarding
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Who should bear the risk?
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Economic Forecast
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Diversity and inclusion
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Consulting Matters
Industry updates
Industry updates MERGER AND ACQUISITION SNAPSHOT Prometheus Group and SMEC Partnership Prometheus Group and SMEC are excited to announce their global partnership which combines Prometheus Group’s leading edge enterprise asset management software with SMEC’s best-in-class asset management consulting group. The partnership will focus on a number of asset intensive industries, including Oil and Gas, Mining, Food and Beverage, Manufacturing, Pulp and Paper, and Power and Utilities. SLR Consulting acquires E.Vironment SLR has acquired E.Vironment LLC., (EV) a Houston-based environmental management, health and safety, process safety, and transaction advisory firm. EV provides strategic consulting expertise to financial, legal, industrial, and energy clients throughout North America and the rest of the world. Locally, SLR’s Asia Pacific Managing Director Peter Georgiou cited that he was excited by the acquisition announcement and looked forward to the EV staff integrating with our global team. This news follows the recent local acquisition announcement in Asia Pacific in 2014 with Environmental Offshore Solutions in Nelson, New Zealand.
NEW APPOINTMENTS New Global CEO commences at Aurecon Giam Swiegers has joined Aurecon as Global Chief Executive Officer, based in the company's Sydney office. Mr Swiegers was previously Chief Executive Officer of Deloitte Australia for 12 years, having previously worked in senior roles for Deloitte in both the USA and South Africa. Aurecon appoints four new Managing Directors James Bennett - Managing Director, Built Environment which includes Buildings and Land Infrastructure. Previously Aurecon’s Buildings Service Group Leader. James has 29 years of experience leading major projects in Australia, New Zealand, Asia, the United Kingdom and Middle East. Geoff Linke - Managing Director, Infrastructure Market, which includes Transport and
Water. With over 20 years of experience as a practising engineer, Geoff joined Aurecon in 2013, managing the Adelaide / Melbourne Delivery Centre. He was previously General Manager, Strategy at SKM, leading the firm’s strategic planning programme. Clive Ross - Managing Director, Advisory & Asset Management which includes Aurecon’s Environment, Advisory, Asset Management, Government and Data & Telecommunications offerings. Based in the company’s Brisbane office, Clive was previously Aurecon's Head of Asset Management. Clive will support Aurecon’s clients in extracting maximum value from their asset portfolios across all phases of the lifecycle. Glenn Hooper - Managing Director, Energy & Resources, which includes Resources, Oil & Gas, Energy and Manufacturing. Glenn has held senior business management positions in Aurecon at a local, regional, and global level. Most recently, he was Service Group Leader, Resources & Manufacturing, responsible for the delivery of services to clients in the resources, oil and gas and manufacturing sectors. Glenn has over 30 years of experience in the planning, design and delivery of consulting services and projects for clients in heavy industry. New NSW Managing Director for Rider Levett Bucknall Rider Levett Bucknall (RLB) has appointed director (and Consult Australia President) Matthew Harris as Managing Director, New South Wales with effect from 1 April 2015, This appointment follows long-standing Managing Director, Bob Richardson’s retirement after 29 years of service with the Group. With over 20 years’ experience providing professional consultancy services to the construction industry, Matthew Harris became the youngest appointed Director at Rider Levett Bucknall in 2002 at age 30. His contribution to the company was further recognised in 2004 when he became a National Director and Shareholder of the RLB Global Group. NDY appoints Stuart Fowler as new CEO After 40 years at Norman Disney & Young (NDY), including 19 of these as CEO, Ian Hopkins has now stepped down from the top role with
former NDY Chief Operating Officer, Stuart Fowler, taking over as CEO from March. Fowler's progression through the NDY ranks has seen him manage Australian and NZ offices, including a stint as Australian Regional Director and his latest global role as Chief Operating Officer and member of the NDY Board. With this appointment Fowler becomes only the third CEO in NDY’s 55-year history, following on from David Norman and Ian Hopkins. Hyder Consulting appoints new Sector Managing Directors Hyder has recently appointed new Sector Managing Directors to lead two sectors of the Australasian business with Malcolm McDowall (top left) appointed to lead Environment and Project Services, a new sector within the Australasian business; and Anthony Venturini (bottom left) appointed to lead Hyder’s Buildings and Urban Development sector in Australasia. Hyder’s Managing Director Australasia Greg Steele believes the appointments highlight the increased opportunity within the market and the expanded offering that Hyder’s parent company Arcadis offers. GHD appoints new Market Leaders Sheldon Krahe has joined GHD as Australian Market Leader – Property and Buildings to lead business development and grow integrated design service offerings for clients. GHD will benefit from Sheldon’s 30 years of professional experience. Most recently, Sheldon held senior regional and global consulting roles, where he has significantly grown revenue while strengthening relationships with key clients. GHD has appointed Ken Snell as Market Leader – Defence to enhance long-standing relationships with defence clients. Ken was previously Engagement Manager at RPDE, a defence think tank bringing together government, industry and academia to accelerate capability development. His skills include strategic planning, operations management, project management, scope definition, contract management and human resources management.
Industry updates
Infrastructure Australia appoints inaugural CEO Phillip Davies The Infrastructure Australia Board announced Mr Philip Davies as its inaugural Chief Executive Officer. Chairman Mark Birrell said the board was pleased to welcome Mr Davies and looked forward to working with him on the key reports that Infrastructure Australia will deliver in 2015 and beyond. Mr Davies currently leads AECOM's Infrastructure Advisory practice for Asia Pacific and was an executive at Transport for London earlier in his career. He has previously advised the Commonwealth Government on High Speed Rail and state governments on transformational transport projects. His experience includes being a Board member of Infrastructure Partnerships Australia and of the Committee for Sydney (roles from which he will now retire). ARCADIS Announces Australia Pacific Leadership ARCADIS has announced its Australia regional leadership following the acquisition of Hyder Consulting in October 2014 with Greg Steele appointed Regional CEO for Australia Pacific—which will be ARCADIS’ seventh region. Greg has been the Hyder MD in Australasia since 2010 and built a 965 people business focused on the infrastructure, water and buildings sectors.
due diligence, independent technical review, mineral asset valuation and deposit evaluation. Most recently, Jeames was the General Manager for Corporate Advisory at international mining consultancies, Snowden Group and Xstract Mining Consultants.
INDUSTRY UPDATES Brown Consulting, a member of the Calibre Group, has rebranded and is now called Calibre Consulting. South Australia Infrastructure Consulting Icon Turns 60 One of South Australia’s most successful infrastructure consulting organisations, Tonkin Consulting, is celebrating 60 years of business. The 100% staff-owned infrastructure and environmental consulting services organisation started as a one-man business in suburban Adelaide. Tonkin Consulting now has offices in Adelaide, Mount Gambier, Berri, Sunshine Coast, and Darwin, employing 100 employees Australiawide. It provides professional consulting services to clients in industries such as urban development, local government, mining and resources, transport, water, environment and waste managements services. GMC Global Rebrands to SMEC
Dr John Messenger has joined MWH Global as Asia Pacific Advanced Water Treatment Practice Leader. Widely considered the country’s preeminent process engineer, John rings with him more than 30 years’ experience in the wastewater and water industries including extensive experience in concept design, detail design, commissioning, training, plant optimisation and plant operations.
As part of SMEC’s global brand strategy, wholly owned subsidiary GMC Global fully rebranded to SMEC on 18 December 2014. GMC and SMEC’s existing asset management capabilities will integrate to form a new Asset Management function designed to increase the company’s service offering in delivering seamless engineering services and ‘whole-of-life’ Asset Management.
SLR Consulting has recently appointed Jeames McKibben to lead the Valuation and Property Services team in the Asia-Pacific region. Jeames has more than 20 years’ international experience in the geological assessment and valuation of mineral projects worldwide. He has been responsible for multi-disciplinary teams covering precious metals, base metals, bulk commodities (ferrous and energy) and other minerals in Australasia, Africa, Asia, the Americas and Europe. He has a strong record in project
Editor Kisanne Dulin
President Matthew Harris
Chief Executive Officer
MWH Advance in Water Treatment Practice
Key Appointment for SLR Asia Pacific
Consulting Matters
GHD supports Indigenous professionals of the future GHD is one of 12 companies that have committed to a 10 year partnership with CareerTrackers, a program that connects Indigenous university students and private organisations to create career pathways through structured internships. The company will provide at least 10 internships each year. The interns will undertake a 12 week vacation practice program at GHD while completing their degrees.
Megan Motto
Director – Policy & Government Relations Jonathan Cartledge
Director – Marketing & Membership Kisanne Dulin
Senior Advisor, Policy & Government Relations Robin Schuck
Business Development Manager Jennifer Kelly
Manager – Events & Education Alexandra Hopper
Corporate Designer Voltaire Corpuz
Editorial submissions kisanne@consultaustralia.com.au
Advertising enquiries info@consultaustralia.com.au Consulting Matters is produced by Consult Australia. Phone: (02) 9922 4711. Website: www.consultaustralia.com.au
Not a member of Consult Australia? To find out more about how your firm can benefit from membership contact Consult Australia’s Business Development Manager, Jennifer Kelly on (02) 8252 6712 or email membership@consultaustralia.com.au www.consultaustralia.com.au
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Consulting Matters
Industry updates
CLIENT CHOICE AWARDS Congratulations to all Consult Australia member firms who were winners of the Financial Review Client Choice Awards 2015! PROFESSION AWARDS Best consulting engineering firm (revenue under $50m) Best consulting engineering firm (revenue under $50m) Best consulting engineering firm (revenue $50m - $200m) Best consulting engineering firm (revenue over $200m)
SECTOR AWARDS Best provider to the professional services sector Best provider to the power & utilities sector Best provider to the property sector
REGION AWARDS Best WA firm
West NZ firm
PRACTITIONER AWARDS Most client focussed consulting engineer Grant Homan
OVERALL AWARDS Best professional services for (revenue under $50m)
What’s happening at Consult Australia
Consulting Matters
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From the President Traditionally, projects were simpler and expectations more easily managed. Companies could grow organically to meet the expanding needs and demands of clients.
To me it really doesn’t seem that long ago that things in the built environment sector were a lot more simple. Traditionally, projects were simpler and expectations more easily managed. Companies could grow organically to meet the expanding needs and demands of clients. Competitive edge was established through specialist skills provision, sometimes down to the specific professional and their reputation, which went hand-in-hand with their employer. You knew who had the best façade specialists, the best tall building experts, the best sports planner, the best cost researchers—some even established a reputation for just being good ‘all-rounders’ or specialist generalists! Today however, globalisation and 24/7 markets are the playing field and you can no longer rely on the longevity and loyalty of your star recruits to form the basis of a company’s reputation. Simple procurement, work and delivery packages no longer exist. Our clients’, both Government and private, preferences are all rapidly evolving and we are seeing industry convergence occurring as a necessity in response to a now very dynamic and complex market. The concept of industry convergence has been succinctly defined as the ‘blurring’ of boundaries between industries, induced by “converging value propositions, technologies and markets” and has probably been best illustrated in the interactions between various industry settings, such as information and communication technologies
‘smartphones’, biotech and pharmaceutical industry ‘biopharmaceuticals’, nutrition and pharmaceutical industry ‘nutraceuticals’ or energy and information technology ‘smart grids’. [PwC, 2012; Deloitte, 2006; Hisey and Rhodes, 2008; Bröring, 2010]
the solution. I also believe that due to the traditionally conservative nature of our industry, our convergence is witnessed more as a slow burn with the occasional game-changer rather than instant and radical innovation.
It has been acknowledged widely that when sectors do converge, new, game-changing innovation results, creating opportunities for some, and threats for others. In the built environment industry, we live within a web of environments that are rapidly evolving and converging:
Take for example the Government as a key client for our sector. They are not just relying on the private sector to build buildings or simple civil infrastructure anymore, they are entrusting our industry to deliver cities— smart, connected, vibrant and diverse places, where we can get around unhindered and connect on a global scale.
• the natural environment – life, land and water • the built environment – infrastructure, buildings and technology • the virtual environment – networks, communication, models and data. So, for me, I think successful convergence in our sector relies on an agile response to market needs, through innovative partnerships that magnify the benefit of
As these projects become bigger and more complex and as the risk profile increases, the complexity of delivery equally becomes more intricate. Our industry and our companies are expanding, both in numbers and capability, bringing in-house the risk and returns, as well as IP and of course any competitive advantage. It is no longer enough to be just an engineer, or just a quantity surveyor or just a builder to deliver on market and client expectations.
Our industry and our companies are expanding, both in numbers and capability, bringing in-house the risk and returns, as well as IP and of course any competitive advantage. It is no longer enough to be just an engineer, or just a quantity surveyor or just a builder to deliver on market and client expectations.
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Consulting Matters
What’s happening at Consult Australia
Large urban renewal projects require us to think about integrated infrastructure, private and public realm connectivity, smart grids, sustainability, vibrancy, and density—bringing in experts and industries that specialise in these particular fields but that haven’t necessarily shared the same client before, let alone had to work together to harmonise an integrated solution.
