Will megaprojects bring Australia’s construction industry to the next level?

Matt Gijselman, Director of Public Policy and Advocacy for Bentley Systems.

Australia’s era of megaprojects has begun. What does this mean for the construction sector? Both mega challenges and opportunities, says expert Matt Gijselman.

There have never been as many megaprojects in Australia as there are currently, with more in the infrastructure pipeline. According to Matt Gijselman, Director of Public Policy and Advocacy for Bentley Systems, it’s important to take stock of the management challenges these projects pose so that current and future projects can achieve successful outcomes.

“We only need to look around at the large road and rail projects already in motion and it’s safe to say that these will be nation-defining projects,” says Gijselman. “What we need to ask is how can these be industry-shaping projects? How can we use the immense amount of investment that’s happening in these projects to lift the whole sector to the next level and address the poor productivity that has crippled these projects in the past?”

Having worked in public policy for over 20 years – including a term at Infrastructure Australia, where he co-authored the agency’s inaugural market capacity report – Gijselman’s current role enables him to look at the trends shaping the industry.

“One of the key strands through all my roles has been around how we can – as an economy, as a community – better use technology and data for improved decision-making,” he explains. “Having worked in both government and the private sector, I’m equally driven by being able to make a difference in this area. There is a great deal of excitement and momentum behind what Bentley Systems is doing in this space, and I’m glad to be a part of it, particularly as we see this increasing trend for megaprojects.”

Megaprojects are generally defined as those worth at least USD 1 billion. While it’s only been a little more than a decade since Australia’s first transport megaproject, they are now a common undertaking.

“In 2020, the average road and rail project size tipped over USD 1.1 billion,” Gijselman remarks. “These projects are accounting for around 2% of GPD and employing over one million people directly and indirectly.”

The downside to megaprojects is that they are prone to significant budget and schedule overrun.

“Megaprojects are habitually more expensive. They take longer and often underdeliver on their initial cost-benefit-ratio analysis,” says Gijselman. “Just to give you a snapshot, bridges and tunnels average about a 35% cost overrun, and for roads, it’s about 20%. Studies have also shown that outcomes in over 70% of major infrastructure projects have actually disappointed the owners at the end.”

There are other challenges putting immense pressure on the sector, including supply issues with plant equipment and materials, as well as severe labour shortages.

“We are going to continue to feel the impacts of the global pandemic for some time. There has been a 100% increase in demand for plant equipment and materials, which is driving up inflation to around 20% on these projects,” says Gijselman. “Issues, such as restrictions on migration, are also exacerbating an existing labour shortage. In addition, the complexities of these projects are increasing.”

How can disappointment or failure be avoided with megaprojects? Gijselman first examines the common causes of failure, referencing a paper produced by the Bartlett School of Construction and Project Management, which identifies six themes for megaproject failure. 1

These include:

  1. Poor decision-making behaviour.
  2. Strategy, governance, and procurement.
  3. Risk and uncertainty.
  4. Leadership and capable teams.
  5. Stakeholder engagement and management.
  6. Supply chain integration and coordination.

Gijselman says the six key themes that are common to poor performance can be addressed by breaking them down into three key questions.

“One is do you have the right people in place to deliver on the bigger projects? Two is do you have a shared understanding of the process that will be required to deliver it? And three is do you have the data management framework and the project management framework to support what you are trying to do?” he advises. “When you start to look at projects to make a process this way, you can map out the data framework required to deliver the projects, which can then lead to a better understanding of risk management and success management at the end.”

Ultimately, a data-first and technology-driven approach is required, and Gijselman reasons that megaprojects present an opportunity for the sector at large to improve.

“How will industry do that? Well, it’s not work harder, it’s work smarter and use the data management framework that these megaprojects can create to really leverage that out and deliver more bang for their buck,” he says. “There’s a technology-driven opportunity to actually increase effectiveness and efficiency across the sector.”

Additionally, Gijselman says there should be a focus on the pipeline of skills delivery and development across the sector in Australia. Initiatives such as the Bentley Education programme – a programme that skills students in project delivery systems – can bring value to industry in this way.

“We need to ensure that we not only have a pipeline of talent coming into the sector, but we also have a pipeline of talent for increasing the technology capability of those already in the sector,” he concludes. “And I think that it’s incumbent not only on governments, but on the industry to ensure that, as we look at digitisation opportunities in the sector, we’re encouraging and supporting enthusiastic young leaders into the field.”

Reference:

  1. What Are the Causes and Cures of Poor Megaproject Performance? A Systematic Literature Review and Research Agenda, The Bartlett School of Construction and Project Management, February 2020.
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