Industry Associations
Procurement reform a vital step for economic recovery Procurement reform can improve the effectiveness of infrastructure spending as stimulus.
ARA CEO Caroline Wilkie makes the case for procurement reform in rollingstock and signalling to assist infrastructure spending to stimulate the economy. Governments in Australia have indicated that they will continue to fund committed infrastructure projects and have begun to bring projects forward to further stimulate the economy to support job growth and investment due to the impacts of COVID-19. The Australasian Railway Association (ARA) commends this sensible approach. Infrastructure spending is in the long-term national interest, stimulating multiple parts of the economy, not just construction. Stimulating rail manufacturers and suppliers would be of immense benefit, particularly in regional Australia, where many are located. However, there are other areas where governments could go further to identify 38 | ISSUE 5 2020 | RAIL EXPRESS
and act on measures that could be introduced to support further cost savings and improve the delivery of new rail projects. Reforms in the area of tendering and procurement would deliver better, faster, and cheaper projects in the rail sector. While this debate is not new within the infrastructure portfolio, the economic impact of COVID-19 has highlighted the importance of pursuing efficiencies to ensure the rail infrastructure construction sector and rollingstock supply chain remain in a position to support the government’s infrastructure agenda and further stimulate the economy during these difficult economic times. Australia’s tendering practices are
significantly costlier and more time consuming compared to international benchmarks. The tendering costs in Australia are estimated to be around 1-2 per cent of a project’s total cost, which are double the world benchmark of 0.5 per cent. Increased tender costs are immediately reflected in the project pricing, so reducing the costs of tendering should be important to all parties. High tender costs also increase the risk profile for tenderers and thereby tend to discourage participation. The ARA proposes that significant benefits could be realised if improvements were made to current Australian industry procurement practices. Substantial improvements can be achieved through