The PPP delivery model is a tried and tested form of Convergence in our sector. The PPP model brings together, as a team, multiple capabilities and specialisations all of whom are key players under a single umbrella. Financiers, lawyers, engineers, architects, planners, IT specialists, media, marketing, the list goes on, all working together to cross pollinate their experience and deliver on a common project objective. Urban Regeneration projects are another example of the new frontier and a key driver for convergence in our sector. The current thinking here is to provide a one-stop-shop model to help simplify the delivery of highly complex built form outcomes. Large urban renewal projects require us to think about integrated infrastructure, private and public realm connectivity, smart grids, sustainability, vibrancy, and density—bringing in experts and industries that specialise in these particular fields but that haven’t necessarily shared the same client before, let alone had to work together to harmonise an integrated solution. Like the industry’s approach to PPPs, the solution will be in innovative thinking and collaboration. These are two examples of where Industry Convergence is already occurring in our sector. Beyond this, think of the ‘megatrends’—an ageing population, social media and technology, infrastructure, sustainability— these are the trends that underpin the business strategies for both government and our private clients and they will all require a multidisciplinary approach which calls on both innovation and collaboration. Often when Industry Convergence is talked about, M&A activity springs to mind, however, whilst I believe it is a contributing factor and it has certainly become the short
hand for rapid commercial growth in this convergence trend, it is not necessarily a driver for it. Whilst we all hear about the headline mergers, interestingly, PWC reported that last year there were over 95 reported mergers in Oceania alone, valued at in excess of $25 billion and there is a clear indication that this activity will not slow with long-term structural shifts in both power and demographics being the key. PWC also reported that the full service integrated model was gaining popularity, particularly among multinational clients as they look at companies within an extended geographic reach and the ability to deliver on complex and higher risk projects It is perhaps some of the M&A and associated industry convergence activity that is yet to occur that will be the most surprising, challenging and innovative. Perhaps we will see Apple Inc. buy into our sector, converging virtual and physical connectivity, BIM and 3D printing and transforming hard, grey infrastructure and once hidden building services into the ‘must have’ items in any thriving urban renewal project! In whatever form, Industry Convergence will certainly bring new opportunity and exciting innovation to our sector—it is a concept that will challenge some of our traditional pillars, but one that should in turn reward our industry’s collaborative spirit and pioneering heart.
Matthew Harris President
What’s happening at Consult Australia
Consulting Matters
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From the CEO Australia needs to appreciate more fully that China/Asia are not simply geographically advantageous potential markets but that they will be the major drivers of global infrastructure spend over the next 20-25 years.
The topic of industry convergence has been front and centre for Consult Australia as we have been conducting a number of sessions with members to focus on our Strategic Plan for 2015-18. Planning days present that wonderful opportunity to think about the big picture and the medium to long term, and in this case have seen us focus on the high level of change and uncertainty in our businesses and sector. There is no doubt that our industry is changing rapidly, with merger and acquisition activity presenting one of a number of key trends that will affect firms, individuals, and Consult Australia more broadly. I thought I might take this opportunity to highlight to members some of the issues that our Congress, Division committees and Board have been contemplating as we set our direction for the next three years. Because everyone likes a Letterman style countdown, I’ll cover these trends in terms of what I call the “Five Big Truths” for our industry… 1. CONSOLIDATION WILL CONTINUE The trend of rapid growth through M&A is by no means finished. In fact, I believe it has only really just begun. I remember being laughed at a decade ago when I suggested we too might end up with a “big four” (or maybe a big 6-10?). There is less laughter now. This has a massive impact
on the industry, as bigger players mean more complexity, less competition and different business drivers. But it also has an effect on Consult Australia, as it means our future growth is less likely going to be in subscription income (in fact the opposite is true as consolidation eats away at that income stream relative to total turnover), but in commercial services (events, training, publications etc). 2. GLOBALISATION CHANGES THE FOCUS New, unknown players with different expectations and demands will significantly affect the industry in Australia. Risk and resources will now have a more global dimension to decision making. This, I believe also provides opportunities as critical mass can mean that firms can work more closely with national governments to once again take their place as trusted advisors, rather than downstream commodity service providers. 3. TENURE AND STABILITY ARE FRAGILE The balance between consistency and dynamism is important in any industry, but particularly so of ours because our 'output' needs to stand the test of time. The changes above mean new faces with more movement, reduced experiential confidence, less trust, and less consistency of skills for consultants, contractors and clients. The average CEO of a Fortune 500 company in the US serves 9.3 years. In Australia, CEOs of the top 200 companies had an average tenure of 4.3 years in 2013, down from the historical average of 4.9 years. I believe in our industry that would be more like 3 years. This means our leaders have less time to focus on long term, industry wide issues due to short term demands, meaning industry bodies like Consult Australia are more important than ever.
4. POLITICAL INSTABILITY HAS A FUNDAMENTAL IMPACT Given the huge volatility in government of late, we have become acutely aware that our industry is inextricably tied to politics, and thus the health and sustainability of our industry is highly dependent on consistency from government. If we are to thrive we need project and timeline certainty, sophisticated management of sovereign risk and a positive relationship between government and the business community. 5. OUR REGION IS IMPORTANT Australia needs to appreciate more fully that China/Asia are not simply geographically advantageous potential markets but that they will be the major drivers of global infrastructure spend over the next 20-25 years. If we want to be a player we need to recognise that they will be setting the rules, rather than expecting Asia to play by ours. These issues present great challenge for our industry, but also great opportunity. Consult Australia has a significant role to play to assist our members in this brave new world so that Australian consultants can not only survive, but thrive in the built environment sector of the next century. My American counterpart often uses the expression “If you are not at the table, you are probably on the menu”. Consult Australia hopes to continue providing opportunities for our members to pull up a chair.
Megan Motto Consult Australia
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Consulting Matters
What’s happening at Consult Australia
Launching: More for Less: The Economic Benefits of Better Procurement infrastructure spends in the last Federal Budget combined. The report also found that better procurement would lead to a reduction in delays by around 7% and improvements to quality by approximately 7%. It further found that the impact of these improvements on the Australian economy would be worth more than $5.1 billion through to 2030.
PROJECT BRIEFS
Upon his election as Prime Minister in September 2013, Tony Abbott declared that he wanted to be known as the “infrastructure Prime Minister”. His desire, shared amongst political leaders of all political stripes, was applauded by industry and a broader public craving the provision of more public infrastructure.
that public sector agencies could reduce the cost of projects through better procurement. While other reports have highlighted the premium cost to government of less desirable procurement practices, this is the first to put specific dollar figures on each practice.
However, this desire to fund more infrastructure quickly ran up against political reality, and in particular the challenges of bringing the Federal Budget back to surplus. As a result, the Federal Government has been left looking for ways to stretch each dollar of public money further in the delivery of infrastructure.
CHEAPER FEES, REDUCED DELAYS, IMPROVED QUALITY
It is in this political context that the report, The Economic Benefits of Better Procurement, commissioned by Consult Australia and written by Deloitte Access Economics, has been released.
That potential saving of 5.4% to the cost of consulting services is driven by firms pricing the additional cost of insurance, risk and additional work required into their bids, as well as other firms deciding not to bid for a particular project in response to the procurement process on a particular project. The saving equates to $2.5 billion (2014) through to 2030, at around $326 million per year from 2019 onwards. It’s an amount that may not seem large in the context of the Australian construction sector, but a saving of that size is equivalent to the cost of building the new Western Sydney Airport at Badgery’s Creek, or the entire South Australian and Northern Territory
In our 60 years of existence, Consult Australia has made the case that better procurement policies and practices are not just beneficial to our industry, but to our clients and other stakeholders as well. When making the case that a range of reforms could save a government agency money, the inevitable question is asked, 'how much?' This report, for the first time ever, answers that question and provides strong evidence
The headline finding of this report is that a saving of around 5.4% can be achieved through better procurement, while delays could be reduced by around 7%, with a further 7% improvement in the quality of projects.
The first opportunities for improvement identified in the report relate to the quality of project briefs. Unclear project objectives was identified as an issue affecting 37% of projects, leading to higher prices in 12% of projects and reduced competition in a further 9% of projects as firms decided not to bid for work. Indeed, unclear project objectives were found to be a contributing factor in more than half of all decisions not to bid for work. The other major finding related to project briefs is the provision of unverified brief information by clients. For example, if a project has gone to tender, a survey of the land that project is to be built on may be provided as background information, but with the client disclaiming any responsibility for reliance on that information. As a result, each bidding firm has to then duplicate the effort that went into ascertaining that information and conduct their own survey. This issue extends beyond geotechnical information to also cover environmental impact and financial data, and was found to cost each bidding firm on average $41,800 per firm, per bid. This represents costly duplication that clients will ultimately have to pay for, without any discernible benefit in return.
CONTRACT TERMS AND CONDITIONS Contract terms have presented a fundamental challenge to our industry for many years, as onerous terms are frequently included in agreements or passed on to the party with the least bargaining power (typically the consultant). The report found that 26% of contracts require the parties to contract out of proportionate liability, with 36% not requiring the parties to contract out.
What’s happening at Consult Australia
However, a large proportion of respondents (38%) weren’t aware of whether they were being forced to contract out. While there are a number of possible explanations, one may be that some firms might not be aware they are contracting out, when the relevant term of a contract won’t explicitly mention contracting out, and will rather use language along the lines of “Part 4 of the Civil Liability Act does not apply”. Other challenges in measuring the cost of contracting out of proportionate liability include the immaturity of the professional indemnity insurance market for policies that cover contracting out, the fact that no major project in Australia has failed where the parties have contracted out (and thereby creating a major uninsured liability), fluctuations in the insurance market, and difficulties in measuring indirect costs where firms proceed without insurance. Nevertheless, the report found that only around 20% of our industry has insurance that covers contracting out of proportionate liability, and that where such policies are available, they can cost up to 25% in additional premiums. Other contractual terms were also considered by the report1, ranging from contractual standards of care (such as 'expert' or 'fitness for purpose' warranties), through to limiting liability, liquidated damages and onerous novation provisions. For each of these, it looked at the term in question and its incidence as a problematic feature of a contract (ranging from 26% to 52%) and how firms responded. It was found that the direct price impact varied between 2 and 7%, but that common responses from our industry included absorbing the impact of the term (affecting the longer term viability of the industry), proceeding uninsured, or making a decision not to bid for work. Each of those responses should be of concern to clients.
OTHER ISSUES The report also considered a number of other challenges facing the consulting industry through the procurement process. It discussed the range of delivery mechanisms, and their role in driving risk allocation and innovation throughout a project’s life. The choice of delivery model was found to account for around 22% of price increases, and depending on the model,
may also be a significant factor in the inclusion of onerous terms in the contract. The report found that around 40% of professional services firms found public sector clients to be very or somewhat responsive to innovation in the bid phase of a project, but a further 45% of respondents found public sector clients to be not at all responsive at this same phase. However, once the project was underway, the level of responsiveness climbed to 66%, with only 16% of clients not responsive. The drivers for this were predominantly probity issues, procurement delivery model or perceived budget considerations. While mechanisms exist to allow for innovative solutions, it is clear that there are also reasons consulting firms are reluctant to use them. Meanwhile, bid costs have been frequently raised as an issue with procurement. The report’s finding that bid costs range between 0.6% and 2.9% of project value is broadly consistent with previous studies. While industry understands that bidding is a necessary cost of doing business, the finding underlines the importance that clients must also respect that bidding costs industry money, and in turn don’t unnecessarily call for consultants to bid for work they have no chance of winning.
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for positive changes to procurement to be implemented in Australia. Less than one month after the report’s launch, there are already some positive signs that we may finally be heading in the right direction. HELP DELIVER MORE FOR LESS Consult Australia’s campaign supporting More for Less is underway across our state and territory divisions. Visit www. consultaustralia.com.au to get involved in upcoming events, and contact your local State Manager for an update on our advocacy across state and territory parliaments. Download the reports and share them with your colleagues, clients and industry networks. Your support for More for Less will help deliver the recommendations we are calling for across government and industry. Stay tuned in the next edition of Consulting Matters for more on More for Less. Robin Schuck Consult Australia 1
At pages 18-21 of the full report
More for Less The economic benefits of better procurement
CONCLUSION This report has come at a time when governments around Australia are exploring how to provide vital public infrastructure while being mindful of budget considerations. Already the last year has seen the release of the Productivity Commission report into Public Infrastructure and a Parliamentary Inquiry into the same issues, together with the release of another edition of the Scope for Improvement Reports. The Deloitte Access Economics report builds on the work of those previous studies, and provides some useful recommendations for reform. While there are a range of non-economic impacts of procurement that Consult Australia has pursued as areas for reform, they are less easily quantified when we take the case up to policy makers. By highlighting the economic benefits of better procurement, and presenting hard data to policy makers, there exists an outstanding opportunity
Seaford Rail Extension Photo courtesy of Aurecon
Around $43 billion is invested in public infrastructure each year. Around 53% is procured from the private sector, and professional services contribute almost 20% to the overall value of projects. As budgetary constraints compete with the public demand for enhanced infrastructure provision, the need for each dollar of public funding for infrastructure projects to go further is greater than ever. The procurement reform described in this report presents an opportunity to make this happen. 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:
Consult Australia engaged Deloitte Access Economics to undertake a study into the economic value of better procurement practices by public sector agencies undertaking infrastructure procurement. This document is a summary of the study’s key findings.
