Innovative Australian Public Sector Construction Management: Effectively Engaging the Private Sector

Abstract

This research addresses problems where 'poor quality tender documents continue to be a source of inaccurate estimates, claims and disputes' (Laryea, 2011 pps 275-286) and 'few industries suffer more from conflict than construction' (Black et al, 2000). Much of this conflict derives from differing aims -Australian public sector owners aim to achieve 'value for money', while contractors aim to optimize profit and improve reputation. Counter-intuitively, the research found that construction industry experts engaged early assisted in translating owner's needs expression, established and maintained good interface relationships, and moderated contract variations. With period and price fixed, process transparency was improved, tenderers concentrated on submitting innovative 'value for money' offers, tender assessment time and cost were reduced, and the contract completed without dispute. Increased design and construction risk was transferred to and accepted by the Contractor, and provided innovative opportunities pre and post contract award for owner and contractor.

Customer Investment Strategies Developed with the Benefit of Hindsight: Pre-contract Award Performance and Critical Success Factors for New Development Projects

“…Mohamed et al (2010) argue that a lack of clarity of information, customer preferences, potential competitors and the overall marketplace make bidding a very complex process (Figure 3). This is evident from the findings that 'industry reliance on performance metrics fixed at the project outset is being superseded by increasing use of emergent customer judgments to characterize success' (Thomson, 2012). But customers may still consider a 'project that fails to meet formalized time, cost and performance goals successful if it satisfies emergent requirements not understood during the initial briefing' and that 'construction practitioners do not routinely recognize that customer awareness of requirements improves as projects progress' (Thomson, 2012).…”

“…This is evident from the findings that 'industry reliance on performance metrics fixed at the project outset is being superseded by increasing use of emergent customer judgments to characterize success' (Thomson, 2012). But customers may still consider a 'project that fails to meet formalized time, cost and performance goals successful if it satisfies emergent requirements not understood during the initial briefing' and that 'construction practitioners do not routinely recognize that customer awareness of requirements improves as projects progress' (Thomson, 2012). Further, 'internal conflict among the customer stakeholders and their reflections on the emerging project solution help customer stakeholders to better understand their needs'.…”

“…However, it has been found that 'dissatisfaction results when these emergent requirements are not acknowledged'. These findings indicate customer distress with current process and regulation (Thomson, 2012). In Australia, the customer's evaluation stage applies key selection criteria and weightings to conforming tenders, checks referees, negotiates variations such as options, re-confirms the budget and recommends the preferred supplier.…”

“…The actual use of a 'performance' contract resulted in actual pre-contract award transaction costs of $49,874 and 2 months and actual post contract award transaction costs of $50,961 and 7 months. Overall, the comparison between the two corporate governance arrangements favoured the 'performance' contract by $122,915 and three months (Table 4) (Thomson, 2012).…”