A QUT-developed Procurement Decision Tool could soon save taxpayers around the world billions of dollars on major infrastructure projects with the Organisation for Economic Co-operation and Development (OECD) signing a licensing deal.
The OECD has licensed the QUT-developed tool and is using it on two major road projects in Norway with a view to promoting it as the Support Tool for Effective Procurement Strategy (STEPS) across its 38 member countries later this year.
In collaboration with Infrastructure Australia, QUT is publishing a user guide that illustrates the use of the tool on a major Australian public sector road and hospital.
“It’s the only tool that does the pre-contract packaging work to determine procurement in an impartial way to achieve superior value-for-money and reduce the risk of long-term cost blow outs,” said product developer Associate Professor Adrian Bridge, a project management expert from the QUT Faculty of Engineering.
“Governments, contractors, and management consultants alike could use the tool for planning or assessing procurement to achieve the best cost outcomes,” Professor Bridge said.
“It can be used across any sector including multi-billion-dollar infrastructure and defence spending, and results are transparent – unable to be manipulated.”
The Australian Government has committed $110 billion to a 10-year infrastructure pipeline as part of Australia’s Economic Recovery Plan, including $15.2 billion in new commitments in the 2021-22 Budget.
The OECD decision to license the tool coincided with an Australian industry debate following the release of the Grattan Institute’s report on infrastructure costs, and the announcement of a parliamentary inquiry to examine procurement practices for government-funded infrastructure.
“The tool walks a line between the Grattan report’s recommendations for more competition, and major contractor calls for more collaboration,” Professor Bridge said.
“It reduces risk for contracting parties, improves the likelihood of a wider distribution of work, strengthens the pipeline of work and promotes full government disclosure of decision making – aspects of procurement about which all government and industry stakeholders agree is critical.
“Its systematic approach to procurement ensures best project outcomes for the right price, not what’s cheapest and fastest upfront.”
The OECD licenced the third version of the tool, which has evolved since 2014 when it was first developed as part of an Australian Research Council-funded project.
It remains the world’s only empirically tested procurement decision-making tool to mobilise Nobel Prize-winning microeconomic theories for better decision-making, according to Professor Bridge.
“The tool guides experts through a process to determine contract outcomes.
“The tool removes risk by filtering out supplier monopolies that undermine competition pre-contract, and hold-ups or costly variations post-contract award.
“It breaks-up the project into parts based on project specific design, construction, operations and maintenance activities, then puts activities back together in the most cost-effective bundles and contract types – from competitive to collaborative,” he said.
The tool has been validated on completed road and hospital projects. On those projects in which it recommended a different procurement approach, results indicated the potential to have achieved significantly better value for money by using the tool’s recommended approach.