• Reduce the costs of projects by 5.4%, comprised of: o direct price increases of 3.6%; o indirect price increases of 1.5% from reduced competition; and o inefficient costs of bidding worth 0.3% of project prices. • Reduce delays to projects by 7%; • Improve the quality of projects by 7%. By implementing the recommendations of this report, government has the opportunity to achieve economic benefits of around $5.1 billion in additional GDP between 2015 and 2030 (real $2014). Download the full report at www.consultaustralia.com.au
LONG FORM http://bit.ly/betterprocurement-longform SHORT FORM http://bit.ly/betterprocurement-shortform
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Consulting Matters What’s happening at Consult Australia
STATE DIVISION UPDATES WA UPDATE WA Division continues to advance those critical agency and political relationships and issues most relevant to members. Working alongside the representative body of Built Environment Design Professions, Consult Australia WA continues to advance discussions supporting better procurement outcomes across government agencies. Discussion with MainRoads WA supported their infrastructure delivery plan through a workshop considering consultants’ perspectives on risk management in design and construct procurement models. Our ongoing relationship with the Western Australia Local Government Association (WALGA) focused on contracting methods, and engagement continued with the newly formed Strategic Projects.
NT UPDATE The NT Division has continued to grow and strengthen relationships across various Government departments. A regular Working Group held between Consult Australia and the Department of Infrastructure (DoI) included discussions relating to: • Guidelines around reporting requirements which are currently under review by DoI. A draft paper has been developed by DoI to begin feedback requirements on any project above tier one, with a desire to implement changes to make feedback a more iterative process throughout the project, rather than just at project completion. • The DoI’s undergrad program. The Department noted they are keen to work with the industry to investigate the possible external placement with consultants of undergrads. • The current application of unlimited liability, use of Australian Standards AS4122-2010 and the Department’s future plans for the use of panels.
Consult Australia WA has held a number of events early in the year including a breakfast with former Senator and leader of the Australian Greens, Bob Brown who, mixed with some entertaining anecdotes of life in Parliament, reflected on the importance of sustainable urban development, and the role and responsibility of built environment consultants in achieving that aim.
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FutureNet hosted a maximum capacity breakfast presentation from ABC journalist Geraldine Doogue concerning women in leadership. Thanks to exiting FutureNet WA Chair Shandip Abeywickrema for all your support and work in continuing to build the success of FutureNet in WA. Stay in touch for more on upcoming WA events including the annual Architects and Engineers Roundtable in May, the launch of our More for Less study in WA, and our breakfast with Woodside Chief Executive Peter Coleman.
At a recent February meeting with David McHugh, CEO, Department of Infrastructure, Consult Australia discussed mechanics of tender evaluation and assessment. It was agreed Consult Australia would submit information on current challenges encountered and possible solutions. The NT Government’s focus on Red Tape Reduction and their current commissioned study for the Construction & Development Advisory Council has enabled the Division to supply feedback regarding the in-efficiency issues our industry face on a regular basis. The release of the Consult Australia commissioned Deloitte Access Economics report Economic Benefits of Better Procurement Practices is timely for our advocacy work in NT and the findings will form the basis this year’s discussions with stakeholders to bring about meaningful procurement reform. Upcoming NT events include: Boardroom Breakfast – Member Only Event The NT Chief Minister, Hon Adam Giles MLA Darwin FutureNet continues to offer young professionals opportunities to network
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and gain business contacts while building business skills to advance their careers. The February event Facing the Strain of a Changing Workplace was an interactive seminar on change management, where Dr David Chapman discussed mechanisms for coping with change in the workplace, within project teams, client bases and support systems in the ever-transient mecca that is the Darwin consulting industry. Upcoming events include speed networking and a facilitated workshop on problem solving when challenges are encountered on a project. National Strategic Partner
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STATE DIVISION UPDATES VIC UPDATE The Victorian Division has kicked off the new year with a Workshop Facilitation seminar, hosted by our Gold Sponsor, Easyconsult. We were fortunate enough to have co-founder, Kym Williams, join us to discuss the eight key areas of effective facilitation. The launch of the Deloitte Access Economics Report, commissioned by Consult Australia on the economic benefits of better procurement, includes findings across a range of procurement practices in terms of cost savings to public sector clients and a number of recommendations to realise these savings. Robin Schuck, Consult Australia’s Senior Advisor, Policy & Government Relations joined the Division to discuss the report in March, this was followed by a range of meetings with the Government, the Opposition and agencies to share the report’s findings. This included a valuable discussion with VicRoads with whom we
NSW UPDATE The NSW Division has kicked off 2015 with a bang! Leading into the March 28 State Election, Consult Australia NSW joined forces with nine other industry groups to advocate for the leasing of poles and wires in an alliance called Repowering NSW. Repowering NSW comprises: Infrastructure Partnerships Australia, the New South Wales Business Chamber, the Sydney Business Chamber, the Property Council of Australia, Consult Australia, Australian Industry Group and the Energy Users Association of Australia. In addition, in preparation for the State Election, Consult Australia NSW surveyed all of the political parties targeting issues such as proportionate liability, improved procurement practices, alternative infrastructure financing, and red tape reduction. The Division continues to engage with and investigate BIM, and how this will affect
continue to have a productive relationship working towards better procurement in practice. Building Information Modeling (BIM) continues to be regularly deployed on projects throughout Australia. The use of BIM can alter the legal landscape at all levels of project participation. The Victorian Division will be hosting an event with Colin Biggers and Paisley on 15 April, to discuss procurement methods associated with BIM, and the legal risks. We hope you can join us. Consult Australia Victoria’s Policy Platform, has been an excellent means of engaging with Government and stakeholders on various issues the industry is facing within Victoria. Our recommendations are outlined within the paper and we have been fortunate enough to meet with various ministers on behalf of our industry. This is a great way to advocate on behalf of our members to ensure the industry is best placed when government is making decisions. Please email State Manager, Zeina Iesa for a copy.
the industry in the future. This has seen NSW provide support to Transport for NSW, as they work through their Roadmap to BIM, and Gold Sponsors CBP Lawyers recently presented about the “BIM Legal Landscape”. 2014 FutureNet Business Leaders are a hard act to follow! Nearly six months after they released their design proposals for a Western Sydney Airport they continue to receive interest from the industry. In the past month, they have given presentations at the Liverpool Council and the Western Sydney Airport Alliance, with requests to present their ideas at other events. The 2015 program is on track to give last year’s course a run for its money! We have 33 professionals registered to attend from a broad range of roles in the private and public sector. Consult Australia recently surveyed FutureNet Sydney and Newcastle event attendees; the feedback confirmed that the FutureNet program is delivering: value for money, personal and professional development and networking opportunities that lead to securing more work!
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Consulting Matters What’s happening at Consult Australia
STATE DIVISION UPDATES QLD UPDATE Change is the only constant! 2015 sees Queensland welcome a new government. With these changes sees relationships to renew, build and foster. Consult Australia has been pleased to be invited (along with other relevant industry associations) to attend two business forums with the Premier since government has been sworn in. We have also combined our voice with Engineers Australia, Civil Contractors Federation, Australian Asphalt Pavement Association and Cement Concrete & Aggregates Australia to write to the new government outlining the combined concerns of parts of our industry and the importance of a clear and funded pipeline of work for the continuing success of our sector. Monthly meetings with the managers of the Queensland Government’s Engineering Consultant Scheme (ECS) continue. One of the outcomes of these meetings is the development of a workshop to be held with both buyers and suppliers of the scheme to help all parties involved gain a broader understanding of how the scheme operates and to raise any outstanding questions. Collaboration is going to continue to be a focus over the next 12 months. Collaboration with you as our members is of course paramount to our success. To
ACT UPDATE Consult Australia ACT was proud to host the national launch at the Australian Parliament House of Consult Australia’s latest report: More for Less: Economic Benefits of Better Procurement. The launch by Assistant Infrastructure Minister The Hon. Jamie Briggs MP, with a presentation by Deloitte Access Economics, saw nearly twenty members of parliament attend in person, in addition to a range of high profile stakeholders from across government and industry. This turnout, from across all sides of politics, demonstrates the value of the report and the interest in taking our recommendations forward across the country.
that end we were pleased to bring together representatives from almost 40 of our member firms in late February to discuss the results of our 2014 member survey and the forward actions that we need to take to improve the business environment you operate in. We have updated our Qld Policy Platform document to reflect the discussions from that meeting. In addition, in early March we brought together representatives from our Qld Division committee and FutureNet committee to work on the specific actions that we need to implement to achieve success this year. FutureNet is such an important part of our membership that we felt it important to include them in the discussions and to help provide fresh ideas on how we engage and communicate with our members going forward. FutureNet’s reach continues to expand with the Brisbane and Townsville divisions continuing to challenge themselves with new ideas which will bring a more diverse and engaged audience to their events. In November last year the Townsville committee met with Hon Warren Entsch MP to discuss the importance of the young professionals in the future development of the North. This follows on from the breakfast the Brisbane committee held with Brisbane Lord Mayor Graham Quirk. These are great examples of the future leaders of our industry developing relationships, which
Personal briefings with a range of ministers were well-received with members keen to explore opportunities to take forward the report’s recommendations. Consult Australia ACT continues to advance discussions locally across the ACT Government, and through the ACT Federal Committee, will continue to support Consult Australia’s national advocacy across the Parliament and with Federal agencies. Stay tuned for more events this year building on the success of FutureNet ACT in 2014 through the Future Sessions and a fresh boardroom lunch program to support our engagement with key stakeholders across the ACT.
is the premise behind FutureNet. Developing on these successes, a small but passionate group have formed in Mackay to develop a division of FutureNet there.
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STATE DIVISION UPDATES SA UPDATE The SA Division’s first event for 2015 was a well attended breakfast presentation of the recently released report More for Less: Economic Benefits of Better Procurement Practices. The report follows a comprehensive study of our 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. The report provides a number of recommendations for government to achieve cost savings, and the procurement reform described presents an opportunity to make this happen, and so was of particular benefit and interest to procurement specialists in both the private and public sectors. Following the breakfast, the Division met with a number of stakeholders to discuss the report, its findings, and opportunities for more efficient procurement of professional services for public sector built environment projects through improvements in briefs, delivery models and contracts. Those we met with included:
• Judith Carr, Executive Director Procurement, Department of Planning, Transport and Infrastructure(DPTI) and Wayne Buckerfield, General Manager Investment Services DPTI
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• Richard East, Senior Manager Procurement, SA Water • Kevin Cantley, General Manager, South Australian Government Finance Authority (SAGFA) • Steven Marshall, State Liberal Leader Off the back of these meetings we have agreement with all the above stakeholders for further engagement via continued dialogue, roundtables and joint endeavours to action many of the recommendations in the report.
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We will continue to promote the report, the findings and advocate for procurement reform more widely throughout the coming year. Upcoming SA events include: Member only Boardroom Lunch Series
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• Ian Nightingale, the Industry Participation Advocate • Wendy Campana, CEO, Local Government Association (LGA - SA) and Rob Ackland CEO, LGA Procurement
TAS UPDATE The Tasmanian Division, with member firm pitt&sherry, hosted Forestry Tasmania, Executive General Manager, Jason Garrett. Members gained insight into the future and role of Forestry Tasmania as well as the new opportunities for downstream processing. The launch of the Deloitte Access Economics Report, commissioned by Consult Australia on the economic benefits of better procurement, includes findings across a range of procurement practices
in terms of cost savings to public sector clients and a number of recommendations to realise these savings. Robin Schuck, Consult Australia’s Senior Advisor, Policy & Government Relations presents on the report on 22 April. In parallel a number of briefings with senior ministers, agencies and stakeholders will be held to share the report’s findings and work towards better procurement and value for money outcomes in Tasmania. Are you interested in becoming part of the Tasmanian Division Committee? Please register your interest, by emailing zeina@consultaustralia.com.au
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Consulting Matters Features
2014 year in review: Preparing for the future THE FOLLOWING IS AN EXTRACT FROM THE WELCOMING ADDRESS GIVEN BY CONSULT AUSTRALIA’S PRESIDENT, MATTHEW HARRIS, AT THE 2014 AWARDS FOR EXCELLENCE. Our Awards are a unique opportunity to profile and promote the outstanding achievements of our firms to both industry and the community and as the sector’s premiere event - it gives us the opportunity to catch up with colleagues and reconnect with old friends. To me these awards are our night of nights to celebrate all that is great about our industry, which is why I would like to take this opportunity to acknowledge and celebrate some of the highly successful programs and initiatives that Consult Australia has delivered over this past year and provide a snap shot of the industry’s year. I have been fortunate in my role as President to witness for myself the great work and innovation of our sector, through various meetings, round tables, conferences and of course networking with many of you present tonight. I have had the opportunity to communicate our common goals to all three levels of Government, as well as with our partner Associations, both here in Australia and overseas. I have also had the honour of being able to experience firsthand the level of respect and esteem our organisation is held in by others around the world at this year’s FIDIC Conference. In total, 98 countries were represented with the common goal to ensure engineering and professional consultants promote high standards, ethical values and assist in the development of professional practices across the globe. It became clear to me that Consult Australia is considered a leader amongst these global associations, not only by the active work it undertakes but the level of leadership it encourages to participate.
