In its latest Infrastructure Market Capacity Report, Infrastructure Australia flags skills shortages and ongoing supply chain disruptions as being key challenges in 2022
Infrastructure Australia has released its second Infrastructure Market Capacity Report on Australia’s infrastructure pipeline and the market’s ability to deliver on it.
The report highlights the significant growth of the major public infrastructure project pipeline – jumping $15 billion over the past 12 months, but also focuses on the severe shortage of hundreds of thousands of skilled workers despite labour demand predicted to increase even further in 2023.
It also says that supply side risks have surged over the past year, with ongoing disruption from COVID-19, volatile demand and the war in Ukraine. Construction insolvencies also rose sharply in 2022, leaving fewer companies to take on the large amount of public infrastructure works in the pipeline. This, along with the skills shortages, means that more projects will slip in terms of time and costs.
Infrastructure Australia says that finding that improving risk management and proactively sequencing the major infrastructure pipeline is key to managing the impacts of an overheated construction market, escalating input costs, labour shortages and productivity challenges.
The report also looks into the potential for new supply chains of recycled material and suggests that 27 per cent of conventional road building materials could be replaced with these, increasing to 43 per cent with advancements in technology and updates to standards.
It highlights that demand for materials for use in road construction projects is expected to grow to a peak of $7.6 billion in 2023−24.
On the report’s recommendations, Infrastructure Australia says that it strongly supports a greater focus on undertaking post-completion reviews of infrastructure projects, highlighting the benefits to the sector that come from the practice. It says that an increased, consistent and collaborative program for post-completion reviews would provide an evidence base to ensure projects achieve their intended outcomes and drive improvements in the sector. It would also support increased use of replacement materials in infrastructure projects through data and shared learnings.
Other recommendations include:
- improve industry capacity and capability by prioritising procurement and portfolio management, and increasing pipeline transparency, certainty and confidence
- improve value for money and reduce risk by consistently adopting appropriate best-practice front-end due diligence for projects
- build support and embed practices for the circular economy by developing a circular economy roadmap for the infrastructure sector, including annual progress reports
- ensure the industry is a sector of choice for employees and can meet current and future workforce demands by introducing cultural reform that embraces diversity and inclusion.
In response to the report, Engineers Australia CEO Romilly Madew says that it “highlights the need for change within a sector that is at breaking-point”.
“Implementing reforms that overcome flaws in project planning, procurement and capability is long overdue. This requires commitment and collaboration from federal, state and territory governments through application of risk management practices, a mature approach to project governance and procurement, and funding for infrastructure investments.
“The Clough Group collapse is a sad example of the challenges the sector is facing. Unfair allocation of risk is leading to a lose-lose scenario. Frameworks are needed to manage risk across the value chain and to ensure appropriate allocation and reporting. As the [Market Capacity] report states, time pressures are reducing the risk discovery stage, which is leading to contractors assuming an increased, and often unsustainable, level of risk.”
Madew also points out that increasing the number of engineers in the workforce is crucial to meet current project demands, and that encouraging and providing more opportunities for women is a necessary part of this.
Infrastructure Australia also focuses on this, saying: “Taking deliberate and meaningful action to understand and address the working needs of women and other under-represented groups, can unlock the potential for a more resilient ecosystem that is capable of delivering Australia’s future infrastructure needs.
“Failing to address cultural issues such as excessive work hours, fatigue and poor mental health will keep [the industry] from attracting untapped workforces.”
For the full report, visit: https://www.infrastructureaustralia.gov.au/publications/2022-market-capacity-report