Restrictive tender processes and disagreements about risk allocation are hampering efficiency in the construction of Australia’s roads, according to a new study by the Queensland University of Technology.
The Innovative Road Products Survey - the largest and most comprehensive ever undertaken - questioned over 200 construction industry participants about the development of new products for use on Australia’s roads to improve the efficiency of their construction and performance over time.
Project Manager, Dr Tim Rose from QUT said although two-thirds of participants had introduced, or facilitated the introduction, of new products over the last three years, 77 per cent had difficulties due to a range of obstacles, including the tender process.
“Despite recent moves away from cost-dominated selection towards performance and ability, data showed innovation in the construction industry is still hampered by the restrictive nature of the tender process.
“In turn, contractors and manufacturers - who were nominated as the two groups most important in generating new product ideas - were less motivated to do so if they knew they were competing to undertake a construction project based only on their competitive price.
“On large complex construction projects, this situation can result in less willingness to align with a ‘best-for-project’ culture, and may induce an individualist, protectionist stance that discourages open dialogue about the potential use of innovative products.
“This means that the industry is stuck using old ideas and potential efficiency gains are not realised, which increases the cost of our roads.
“There is an estimated $96 billion worth of investment in the pipeline at the moment to deliver Australia’s engineering and construction program, which is over ten times that of a decade ago.
“Innovation in the operation and delivery of infrastructure projects could lead to higher returns on tax-payer funded projects and could help us achieve this program at lower cost,” he said.
The survey covered industry participants in Queensland, New South Wales and Victoria in all stages of the supply chain, comprising suppliers (manufacturers and distributors), consultants (engineering consultants), contractors (head and subcontractors) and clients (state government road agencies).
Lead Investigator, Dr Karen Manley from QUT said low learning capacity by the industry also hampered its participants from developing new ways to overcome their problems.
“Nearly one in five construction organisations had low learning capacity and thus poor learning processes,” Dr Manley said.
Dr Karen Manley and Dr Tim Rose have examined obstacles to the introduction of new products in road construction
“This was measured by their ability to acquire, assimilate, transform and exploit knowledge from their environment.
“Each link in the supply chain must learn from the others and develop stronger relationships to improve innovation and become more efficient and effective,” she said.
The survey found that organisations with high levels of experience in relationship-based types of construction contracts were significantly less likely to have difficulties implementing innovations.
“Collaborative inter-organisational relationships showed a significant positive effect on innovation on construction projects,” Dr Manley said.
“This is a very important result, proving that relationship-based contracts, such as Alliances and Early Contractor Involvement Contracts really do improve innovation, and thereby efficiency in the construction of Australia’s roads.
“This finding refutes any doubts about the value proposition of relationship-based contracts, such as those raised by various treasury departments,” she said.
To generate possible solutions to the most significant barriers to innovation, QUT will organise workshops in New South Wales, Victoria and Queensland in 2012. Industry participants can register interest via d.messer@qut.edu.au
The research project is a collaboration between QUT, the Commonwealth Government, the Queensland Department of Transport and Main Roads, the Construction Industry Institute of Australia (CIIA) and the University of New South Wales (UNSW).
The full Innovative Products Survey 2011 results are published online at: www.bee.qut.edu.au/research/projects/innovativeproducts/outputs.jsp
Further information:
Dr Tim Rose, QUT, +61 7 3138 7667 or tm.rose@qut.edu.au
Dr Karen Manley, QUT, +61 7 3138 1762 or k.manley@qut.edu.au