Top: Matthew Harris at the President's address 2014 Consult Australia Awards for Excellence. Bottom from left: Norman Disney & Young CEO, Ian Hopkins; Bita Enarcon Engineering (Indonesia) Executive Chairman; Irawan Koesoemo; WorleyParsons CEO, Andrew Wood; Public-Private Partnership Center of the Philippines Director, Rina Alzate; Intercontinental Consultants and Technocrats (India) Chairman and Managing Director, Kiran Kapila. Attendees of the 2014 Consult Australia Asia Pacific CEO Conference.
This level of leadership was not only recognised by the appointment of Tony Barry to the ASPAC Regional Executive, but also by way of the number of Australian projects recognised by FIDIC at their Annual Awards Night.
In total, 98 countries were represented with the common goal to ensure engineering and professional consultants promote high standards, ethical values and assist in the development of professional practices across the globe.
ASPAC delegates also made up a large contingent of attendees at our Inaugural CEO Conference—an initiative that saw the coming together of many of our Company Leaders at a two day conference where the open dialogue and honesty, was only surpassed by the integrity and respect held for those in attendance. This is another fabulous initiative that will be repeated again in 2015. Of all the initiatives that we have delivered this year, two stand out as the most rewarding part of being the President of our association: • FutureNet and the FutureNet Business Leaders Course; and
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Both our Business Leaders Course and FutureNet have gone from strength to strength, with our young professional committees across Australia involved in the development of both programs and events that are relevant and valuable to those attending. • Our Champions of Change initiative. Both our Business Leaders Course and FutureNet have gone from strength to strength, with our young professional committees across Australia involved in the development of both programs and events that are relevant and valuable to those attending. Professional Skills nights, politics at the pub, and our very own F20 in Brisbane are among some of the 50+ events carried out during the year.
and teamwork. As an employer, we see this course as a great way to supplement our own internal training with real and tangible outcomes.
that there has not just been talk— there has been real action that will no doubt deliver huge benefits to business and the broader economy.
The second stand out initiative, as I mentioned, is our Champions of Change.
Just one way in which this initiative has shown its commitment to change is its support for the Power of Engineering a program reaching out to female high school students, creating awareness of the different opportunities that a career in engineering can offer. As the father of a daughter and the husband of an engineer, I think this is an incredibly important agenda and a truly inspirational program—getting in at the grass roots to affect change. I commend Greg Steele and his committee for the work they have done.
Aligned with this is the Business Leaders Course run over 8 months. With workshops, presentations, and seminars - the program reaches a crescendo with a group project judged by a panel of experts.
Our charter for Champions of Change was originally signed in 2012, with 16 member firms taking the challenge head on—each making a commitment to advance equality in what is traditionally considered a male dominated profession and to also ensure that professional consulting in the built environment is attractive to prospective employees from all walks of life, including women.
It has been great to have been able to see for myself the development of those attending the course, not only in skills and technical aptitude, but in confidence, self-awareness
Jointly the signatories have had what I would consider as honest conversations with each other, about their own company’s performance in this area. I am pleased to say
Like all industry associations in times of uncertainty, this year’s road has not been without its bumps—with merges and
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Consulting Matters Features
As our industry will no doubt talk about skill shortages in the future, it will be the technically qualified roles that we require, however there are likely to be less technically qualified local professionals entering the workforce. Our immediate challenge is to lobby those state governments or face having to reinvest in the significant training and education of tomorrows under prepared graduates.
acquisitions, consolidations and general belt tightening, our Board continues to monitor, strategise and govern for our continued future prosperity and to achieve our vision to be the leading association for consultants in the built environment. So, what about our markets? What does 2015 hold for us? As a quantity surveyor it is my job to predict where our markets may head, what sectors show an upward trend or region will face an uncertain future. It is fair to say that our economy faces its biggest test of confidence since the GFC. Japan and the Euro are still showing signs of weakness and the emerging markets, such as China, continue to slow. Fuelled by ongoing confrontation in the Middle East, protests in Hong Kong, Ukraine’s Sovereignty pressures and the Ebola crisis, the IMF revised its growth down from 3.7 to 3.3%. Whilst our local economy slowed and the leading construction companies forecast a decline in residential work in 2015, this will be offset by continued growth in commercial and infrastructure projects. On the local front South Australia remains slow whilst unemployment appears to have peaked, falling from 7.3 to 5.9% growth remains static at 2%, down from the 3% average of the past two decades. Queensland remains a strong performer whilst still being propped up by engineering construction, 2015 will likely see an increase in residential construction approvals which are already at their highest levels since 2008. Whilst in Victoria strong population growth and a strong economy remain, unemployment has risen, building commencements have fallen and recent government pressures add to the uncertainty of a flat market. WA, like Victoria, will continue to find its feet in 2015 as the mining boom continues to decline. Whilst remaining one of the stronger
states, the transition from resources to other sectors will prove interesting. Northern Territory, ACT and Tasmania will continue to rely on Government work. Whilst the short to medium term remains austere; future planned projects offer a more positive outlook. And finally to NSW with a certain momentum and yet still playing catch up, NSW currently has the fastest growth rate in the nation, with a strong pipeline of work, strong residential sales and a positive economic outlook. This all contributes to a positive sentiment for the industry in 2015.
having to reinvest in the significant training and education of tomorrows under prepared graduates. It is pleasing to note that we have, at our congress, brought together wise heads, our future leader and management team, to plan and to facilitate Consult Australia’s vision to be the leading association for consultants in the built environment and it is clear that we have a common goal, not just to articulate our vision, but to passionately own it and relentlessly drive it.
Whilst the general sentiment is positive, with markets beginning to improve and our eyes still focused on the pipeline of opportunity I have no doubt that 2015 will see our minds shift to the how and who will deliver these nation building projects. In a profession which has given me the opportunity to travel the world and work on a vast array of projects it concerns me deeply where our next generation of visionary professionals will come from. I know it shouldn’t surprise me, but with Generation Now, where everything is iPads, iPhones, emails and technology at your fingertips, there continues to be an alarming decline in the uptake of STEM subjects, in particular maths. This can be directly related to a number of our state governments removing the requirement for maths, for students beyond Year 10. Business is already identifying poor numeracy skills as a barrier to employment and productivity growth generally. As our industry will no doubt talk about skill shortages in the future, it will be the technically qualified roles that we require, however there are likely to be less technically qualified local professionals entering the workforce. Our immediate challenge is to lobby those state governments or face
2015 Awards for Excellence Call for entries opening soon! Save the date This year's Consult Australia Awards for Excellence will be held in Brisbane on Friday 5th December 2015.
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Controlling space in the frame – rethinking subcontractor boundaries Creating certainty in the construction process is now directly impacting on the roles of the contractor and subcontractor within a build. Technology is focusing the mind of the trades and services from doing something efficiently to creating greater productivity and thus positioning themselves to be involved in the design process much earlier. As a result we are seeing greater industry convergence around who drives the design.
PATH TO PREFABRICATION The initial signs of change in the services sector of construction date back to the US and early 2002. The Mechanical Contracting Education and Research Foundation published research in March 2005, entitled “Five Key Trends for the Future of the Mechanical Contracting Industry”, that posed the question to the mechanical contractors industry; “why does it seem like I am doing the work of the General Contractor without the pay?” The research focused very acutely on the emerging technologies and the opportunities they presented to the trades in relation to developing closer relationships with the design process to improve productivity and reduce costs. The report establishes a timeline of industry change where the mechanical and electrical contractors have a real opportunity to lead project design by 2020. It may however be much earlier than predicted given the current pace of prefabrication and the development of the “frame” of services that are built off site, something which is changing the entire nature of subcontracting services.
FUTURE FORM - PERMANENT MODULAR CONSTRUCTION Much more recently industry organisations are focusing attention on how quickly
prefabrication is changing and we’re already moving towards permanent modular construction as a viable build option in large scale commercial projects. In the US the Modular Building Institute, representing more than 250 companies operating in 15 countries, are championing the development of permanent structures offsite in a safe environment that are being delivered to site, integrated with less waste and greater quality control. Some industry commentators are citing that building lifespans of more than 50 years are achievable. Whilst prefabrication is clearly not a new concept, product improvement, trade convergence and increased demand have brought it back into the spotlight. Currently the key saving is time; however improvements in technology and large scale manufacturing will also lead to cost reductions. When McGraw Hill released its “SmartMarket Report: Prefabrication and Modularization” in 2011, it specifically recognised the re-emergence of prefabrication and modularised components and how BIM technology was enabling their greater integration. Of the 800 architecture, engineering and contracting (AEC) professionals surveyed, more than two thirds reported significant productivity gains, including: • 6 6% reporting project schedule decreases 35% by four weeks or more • 65% reporting project budget decreases 41% by 6% or more • 77% reporting construction site waste decreases- 44% by 5% or more By converging multiple innovative technologies and processes together it improves productivity in the industry by
The report establishes a timeline of industry change where the mechanical and electrical contractors have a real opportunity to lead project design by 2020.
implementing different systems to achieve the desired outcomes, rather than simply speeding up the same myopic process.
EXPANDING THE SCOPE AND BLURRING THE BOUNDARIES FOR SUBCONTRACTS The trend toward prefabrication of building components has the potential to blur or change the traditional subcontract boundaries entirely here in Australia. BIM is already enabling prefabrication of services racks in corridors and risers. These racks are being fabricated by the mechanical services subcontractor who is allowing the space for electrical, hydraulic and fire services to be installed by those subcontractors in the mechanical subcontractor’s workshop. The other services subcontractors are then charged for the benefit that has been created for them. In the US it’s a slightly different experience where the mechanical subcontractor is using his own plumbing and electrical staff to complete the work that was traditionally done by other subcontractors. In effect US
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BIM is already enabling prefabrication of services racks in corridors and risers. These racks are being fabricated by the mechanical services subcontractor who is allowing the space for electrical, hydraulic and fire services to be installed by those subcontractors in the mechanical subcontractor’s workshop. mechanical subcontractors have expanded their traditional scope to include multi services within building trunk zones and this trend has reduced the scope of the electrical, fire and hydraulic packages. It will be interesting to see if the US approach becomes the norm in Australia. At a time when our balance of trade figures are already heavily skewed by imported consumer goods in Australia, utilising local innovation and technology can produce a highly valued product that will be more cost-effective and adaptive to our needs than one mass produced off-shore. David Mitchell Partner & 5D Quantity Surveyor Mitchell Brandtman
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Socially network or die - the future for consulting firms? The rate of change in the global business environment is higher than ever. Organisations that have traditionally sought and achieved strength through increasing scale, control of resources, and mechanisation of the workforce have been spectacularly successful… until now. We can see all around us some of the largest and most successful companies struggling, many disrupted by small and agile entrepreneurial companies who are not just responding to the change drivers but building their business models around them.
We can see all around us some of the largest and most successful companies struggling… Consulting Firms are not immune. Globalisation and hypercompetition, driven largely by rapidly developing technology, are opening opportunities for new players to find new ways to do business. Client sophistication is reducing information asymmetry between professionals and their clients, and modularisation and specialisation are forcing companies to outsource and offshore more of their commoditised work. Charles Darwin famously said “It is not the strongest or the most intelligent who will survive but those who can best manage change.” But there are also new organisational forms emerging that are capitalising on these changes. These organisations are changing the way business is conducted and structured, and they are succeeding. So much so that they are giving weight to what many commentators are calling an “epochal” change from the industrialised era of hierarchical and divided organisations to a new social era where the re-humanisation of organisations and business is being brought about by connected customers. The challenge for business leaders is that there are currently very few rules to guide them in this new social era. Organisations will therefore need to get used to being uncomfortable and challenged. They will need to trust their own sense of purpose, engage more broadly outside the walls of their organisation, experiment, and embark on continuous learning.
This way of working will challenge and scare the pants of the “old school” as they loosen the reins and empower those around them. I had the opportunity recently to undertake some academic project work at Bond University on this specific issue. The work involved assessing the theory of organisational forms against the changing environmental forces for consulting firms. The result… a more sustainable business model that will ensure the survival and prosperity of the consulting firm; a model called the “Socially Networked Professional Services Firm”. There are ten key interlinking elements to the model that work together to increase flexibility and adaptability to help consulting firms prosper in the changing business environment. It starts for example with the strategic focus being shifted from developing traditional but quickly outdated strategic plans to articulating a shared purpose that continuously guides and aligns employees with the changing market place. In the socially networked consulting firm decision making is moved from the bureaucratic centralisation model down closer to the coalface where those interacting with clients can make real time decisions that better respond to the customer’s evolving needs. This way of working will challenge and scare the pants of the “old school” as they loosen the reins and empower those around them. Roles for leaders and managers are clear in the socially networked consulting firm but different.
The roles centre on re-humanisation rather than mechanisation of the workforce which can be particularly difficult for the larger firms or for leaders of firms that have engrained traditional views wedded to hierarchical structures. Having recently acquired a 40 year old regional consulting firm, it is no coincidence that my firm also finds itself in the midst of this changing environment. The competition is becoming larger and more homogenised, clients find it harder to differentiate, services are being commoditised, and margins are being squeezed. By implementing a plan to gradually adopt socially networked consulting firm attributes, we aim to adapt and create the opportunity to differentiate ourselves and build an exciting, sustainable and prosperous future. Ursula K. Le Guin gave her alternative view of Darwin’s theory in saying “The law of evolution is that the strongest survives!' Yes, and the strongest, in the existence of any social species, are those who are most social. In human terms, most ethical...” Steve Coote Owner and Managing Director VSC Growth and Burchills Engineering Solutions
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Global engineering convergence on the rise Reflections from WSP | Parsons Brinckerhoff French philosopher Teilhard de Chardin’s said everything that rises will converge – a statement that rings true when we consider the global engineering consulting industry. In this industry companies like WSP and Parsons Brinckerhoff, having risen to global pre-eminence as engineering consultants in their respective fields, have found the natural next step is to converge.
