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Savings of $2.5B identified through better infrastructure procurement

Report identified that the Australian Government can save $2.5B over the next 15 years by removing inefficiencies in the way that it procures professional services, such as civil engineers, for infrastructure projects.

Today, a report titled “Economic benefits of better procurement practices” was released by Consult Australia which identifies that the Australian Government can save $2.5B over the next 15 years through better infrastructure procurement.

Deloitte Access Economics was commissioned by Consult Australia to quantify and model the economic benefits of better procurement practices.

“This report has found that direct savings of around 5.4% can be achieved across governments’ procurement of professional services supporting the delivery of new infrastructure,” said Consult Australia Chief Executive, Megan Motto. “Changes to procurement will also deliver improvements in the quality of projects in the order of 7%, reducing costs incurred during construction. These flow-on savings are estimated at up to $87 million per year.”

The report states that Australian Governments spend around $43B on infrastructure each year and professional services firms, such as consulting civil engineers, represent around 20% of this spend (around $8.6B).

One particular insight of interest to procurement professionals is that proposal objectives / scope of services that were unclear resulted in around 12% increase in costs and 9% decrease in competition.

To read the full report or the 4 page summary, please click on the links below.

4 Page Summary: Economic benefits of better procurement practices

Full Report: Economic benefits of better procurement practices 

 

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