For clients, industry convergence means that they now work with a smaller number of large firms that have the capacity to serve clients globally. For some clients they see advantages in using the same approach in multiple markets. One example is WSP’s project work with Google in Sydney. Here our embedded knowledge of Google’s systems supported the development of other projects during 2014 in Manila and Singapore.
WSP Global’s entrepreneurial spirit is evident in its own pursuit of global convergence, from 2006 when they were a Quebecbased engineering services firm (GENIVAR) employing 1,150 people across Canada to their own merger in 2012 with WSP and then the acquisition of Parsons Brinckerhoff in 2014. Today WSP is a world-class professional services firm positioned for diversified growth with 32,000 employees in 500 offices across 39 countries. Industry convergence is not simply about companies becoming bigger, but about companies becoming smarter and stronger. In engineering consulting, consolidation has been driven by the need to broaden our capability, expertise and appetite for risk to tackle large and increasingly complex projects. For clients such mega projects propel them towards a preference for global firms for several good reasons. Most compelling is that clients, through such firms, have greater access to a wider and deeper pool of expertise and experience. For years in the Australia New Zealand transport market our clients have tapped into the skills of Parsons Brinckerhoff’s experts regardless of their geographic location. Thus local clients can maximise the innovations in design and project delivery provided by moving international transport experts to local projects. The new connection between WSP | Parsons Brinckerhoff means transport clients can now also access WSP’s expertise on ‘vertical’ infrastructure, such as buildings for station design, which complements and extends the original service offering. Where niche, specialist services are required, global players can pull in smaller players to deliver this component.
Large firms with enhanced global connectivity also offer global clients the surety of a positive working relationship with one client at both ends of the deal – that is, where the investment is made and where the work is delivered. For WSP | Parsons Brinckerhoff the increased connectivity between teams in Greater China and Australia has already resulted in three significant project commissions in Sydney and Melbourne for Greenland, China’s largest real-estate developer.
Image courtesy of Greenland Group.
Today top technical talent is increasingly mobile and technology supports this mobility. Industry convergence has appeal not only for clients but for employees, who have greater opportunities to work on more complex, iconic projects and work collaboratively within international teams. The economies of scale provided by industry convergence can reduce the cost of project delivery for clients. WSP | Parsons Brinckerhoff has the capability to shift project work around the world to take advantage of specific skills in a geographic location, to expedite delivery timeframes by following the sun or to access lower cost design in offshore resource centres. Parsons Brinckerhoff’s design work on the Qatar Expressway Programme is a prime example. To meet the Middle Eastern client’s requirements, the overall design is led by teams in Brisbane and Melbourne, supported by drafters in Manila and delivered by an international team located in the Middle East.
Industry convergence is not simply about companies becoming bigger, but about companies becoming smarter and stronger.
Realising the advantages of convergence, there is strong momentum behind completing the integration of WSP | Parsons Brinckerhoff in Australia and New Zealand. The companies’ senior leadership teams quickly combined following the acquisition of Parsons Brinckerhoff in late 2014. The companies moved fast to work on the early gains that could be secured through revenue synergies to accelerate future growth. Globally, both companies continue to operate with two well-respected brands but in Australia New Zealand our people are working closer together as we begin to co-brand and co-locate. The ‘natural fit’ between our two businesses has already seen positive synergies across joint bidding activity where we would not have had traditional involvement as standalone businesses, such as the mining team’s inclusion on MMG’s panel. This win resulted from the early collaboration and natural synergy between the mining divisions of Parsons Brinckerhoff in Australia and services offered by WSP in Canada. Industry convergence is a fitting response to increasingly complex engineering projects and clients’ demand for specialised skills across diverse markets and geographies. As consultants we face the market in a stronger position together and so the industry evolves. Guy Templeton WSP | Parsons Brinckerhoff President and Chief Executive Officer, Asia-Pacific
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Consulting Matters Features
To Converge or not to Converge: it’s a key strategic issue BY CONVERGENCE IN THIS INSTANCE, I REFER TO THE ‘SCOPE’ OF A PROFESSIONAL SERVICE BUSINESS, WHETHER YOU REMAIN AS A SINGLE DISCIPLINE BUSINESS, COVER MANY DISCIPLINES, OR BECOME A MUCH BROADER AND MORE GENERAL (IN SCOPE) PROFESSIONAL SERVICES FIRM. THE FIRST THING TO OBSERVE IS THAT THERE IS NO ‘DOMINANT MODEL’ BECAUSE WE DO SEE A VAST RANGE OF HIGH TO LOW SCOPE FIRMS THAT SURVIVE AND PROSPER. There clearly can be synergies associated with having multiple disciplines of engineering, architecture and project management etc, and even management consulting, operating off the same balance sheet. On the other hand this breadth of scope can bring complexity, and complexity drives overhead costs up fast, relative to those who follow the KISS (keep it simple stupid) principle. Let’s start with the client and the project in thinking this through. What is most effective in supply terms? A core question, first addressed some 80 years ago by Nobel Prize winner Ronald Coase, is whether it is more effective to use a series of contracts within markets to organise work, or to employ people ‘within a firm’ to get the work done. In the built environment sector, is it more effective to have series of narrowly focussed, single-discipline specialist firms, or to horizontally integrate into multidiscipline firms that can do a lot of design and project work ‘in-house’? Surely the best criterion to use in making this choice relates to return on shareholders funds, and also the ratio of risk to that return, associated with the synergies that can be gained through diversification and cross ownership, as against letting a market mechanism work through contracting between firms. It’s a matter of strategy: and this starts with the high level goals of the firm and shareholders, which can range from revenue growth, to profitability to excellence in client focus and design, and other elements. There is a lot to learn from other industries too: more consolidations have led to corporate tears than to joy in most other industries. Two examples in Australia are Coles Myer and Pacific Dunlop, both became very big companies but neither survived their burden of complexity. Coles Myer was a merger of everything from a department store, a grocery chain, and discount chains Kmart, Target, and numerous other smaller retailers. They were each already large, and market leaders. The logic seemed compelling of putting together a group of retailers which will achieve economies of scale of many types, creating a powerful, efficient force, where everything from back
A sound risk assessment, and hopefully a quantitative risk analysis should be a part of the strategic decision process, prior to a merger or an acquisition that broadens your scope of services. Growth that comes with complexity can bring more risk than return. office systems to combined buying power would bring great benefits. So why after trying almost everything possible, did it fail as such and lead to a split up and sale of these assets? One view is that the economies of scale were highly elusive, and that any economies of scale achieved were diluted by ‘diseconomies of complexity’.
complexity was the culprit, and synergies and economies of scale were weak. There was no compelling strategic reason to attach these business to each other, and many of them were not that well led anyway. After separation, and with new leadership, many of them have thrived (for example Ansell and Simplot).
Similarly, Pacific Dunlop had leading brands in nine entirely different industries, and history proved that there was only a very weak strategic logic of spreading best practices across these business units. It failed and shareholders took a bath. Once again,
On the subject of risks associated with different arrangements and strategies, there has been some good success in built environment projects, and some failures, from mechanisms such as joint ventures and alliances of various sorts. These are
Photo courtesy of Markus Spiske
Features Consulting Matters
usually aimed at designing in a set of incentives that will achieve a wonderful goal: of alignment in the interests of all the key players in a project. A sound risk assessment, and hopefully a quantitative risk analysis should be a part of the strategic decision process, prior to a merger or an acquisition that broadens your scope of services. Growth that comes with complexity can bring more risk than return. Given all this, I would counsel paying serious attention to the following questions, whether it is two or more giants of our industry who are considering a merger, or smaller firms who are looking to acquire, or broaden your scope of services by organically growing service lines that are new to you: 1. Will the new form of firm be more or less competitive in the market than it is now? How and why? 2. Will our costs be advantaged or disadvantaged: remember that economies of scale are often elusive when size is pursued that comes with increase in scope/ breadth of services? 3. After we converge/ diversify/ acquire, will we have or achieve a naturally coherent business strategy? 4. What will we have to do to achieve excellence in the leadership team? 5. What will be the new culture and will the businesses we are putting together fit in a cultural sense? 6. Will revenue be advantaged, and will that come at a profit? 7. What are the risks, and how will we deal with them? Then, if you go ahead, remember, effective implementation is everything!
Danny Samson Danny Samson, an engineer, is professor of management at the University of Melbourne. He conducts Consult Australia’s residential management program. Comments to d.samson@unimelb.edu.au
SERVICE EXCELLENCE AND INNOVATION 2015: DRIVING BUSINESS VALUE 31 August - 2 September 2015 at Melbourne University Business School This three-day residential management course focuses on business excellence for technical professionals with key topics including: • Leadership of the Service Focused Organisation • Best Business Practices • The Principles of Service Excellence • Advanced Service Company Practices • Marketing and Differentiated Pricing • Attracting and Retaining the Right Clients • Teamwork and Service Operations • Strategic Business Improvement • Firm Measurement and Reporting Performance • Financial Management • Business Strategy and Development
Cost: $3,950 (including full residential costs) Registration: For more information and to register, contact Professor Daniel Samson on (03) 8344 5344 or d.samson@unimelb.edu.au
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24
Consulting Matters Protecting your business
Industry Convergence – what it means for your business and how to manage the risk it creates. SKM & Jacobs, Hyder & Aradis, GHD & CRA and AECOM & URS – these are just four recent examples of convergence at the larger end of the built environment. Indeed, convergence and consolidation within the consulting sector continues apace as firms large and small seek to expand their size and horizons through acquisitions and mergers to become multidisciplinary consultancy practices.
The development of a risk management framework where risk is evaluated and managed is vital to mitigating excessive risk and ensuring the cost of risk is included when competing for work.
Additionally, more firms are providing their services in joint-ventures, teams or formal alliances in order to meet the requirements of tenders for larger and more complex projects.
management framework where risk is evaluated and managed is vital to mitigating excessive risk and ensuring the cost of risk is included when competing for work.
As convergence, expansion and cooperation gathers pace, a number of questions need to be addressed if the combined entity or venture partners are to prosper and fully reap the potential rewards and avoid the pitfalls. Some of these key questions are:
2. HOW CAN RISK BE IDENTIFIED AND MANAGED?
1. What risk is inherent in combining both the business and the culture of two or more practices? 2. How can risk be identified and managed? 3. How will risk be shared between the parties? 4. What insurance solutions are available to transfer some of this risk?
In many instances a process of risk analysis can help to map the risks, prioritise them in terms of their likelihood and potential severity and enable an appropriate control to be developed to mitigate the risk. Often a workshop where all conceivable problems and their consequences are envisaged can help to identify and categorise various risks. For example what are the worst-case scenarios for my business if a project runs over time and over budget?
5. How can the practice’s risk from projects completed prior to convergence be fairly allocated and managed?
3. HOW WILL RISK BE SHARED BETWEEN THE PARTIES?
1. WHAT RISK IS INHERENT IN COMBINING BOTH THE BUSINESS AND THE CULTURE OF TWO OR MORE PRACTICES?
It is increasingly common for the parties providing consulting services, particularly on larger projects, to be joint ventures between parties that would more usually compete for work. The risk inherent in providing these services is likely to be shared between the joint venture partners regardless of the actual cause of any loss.
As much as practices offer unique services, they will also have their own unique culture, including in relation to risk. Where two practices have different historical risk cultures (ranging from risk adverse to ‘risk oblivious’) the challenge is to create a combined culture where risk is considered and managed, without losing the potential to grasp new opportunities. The development of a risk
If services are provided by way of an alliance, the alliance contract will often dictate that the risk be shared equally by the alliance parties, regardless of fault, on a no blame basis. Here the parties agree to share the burden of any losses while similarly sharing the benefits of the successful delivery of the project.
In these situations, the key is to weigh up the benefits of a successful delivery of the project against the potential downsides if the project goes awry and the impact is shared by all parties regardless of the cause of the problems.
4. WHAT INSURANCE SOLUTIONS ARE AVAILABLE TO TRANSFER SOME OF THIS RISK? For many projects, single project insurance policies are now arranged. These can be arranged by the principal on behalf of the consultants or it can be a contractual requirement that the consultant(s) arrange such a policy in order to ring-fence the project risk. This adds an additional cost to the project which should be determined when tendering. However, it also has the advantage of taking the risk away from a consultant’s regular insurance policies, which can be endorsed according to ensure that the single-project policies respond to any losses first.
5. HOW CAN THE PRACTICE’S RISK FROM PROJECTS COMPLETED PRIOR TO CONVERGENCE BE FAIRLY ALLOCATED AND MANAGED? When a practice ceases trading or is acquired by another practice, the risk and liability from its completed work or current projects does not end. If liability is passed to the acquiring practice, it should be quantified and addressed in the acquisition agreement to ensure responsibility for any liability that arises down the track is not unforseen.
Protecting your business Consulting Matters
For larger businesses considering acquisitions, warranty and indemnity insurance can be an effective way of transferring some of the risks associated with the commitments made by the buying and selling parties in the sale purchase agreement. Many smaller consulting firms and one-principal consultants in particular, look to a business sale when considering ceasing to trade – particularly when looking to retire. In these instances ring-fencing the risk by way of run-off insurance can be an effective measure. However, the cost of this can be considerable and needs to be gauged early on. Alternatively, it may also become a recurring annual cost until the risk is completely diminished – which may be in many years’ time. For larger businesses considering acquisitions, warranty and indemnity insurance can be an effective way of transferring some of the risks associated with the commitments made by the buying and selling parties in the sale purchase agreement. A typical risk that warranty and indemnity insurance can cover is tax provisions or environmental liability.
Professional Indemnity question? Consult Australia believes that it is important to support members in all aspects of their business. We also recognise the impact that the insurance market has on Consult Australia member firms in terms of availability, affordability and quality of Professional Indemnity insurance. Post your latest Professional Indemnity insurance cases on the Consult Australia Linkedin group and our PI Insurance Pathway will advise you on the best steps to tackle these issues.
As a guide to all of the considerations discussed above, the top considerations for any practice going into a merger or acquisition are: What is the risk? Is the risk worth the reward? Can the risk be controlled?
BRIC
Bovill Risk & Insurance Consultants
What risk and insurance solutions can be implemented to protect my business? What is the overall cost? Chris Moore Willis Willis is a leading global insurance broker, risk consultant and risk adviser that assists clients of all sizes in identifying and managing risk using traditional insurance and non-traditional solutions. Find out more at willis.com or call 1800 335 014.
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Consulting Matters Business essentials
Addressing pay equity is highly rewarding In late 2014 the Workplace Gender Equality Agency launched the ‘inyourhands’ campaign raising awareness with employers on the issue of gender pay equity. Gender pay equity is about ensuring women and men performing the same role are paid the same amount, and women and men performing different work of equal or comparable value are paid equitably. We know that employers don’t set out to pay women and men differently, so they are often surprised to find gender pay gaps in their organisation. The reality is nearly all organisations have gender pay gaps and pay inequity has the potential to undermine staff attraction, retention, engagement and morale. Unintended gender biases in hiring, promotion, performance and pay decisions can often lead to incidences of pay inequity in almost every organisation. Any unfairness or perceived unfairness can negatively impact workplace productivity, employee engagement and morale, access to talent and retention. UNDERSTANDING THE DIFFERENT TYPES OF GENDER PAY GAPS In addressing gender pay equity, it is important to understand that different types of gender pay gaps can be identified, these have different, but related, causes and actions required to resolve them. Three types of gender pay gaps can be found in organisations: like-for-like, by-level, and organisation wide gaps.
Types of gender pay gaps Like-for-like gaps: these are gaps between women and men undertaking work of equal or comparative value (comparing jobs). By-level gaps: These are gaps between women and men at the same organisational level, for example, at each manager level or level to the CEO. Organisation wide gaps: This is the difference between the average remuneration of women and the average remuneration of men across the whole organisation.
WHY DO GENDER PAY GAPS ARISE? Gender pay gaps, particularly like-forlike gaps, can often be the result of
unconscious biases and practices in recruitment, promotion, performance and remuneration decisions. Decisions that impact remuneration outcomes are generally made at the time of commencement, during the annual remuneration process, during promotion discussions, within organisationwide remuneration reviews, and when employees go on leave or return from leave. Gender stereotypes and bias are a key factor in determining pay outcomes as a result of these decisions. Gender bias often arises from the views, whether conscious or unconscious, about the roles that women and men should play both in the workplace and more broadly in society. Women are generally perceived as communal (caring, communicative and encouraging) and men as ambitious, assertive, decisive and self-reliant. These stereotypes can lead to women missing out on opportunities for promotion, being excluded from training and development or taking on leadership roles on large projects. Such bias is usually heightened for women who are pregnant, work part-time or have recently returned from maternity leave.
THE ROLE OF KEY MANAGEMENT Addressing pay equity requires leadership from the top. Management can play an important role in driving a strong culture of pay equity by asking questions and monitoring remuneration outcomes. Asking for and looking at the data is perhaps the most important step in addressing pay equity in an organisation. It is critical to understand where the gaps are and whether they can be explained and justified. In building a pay equity strategy and action plan, organisations should tailor actions to address the specific nature and causes of their gender pay gaps. Many organisations start by addressing their like-for-like gender pay gaps. SIX STEPS TO ADDRESSING PAY EQUITY The Agency has developed a six step process for organisations to address pay equity. The first step is to become aware of the issues of pay equity and understand why gender pay gaps may arise in your organisation. Data shows that less than a quarter of organisations have undertaken a payroll analysis. This is one of the most critical steps for organisations to conduct a payroll analysis to identify any gaps that may exist and the causes of gender pay gaps.
Six steps to addressing pay equity The six steps are: 1. Awareness and understanding: develop a basic understanding of the key issues surrounding pay equity 2. B uild a business case: articulate why pay equity is important for your organisation 3. Gain leadership commitment: secure buy-in from the leadership team to investigate and address pay equity issues 4. Data analysis: identify any gender pay gaps and investigate the causes 5. Strategy and action: build a clear set of goals and action plans to improve pay equity 6. Review and refine: monitor and review pay equity continuously
TAKING ACTION Once you understand what is contributing to like-for-like gaps, the next step is to develop a tailored set of actions to address these gaps and target the causes. Typically the removal of bias in pay and performance decisions requires a medium to long term strategy and cultural change. Employers can view their by-level pay gaps and how they compare to chosen comparison groups by downloading their confidential organisation-specific benchmark report from the Agency’s online portal. The Agency has a suite of resources to help employers undertake a gender pay gap analysis, available at: https://www.wgea.gov.au/lead/addressingpay-equity. The Agency is also running a series of pay equity workshops in Sydney and Melbourne. https://www.wgea.gov.au/addressing-payequity/pay-equity-workshops We encourage organisations to test any assumptions that pay equity is not an issue in their organisation by using the Agency’s resources. It is only through fact-based analysis that they can truly know if, and where, any pay gaps exist.
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Consulting Matters Business essentials
Who should bear the risk? Much of the commentary on project risk is from the perspective of principals or financiers. It accepts that ‘undesirable’ risks may be laid off to other project participants, such as consultants and contractors, based on their perceived ability to absorb, manage or insure them. This article briefly examines why consultants should approach the subject of project risk allocation from a different perspective.
THE ABRAHAMSON PRINCIPLES Parties at the negotiating table often hear the saying “the risk should be borne by the party who can best manage it”? For many, this is an article of faith and self-evident, despite the fact it does not stand to reason. Why should the person who may be better skilled at managing a risk be obliged to underwrite it? Those who trot this line out are often unaware it is a misinterpretation of the first of five principles put forward by lawyer Max Abrahamson in the early 1970s. In summary, they read: “[A] party should bear a construction risk where: 1. It is in his control, that is; if it comes about it will be due to wilful misconduct or lack of reasonable efficiency or care; or 2. He can transfer the risk by insurance and allow for the premium in settling his charges to the other party …; or 3. The preponderant economic benefit of running the risk accrues to him; or 4. To place the risk on him is in the interests of efficiency (which includes planning, incentive, innovation) …; or 5. If the risk eventuates, the loss falls on him in the first instance, and it is not practicable … trying to transfer the loss to another.”
Misinterpretation of the first principle is no doubt partly explained by its frequent simplification to; “It is in his control”, in which control is read to mean ability to control rather than responsibility to control.
“The job of trying to balance the five principles in practice is the hard one…But at least it is best to work from declared principles rather than undeclared and perhaps unconscious prejudices.”
In its original form, the first principle is concerned with parties bearing the risks arising from their wilful misconduct (unarguable), or which they have a duty of care to manage. So, for example, a design consultant should retain design risk, a contractor the risk of poor workmanship. Abrahamson could not reasonably have been proposing to allocate risks to a party just because they would be better skilled at managing them. Why should the expert have to be the underwriter?
The Abrahamson Principles have become entrenched as conventional wisdom, reinterpreted, enshrined in policies and procurement guidelines, and recited in negotiations, accurately or otherwise. It appears that their shortcomings may also be their strength. As they do not reflect any fundamental logic or supporting rationale that points to a particular outcome, they can be selectively applied to support different stakeholders’ vested interests.
Another concern with the Abrahamson Principles is whilst the first principle might allocate a risk to a particular party; the other principles might allocate that same risk to somebody else. The principles contain no order of precedence, and even Mr Abrahamson acknowledged the difficulty in applying them when he said:
The Abrahamson Principles have become entrenched as conventional wisdom, reinterpreted, enshrined in policies and procurement guidelines, and recited in negotiations, accurately or otherwise. It appears that their shortcomings may also be their strength.
Where does this leave the consultant who is seeking to take a reasoned approach to the risks presented by a project opportunity?
WHOSE RISK IS IT? From the consultant’s perspective, a better approach to allocating project risks begins by asking; who ‘owns’ the risk in the first place? A strong case can be made that, from the outset of any enterprise, all risks belong to the entrepreneur. Every principal embarks on a project in order to achieve some benefit, be it profit, capacity, efficiency, public utility or other. The type and magnitude of risks involved depend on the principal’s choice of business, the type of facility, its location, delivery model, etc. If they decide to execute the project themselves they will retain all of the risks. They would need to weigh up whether the risks are acceptable in view of the benefits they expected to enjoy over the life of the project.
Business essentials Consulting Matters
Where the principal outsources elements of the project to external providers, such as architects, engineers, surveyors, contractors and equipment suppliers, those parties must decide which of the project’s risks they can reasonably assume and on what terms. Commentators use the benign term ‘risk allocation’ when discussing this outsourcing scenario, but this is misleading – they are really talking about the transfer of risks which prima facie belong to the principal. External providers such as consultants bring to the project their particular repertoire of skills and services. In return for the one-off fees they charge, the principal can reasonably expect them to assume the risks inherent in their particular service offering, be it design, engineering, surveying, procurement, management or other, at least up to a reasonable limit of liability. What can be contentious however is whether a consultant should assume particular risks that arise from the way the principal has put the project together. These include risks caused by; lack of information, unclear design responsibilities, inappropriate project delivery model, unrealistic schedule, multiple third party dependencies. The Grove Report2 noted: “it is largely the principal who can reduce risks through pre-construction planning, exploration and design effort (it is submitted this includes appropriate contract selection and quality documentation); most of the risks in a project, including determining the appropriate allocation of any risk that will occur during the construction phrase, can be dealt with by the principal prior to the selection of the contractor. This provides an incentive for the principal to invest money early in investigating the risks, produce quality documentation to deal with those
risks and consider embracing rather than transferring risk”
THE CONSULTANT’S PERSPECTIVE In a competitive tendering scenario, it is unrealistic to think consultants have the opportunity to address every type of risk in their pricing. Moreover, if they assume a risk which is uncontrollable or unquantifiable, will they essentially be gambling, or providing free insurance? What would their shareholders think? As with any other business decision, consultants need to make a case for taking on the principal’s project risks. Before accepting such a risk, a consultant should ask itself: 1. Is the risk within our competence? 2. Can we evaluate it? 3. Can we manage and control it? 4. Are we being paid to accept it i.e. does it arise out of an activity under our control and can it be covered by a fee or contingency? In answering these questions, the consultant would need to examine such matters as: • Whether taking the risk is part of its service offering. • In what capacity it is being engaged – its particular role and scope of services. • Whether it has the power under its contract to control the factors on which the risk depends. • Whether the principal is paying it for the work necessary to manage the risk.
• Whether it is able to make a margin on the value of the activities it assumes responsibility for. • Whether it is able to include a realistic risk contingency in its fee. • Whether the risk can be qualified, excluded or otherwise addressed by how its responsibilities, scope of services and entitlements are defined in its contract. • Whether the proposed responsibilities form part of the ‘business’ it declares for Professional Indemnity insurance cover.
CONCLUSION When responding to a proposed ‘allocation’ of project risks, remember to take into account which party ‘owns’ the risk in the first place. If it is not inherent in the services you are offering, decide whether it makes good business sense to accept a ‘transfer’ by considering whether you will be appropriately paid to control or otherwise provide for it. And if you are told that you should accept a risk because “you are the experts”, it might just help if you explain the background to where this line comes from.
Martin Harris Principal Prodest www.prodest.com.au 1
Abrahamson Risk Management, 2 ICLR 241, 1984.
2
‘ The Grove Report: The Background To The Conference On Whose Risk?’ Report by Jesse B Grove III into Hong Kong Special Administrative Region’s general conditions of contract for construction works (ICLR 302 Volume 18, 2001 – Part 2)
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March quarter 2015 Overview In its January update of World Economic Outlook, the International Monetary Fund lowered its forecast of world growth in 2015 from the 3.8 per cent forecast last October to 3.5 per cent. Growth of 3.7 per cent is forecast for 2016: down from the previous 4 per cent. The boost to world growth from lower oil prices is expected to be more than offset by slower growth in China, Russia, the euro area and Japan. The United States is the only major economy in which growth forecasts have been raised. The Australian economy grew by a relatively slow 2.5 per cent in 2013/14; and growth slowed further to an annual rate of 1.7 per cent in the first half of 2014/15. In its February Statement on Monetary Policy, the Reserve Bank saw the economy growing by 2.25 per cent in 2014/15, by 2.5–3.5 per cent in 2015/16 and by 2.75–4.25 per cent in 2016/17. Our forecasts are a bit lower than the mid-points of these forecasts. The sharp falls in mining investment ahead are unlikely to be counterbalanced by rises in non-mining investment; and although mining export volumes will grow strongly, low commodity prices will depress their value. Preliminary estimates suggest that engineering construction activity fell by 0.6 per cent in the December quarter of 2014 to be about 12 per cent lower than a year earlier. We estimate that construction of mining, oil and gas facilities, not yet published, fell by about 5 per cent, and that other activity increased by 3 per cent. In the September quarter, engineering construction activity fell by 5 per cent: work on mining, oil and gas was down 9 per cent and other engineering construction down 1 per cent. Engineering construction fell sharply in Queensland and moderately in Victoria and South Australia; but it increased in New South Wales and in Western Australia. Work on new housing increased by 3 per cent in the quarter and was 16 per cent greater than a year earlier. Non-residential building activity, however, fell by 3 per cent and was 3 per cent less than a year ago.
World Economic Growth: 2014, 2015 & 2016 China India ASEAN-5* Developing economies United States World Advanced economies
2014 2015 2016
Euro area Japan
* Indonesia, Malaysia, Philippines, Singapore & Vietnam
0
1
2
3
4
5
6
7
8
% change on previous year
Source: IMF, January 2015
Australian Economic Growth Percentage increase in real GDP
% 4.0
3.7%
forecast
3.5
3.1%
3.0 2.5%
2.5
2.7%
2.5% 2.2%
2.0 1.5 1.0 0.5 0.0 '06-07
'07-08
'08-09
'09-10
'10-11
'11-12
'12-13
'13-14
'14-15
'15-16
16/17
Source: ABS 5206.0, author's forecast
Selected Construction Activity, Australia $ billion
Seasonally-adjusted annual rates, in constant 2012/13 prices
80 Other engineering construction 70 Mining, oil & gas
60
estimated
50 New housing estimated
40
Non-residential
30
Source: ABS 8755.0 20 Mar '12
Jun
Sep
Dec
Mar '13
Jun
Sep
Dec
Mar '14
Jun
Sep
Dec
Non-residential Building
Forward Indicators of Non-residential Building
Begun % done
Preliminary estimates suggest that activity fell by 3 per cent in the December quarter, to a seasonally-adjusted annual rate of $34.3 billion, in 2012/13 prices, and was nearly 3 per cent less than a year earlier. Forward indicators weakened in the September quarter and remained negative. Work commenced in Australia in the year to September was nine per cent less than work done; and at the end of September there was 8.2 months work in the pipeline: down from 9.1 in the previous quarter. The indicators were positive in New South Wales, neutral in Victoria, but negative in other states and territories. National approvals fell, for the fourth consecutive quarter, to a seasonally-adjusted annual rate of $26.7 billion in the December quarter. Down 5 per cent on the previous quarter, approvals were 36 per cent lower than a year earlier. Increases in industrial and health and aged care buildings were more than offset by a sharp fall in education buildings. Public sector approvals fell sharply, their market share dropping from 26 per cent to 19 per cent.
110
14
100
12
90
10
80
8
70
6
60
4
50
2 0
40 NSW
Vic.
Qld
SA
WA
Begun % done
Tas
NT
ACT
Months work ahead
As the chart opposite shows, approvals picked up recently in New South Wales, but continued to fall in the other large states. From these depressed levels, we expect approvals to trend higher in the year ahead. The latest NAB Monthly Business Survey shows that both business conditions and confidence remained weak in February, with both below their long-term averages. Measured in 2012/13 prices, activity increased by 5 per cent to $35.2 billion in 2013/14. With continuing low interest rates and a declining Australian dollar, we expect modest rises of 1.7 per cent this year and 0.6 per cent in 2015/16.
Aust
Source: ABS 8752.0
Non-residential Building Approved, Australia: by type $ billion
Seasonally-adjusted annual rate, in constant 2012/13 prices
45 40 35 30 25
Other
20
Health & aged care Education
15
Total work approved in the year to December, at $30.4 billion, was 19 per cent less than work approved in calendar 2013.
Months
Ratio of work begun to work done in year to September 2014 and months work ahead at year end
Industrial
10
Commercial
5
Source: ABS 8731.0
0 Mar '12
Jun
Sep
Dec
Mar '13
Jun
Sep
Dec
Mar '14
Jun
Sep
Dec
Non-residential Building Approved, Selected States $ billion
Trend values at annual rate, in constant 2012/13 prices
12 10 8 6 4 2 0 Mar '12
Jun
Sep
Dec
Mar '13 NSW
Non-residential Building Forecast: by State & Territory
Jun Vic
Sep Qld
Dec SA
Mar '14
WA
Jun
Dec
Source: ABS 8731.0
value of work done, $ million, constant 2012/13 prices
NSW
VIC
QLD
SA
WA
TAS
NT
ACT
Australia
2012/13 (a)
8,063
8,360
6,772
2,247
5,592
419
1,046
1,015
33,515
2013/14 (a)
9,415
8,834
7,063
2,295
5,385
459
1,058
695
35,203
2014/15 (a)
10,050
9,000
7,250
2,190
5,200
470
940
700
35,800
2015/16
10,250
8,910
7,600
2,140
5,150
500
730
720
36,000
2016/17
10,300
8,700
8,000
2,250
5,280
520
700
800
36,550
2013/14
16.8
5.7
4.3
2.1
-3.7
9.5
1.1
-31.5
5.0
2014/15
6.7
1.9
2.7
-4.6
-3.4
2.4
-11.1
0.7
1.7
2015/16
2.0
-1.0
4.8
-2.3
-1.0
6.4
-22.4
2.9
0.6
2016/17
0.5
-2.4
5.3
5.1
2.5
4.0
-4.1
11.1
1.5
% change
a = Actual
Sep
Forward Indicators of Engineering Construction
Engineering Construction
Begun % Ratio of work begun to work done in year to September 2014 and months work ahead at year end Months 100 20
Recent activity Preliminary estimates suggest that the volume of work done fell by 0.6 per cent in the December quarter to an annual rate of $111.5 billion, 12 per cent less than a year earlier. Forward indicators weakened again in the September quarter, if only slightly. In the year to September, 44 per cent less work was begun than was done, suggesting substantial falls in activity ahead. Nevertheless, at the end of September there was still more than 10 months work yet to be done: about the same as at the end of the previous quarter but less than the 12 months outstanding a year ago. In Western Australia there was 18 months work in the pipeline; but work ahead was less than 8 months in most other states and territories. Commencements fell sharply in the September quarter and in the year to September, at $67 billion, they were down 9 per cent on the year to June. In Victoria, commencements in the year to September were down only slightly on those in the year to June; but they fell quite sharply in most other states and by around 13 per cent in both Queensland and Western Australia. The volume of work yet to be done fell by 2 per cent to $103 billion in the September quarter and was 20 per cent less than a year earlier. Seventy per cent of this work ahead is on mining and heavy industry. Measured in 2012/13 prices, activity fell by 4.3 per cent to $124.7 billion last year. It is forecast to fall by 13 per cent this year to $108.5 billion and by 20 per cent to $86.8 billion in 2015/16.
80
16
60
12
40
8
20
4
0
0 NSW
Vic.
Qld
SA
WA
Begun % done
Tas
NT
ACT
Aust
Source: ABS 8762.0
Months work ahead
Engineering Construction Commenced, Selected States Moving annual totals, in constant 2012/13 prices
$ billion 80 70 60 50 40 30
WA NSW Qld Vic SA
20 10 0 Dec '11
Mar '12
Jun
Sep
Dec
Mar '13
Jun
Sep
Dec
Mar '14
Jun
Source: ABS 8762.0
Engineering Construction Work Ahead, Australia $ billion
Value of work yet to be done, in constant 2012/13 prices
160
Recreation & other
140 Telecommunications
120
Water & sewerage
100 80
Electricity & pipelines
60
Bridges, railways, harbours
40
Roads
20
Source: ABS 8762.0
Mining & heavy industry
0 Dec '11
Engineering Construction Forecast: by State & Territory
Mar '12
Jun
Sep
Dec
Mar '13
Jun
Sep
Dec
Mar '14
Jun
Sep
value of work done, $ million, constant 2012/13 prices
NSW
VIC
QLD
SA
WA
TAS
NT
ACT
Australia
2012/13 (a)
24,151
11,113
40,458
5,913
43,692
1,154
3,076
789
130,345
2013/14 (a)
20,009
10,295
42,397
5,287
41,721
1,166
3,046
813
124,735
2014/15
18,400
9,400
32,100
4,900
37,600
1,100
4,200
780
108,480
2015/16
19,200
9,000
18,300
4,850
30,200
930
3,600
730
86,810
2016/17
20,500
8,910
15,100
5,110
23,700
960
2,100
720
77,100
2013/14
-17.1
-7.4
4.8
-10.6
-4.5
1.1
-1.0
3.1
-4.3
2014/15
-8.0
-8.7
-24.3
-7.3
-9.9
-5.7
37.9
-4.1
-13.0
2015/16
4.3
-4.3
-43.0
-1.0
-19.7
-15.5
-14.3
-6.4
-20.0
2016/17
6.8
-1.0
-17.5
5.4
-21.5
3.2
-41.7
-1.4
-11.2
% change
a = Actual
Sep
Population Growth, Australian States '000
New Housing
110 100
In the year to June 2014, Australia’s population increased by 364,900: 8 per cent less than the increase of 397,600 in the previous year to June. Natural increase of 152,200 was 6 per lower and net overseas immigration of 212,700 was down by 10 per cent. Despite the slowdown, the increase in 2013/14 was 6 per cent higher than the average annual increase over the previous decade.
90
Growth strengthened in New South Wales and Victoria but, as mine development slowed, weakened significantly in the resource-rich states of Queensland and Western Australia.
10
The trend in national dwelling approvals rose by 3 per cent in the December quarter. As the chart opposite shows, approvals increased in all of the large states except Queensland, where they declined by 2 per cent. Residential property prices rose only slightly in December but were generally well up on a year ago. According to RP DataRismark, at the end of December 2014 dwelling prices in the main capitals were 8.2 per cent higher than a year earlier. They were up 12.4 per cent in Sydney, 7.6 per cent in Melbourne, 4.8 per cent in Brisbane, 4.3 per cent in Adelaide and 2.1 per cent in Perth. Consumer confidence improved sharply in February: the index rose by 8 per cent to 100.7. The Reserve Bank’s cut in interest rates, falling petrol prices and a strong rise in share prices were some of the reasons for the rise. Respondents nevertheless remained cautious about employment prospects. Confidence about housing also rose sharply. The ‘time to buy a dwelling’ index increased by 10 per cent but was 3 per cent lower than a year earlier. Expectations about future house prices rose by 7 per cent but were 6 per cent lower than a year ago. A further cut in interest rates over the next three months should support confidence in housing; but, if unemployment increases, confidence in general may suffer.
New Housing Forecast: by State & Territory
80 70 60 50 40 30 20
0 NSW
Vic
Qld
Years ended June
SA
Average 2003-13
WA 2012
Tas
2013
NT
Dwellings Approved, Selected Australian States '000
Trend values, at annual rate
70
Vic
60
NSW
50 40
Qld WA
30 20
SA
10
Source: ABS 8731.0
0 Mar '12
Jun
Sep
Dec
Mar '13
Jun
Sep
Dec
Mar '14
Jun
Sep
Dec
Consumer Confidence
Index 125 120 115
10-year average
110 105 100 95 90 85 80 75 Feb'07
Source: Westpac-Melbourne Institute Feb'08
Feb'09
Feb'10
Feb'11
Feb'12
Feb'13
Feb'14
value of work done, $ million, constant 2012/13 prices
NSW
VIC
QLD
SA
WA
TAS
NT
ACT
Australia
2012/13 (a)
10,511
13,910
7,323
1,839
5,895
468
541
1,280
41,768
2013/14 (a)
11,602
13,549
7,811
2,114
7,166
425
718
1,170
44,555
2014/15
12,500
13,940
8,580
2,160
7,380
430
480
1,130
46,600
2015/16
13,100
14,000
8,600
2,200
7,590
440
450
1,020
47,400
2016/17
13,500
13,980
8,500
2,300
7,780
480
440
1,050
48,030
2013/14
10.4
-2.6
6.7
14.9
21.6
-9.2
32.7
-8.6
6.7
2014/15
7.7
2.9
9.8
2.2
3.0
1.1
-33.2
-3.4
4.6
2015/16
4.8
0.4
0.2
1.9
2.8
2.3
-6.3
-9.7
1.7
2016/17
3.1
-0.1
-1.2
4.5
2.5
9.1
-2.2
2.9
1.3
% change
a = Actual
ACT
Source: ABS 3101.0
2014
Feb'15
34
Consulting Matters Corporate social responsibility
Building Communities
street artists on the sides of the building. They will further enrich the social programming and community development activities which has seen residents learn to create simple furnishings such as stools and benches from recycled materials. Interactive cooking sessions between residents and designers helped establish a sense of community amongst everyone involved, while allowing the residents to have a say in the future of their building.
Picture yourself in crisis, where money is scarce and food is hard to come by. Accommodation options are limited and you are forced into a lodging house: simple, low-cost accommodation where you receive a single room and access to a shared kitchen and bathroom. You share your space with 192 other residents living in close quarters at 100 Hampton Road in Fremantle. FORM, an independent, non-profit organisation in Western Australia, envisions a new model of affordable house; it’s one where residents share meals, garden and get to know one another in a supportive environment and where shared spaces such as the common rooms and gardens are beautifully designed places that residents are proud to call home.
A pro-bono partnership with integrated infrastructure firm AECOM is helping FORM achieve its vision to create social housing that brings residents together and dispels the negative perceptions that often go hand-inhand with these developments. AECOM is helping to craft a new model of affordable housing that hopes to set a benchmark for future for future design and development. AECOM’s landscape architects have designed interactive communal spaces including a community pocket parket, kitchen garden and multiple retreats for the residents to relax, stay active or work on their green thumbs in the garden. The challenge now is to raise the funding to make them a reality These gardens will complement striking murals created by internationally renowned
AECOM’s Walter Van Der Loo, Western Australia Practice Leader – Design + Planning, and Tom Griffiths, Senior Landscape Architect, even had the opportunity to make tacos with the residents and discuss ideas for exterior spaces. “Sharing a chopping board, prepping and eating lunches together on the patio of 100 Hampton has helped the AECOM team better appreciate how the vulnerable residents of the Lodge could benefit from improvements to the facility, making it a more welcoming and positively engaging home base from which they can continue on the journey to rebuild their lives.” Tim McNamara AECOM
Corporate social responsibility Consulting Matters
35
Realising a new vision of Indigenous education
GHD is providing a range of pro-bono technical services to help ‘close the gap’ between Indigenous and non-Indigenous Australians.
literacy instruction in a warm home-style environment that understands the challenges of transitioning from a remote community to a big city.
The Melbourne Indigenous Transition School (MITS) has developed a new model for education of remote Indigenous students. Many remote Indigenous students and their families desire the opportunities, structures and pathways offered in capital city schools. However, students who grew up in remote areas face geographic, economic and cultural barriers in moving to a big city.
After a year at MITS, it is envisaged that the students will transition to one of 19 Melbourne Partner Schools. The partner schools, known for their high performance, will offer full scholarships to the transitioning MITS students.
Starting next year, some 20 Indigenous boys and girls will live and study at the new MITS campus in Richmond, built in the magnificent 19th century property ‘Lockington’. Students will receive intensive numeracy and
Working alongside project architect McIldowie Partners, GHD has leveraged it’s integrated service offering, providing mechanical, electrical and sustainability engineering services for renovation of Lockington and addition of a new building on the site.
MITS Executive Officer Edward Tudor said, “We want to enable Indigenous students from remote communities to access the best educational opportunities in Australia. GHD’s pro bono commitment will help our students enjoy a warm and connected home in Melbourne for many years to come. GHD’s engagement with other members of the design team has been particularly impressive, resulting in outstanding designs delivered on time.” Work on this project has been supported as part of the GHD in the Community corporate social responsibility program. Clair Millar and Ben Foster GHD
36
Consulting Matters Project case studies
Brisbane West Wellcamp Airport and Wellcamp Business Park Australia’s newest public Airport, Brisbane West Wellcamp Airport, is the first privately funded public Airport ever built in Australia and the only new Greenfield public Airport to be constructed in Australia since Tullamarine almost 50 years ago. The Brisbane West Airport and Business Park will service catchment area of over 344,000 people, and is well situated with the recent approval of the proposed $147M Toowoomba Second Range Crossing (TRSC), which is estimated to reduce travel times from the Brisbane CBD to the airport from 2 hours down to just 1 hours and 20 minutes. As an important business hub, the latest independent economic studies estimate that by 2019, the Airport and Business Park will generate nearly half a billion dollars worth of business per annum into the local Toowoomba economy, resulting in positive economic output for the region. The Wagner family first conceived the idea for the airport in 2010 when they commenced the design for a business park on their 5,000 acre landholding at Wellcamp, just west of Toowoomba. Since then, well in excess of $100M has been invested and over 6.7 million cubic metres of earth has been moved to construct a fully operational airport within a construction period of just 18 months. It is estimated that a total o0f 18.2 million cubic metres will need to be moved to complete the works. As the Civil Engineering Consultants for the earthworks, access roads, business park and stormwater drainage infrastructure, Kehoe Myers Consulting Engineers’ ability to assist the client in meeting the ambitious construction targets played an important role in the success of the project.
Southern Queensland (USQ) to open a new aviation education precinct, offering much needed pilot training as well as courses for aircraft maintenance, engineering and electronic. Regional Express Airlines (REX) commenced passenger flights, servicing various parts of regional Queensland, on January 1, 2015.
The Kehoe Myers team was constantly challenged and responded by initiating innovative, efficient and timely engineering solutions to meet “real world” challenges. The speed in which the airport has taken shape has been commended by many as a very well executed feat of engineering and construction by all involved.
Whilst exciting, the above developments are only the first steps on a bigger journey.
The new terminal was officially opened with QANTAS direct passenger flights (Toowoomba to Sydney) on Monday 17th November 2014.
Many interesting innovations in design and construction have been utilised, including the following, making the project unique:
In early December 2014, Brisbane West Wellcamp linked up with the Airline Academy of Australia (AAA) and the University of
In addition to the benefits the tourism and business sectors, the Agricultural Industry will also benefits from local access to freight capabilities to Asia – fresh produce, live cattle and chilled beef.
A pioneering Low Pressure Sewer (LPS) system, the largest of its kind anywhere in the region, conveys the sewerage to an on-site Sewer Treatment Plant (STP). Treated
sewer effluent is then reused for various safe purposes, including irrigation. The bridge constructed under the main site entry road (off Cecil Plains Road) utilises Wagner’s proprietary Composite Fibre Technology (CFT), which represents a significant innovation and improved environmental outcome over traditional concrete girders. Wellcamp Airport is also the first airport in the world to feature the Wagner Group’s award winning Earth Friendly Concrete (EFC). Wagner’s replacement of Portland cement with the recycled binder materials reduces the CO2 emissions associated with Portland cement by 80 to 90%. The Airport Terminal and Business Park have been fitted with an optic fibre backbone network which will provide high-speed data connection to all of the prospective tenants. Fiona Lyall Kehoe Myers
Project case studies Consulting Matters
37
38
Consulting Matters Project case studies
Visitor centre a respectful tribute to its neolithic neighbour
The Stonehenge Visitor Centre has been described as a modest and lightweight counterpoint to the enduring presence of Stonehenge, a description which is a tribute to the architect and design team in delivering a facility that respects the history of the site and integrity of the surrounding environment. “The design of the centre is based on the idea that it is a prelude to the Stones, and its architectural form and character should in no way diminish their visual impact, sense of timeless strength and powerful sculptural composition,” said Denton Corker Marshall’s Barrie Marshall. “Where the Stones are exposed, massive and purposefully positioned, the centre is sheltered, lightweight and informal. And
Project case studies Consulting Matters
where the Stones seem embedded into the earth, the centre rests on its surface,” he added. The client English Heritage was keen to ensure the long awaited visitor centre nestled gently into the site to minimise excavations within this World Heritage Site. Accordingly, the design team created a raft foundation requiring only very limited excavation into the ground, reinforcing the centre’s gentle placement on the site. The site is referred to as ‘Airman’s Corner’, named in commemoration of the 1912 air crash which took the lives of two members of the newly formed Royal Flying Corps. The 211 slender steel columns that support and tie down the roof – placed at uneven intervals and slight leaning in different directions – reference the trunks of nearby forest trees. From a functional perspective, the number of columns reduces the depth of the foundations required. The intentional irregularity of the building components pay homage to the surrounding landforms, allowing the building to reference and sit in harmony with the landscape. The opening of the visitor centre in December 2013 ensures visitors are no longer required to endure the previous ramshackle arrangement of cramped temporary buildings. The inside of the centre is austere and nicely detailed throughout without a hint of the hidden services and engineering. Visitors
39
Accordingly, the design team created a raft foundation requiring only very limited excavation into the ground, reinforcing the centre’s gentle placement on the site. now have the opportunity to take time to understand the Stones and their significance through time in the interactive museum space which includes a 360° cinema display and climate controlled exhibition cases for artifacts on loan from a number of major institutions. An on-site café, impressive gift shop and dedicated facilities for school parties accentuate the visitor experience. Sustainability was a key driver for the client and the design team since the concept stages of the project and a BREEAM Very Good rating has been achieved. An on-site sewage treatment plant, ground source heat pumps and borehole water have been included to reduce both the carbon footprint of the centre and costly and intrusive excavations associated with connections to local utilities. The on-site boreholes also provide the groundwater to feed the heat pump installations which are key to the low energy hybrid environmental approach. Despite the extreme weather during the past winter, including very strong winds and record rainfall for the UK, the centre remained warm and dry, though these
conditions increased the complexity of the commissioning of all systems. The visitor centre represents the most significant and recognisable component of the Stonehenge Environmental Improvements Programme which began with infrastructure works and has also included the closure of the A344 road past Stonehenge. It concluded this summer with the conversion of the former facilities near the monument to a security hub concealed within the remodeled landscape, and all signs of recent construction work removed as the Stones have been returned to their former glory and can be appreciated without distraction. For more information on the Stonehenge visitor centre and the Stonehenge Environmental Improvements Programme, visit: www.englishheritage.org.uk Norman Disney & Young provided the following services to this landmark project: Communications, Electrical, Fire Protection, Hydraulics, Mechanical, Security, Acoustics, and Sustainability.
40
Consulting Matters Industry comment
Diversity and inclusion As consultants, we take pride in the variety of clients and industries we serve, and the long-term benefits we create for communities in Australia and around the world. Attracting, developing and retaining people from a broad range of backgrounds will help us evolve new ideas and provide even more responsive solutions to clients and communities.
YOUR CONSULT AUSTRALIA HEALTH COVER BENEFITS AT A GLANCE J O I N N OW A N D G E T 6 W E E K S F R E E
Gender is an obvious imbalance in our industry. However, we can also do more to recognise the unique contribution each of us makes as individuals, regardless of age, culture, or personal situation.
We understand that your health is important. That’s why we’re offering you 6 weeks free cover when you take out both hospital and extras cover through the Consult Australia health plan.*
Fostering more diverse and inclusive workplace cultures is not an ’add-on’ that’s nice to have, it makes good business sense. Research consistently confirms that companies that are more diverse make better decisions and are ultimately more successful. In our industry, a diversity of thought is essential to creating imaginative solutions that address operational, economic, social and environmental challenges.
G A P F R E E G E N E R A L D E N TA L AN D PHYSIO FOR KIDS We’ll cover the cost of your kids’ general dental and physio until they turn 25 at Members First providers.**
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This is a journey that requires continual focus. At GHD for example, we have a three year diversity & inclusion step up plan to enhance gender equity, cultural diversity, and flexible work arrangements for our people. In 2014 we also established a Diversity & Inclusion Group, made up of representatives from key areas of our business, which meets on a regular basis. Active commitment at senior levels is needed to champion change and create environments where everyone has an opportunity to succeed. Phil Duthie GHD
MEMBER DISCOUNT PARTNERS Keep your mind and body active with some great member discounts on things like gym memberships, movie vouchers and theme park entry. With a wide range on offer there’s something for everyone. Visit bupa.com.au/MemberExclusives.
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bupa.com.au/corporate username: consultaust password: healthplan
corporatecallback@bupa.com.au
*Only for new customers on new hospital and extras cover policies issued by Bupa Australia Pty Ltd ABN 81 000 057 590, paying by direct debit or payroll deduction (if available). Six weeks free after initial payment. Not with other offers. **For most items when treatment is provided by a Members First dentist or physiotherapist. Available on Ultimate Health Cover, Silver, Gold and Platinum Extras covers when taken with hospital cover on a family membership, on most services. Fund rules, waiting periods and annual maximums apply. Child dependants only. Includes Major Dental in VIC and SA only. Excludes orthodontics and hospital treatments. ~Available in NSW, QLD, SA, TAS, VIC and WA. Bupa Australia Pty Ltd ABN 81 000 057 590. 11571-06-14P
What do you think is the most pressing issue our industry is facing? Submit an industry comment to Consulting Matters today. Send your comment to our Editor (max 200 words) at kisanne@consultaustralia.com.au.
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CONSULT AUSTRALIA IS ON YOUR SIDE
Consult Australia believes that it is important to support members in all aspects of their business. We also recognise the impact that the insurance market has on Consult Australia member firms in terms of availability, affordability and quality of Professional Indemnity insurance.
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Safety in Design
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Learn vital information about:
Learn vital information about:
• Designer duties under current legislation
• Contract formulation & terms
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• Best practice examples • Includes the Safety in Design Tool Kit
Member Price: $1,800 Non-Member Price: $2,680
The Role of the Superintendent Topics include:
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Member Price: $2,900 Non-Member Price: $3,200
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• Scope of duties • Decision making and conveying information • Liability of the Superintendent • Insurance issues Facilitated by Tony Horan - one of the most knowledgeable and experienced barristers working in the construction industry in Australia.
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All courses are also available in-house. For more information, visit www.consultaustralia.com.au or contact Consult Australia on 02 9922 4711 or education@consultaustralia.com.au http://bit.ly/caeducation
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