The recent industry briefing by the Victorian School Building Authority (VSBA) on its program of education infrastructure works proved a nexus of politics, price, risk, capability, local content and social procurement (oh, and education).
Recently, the Victorian School Building Authority (VSBA) conducted a briefing to industry on its program of education infrastructure works. The intent of the briefing was to inform the market (mainly architects, builders and consultants) on recent policy changes impacting the program, and the role of the sector in the delivery of the program. Some of the policy changes relate to Local Jobs First and the Victorian Government’s Social Procurement Framework.
There must have been over 200 attendees, all eager to understand what opportunities there are for their organisation, and how they could win some of the work on offer. Well, it is fair to say that there was a significant level of disquiet amongst the attendees when the VSBA discussed their procurement philosophy. But more on that later.
Biggest education infrastructure spend in history
Firstly to the numbers, and they are staggering. In the 2019-20 State Budget alone, $1.8b was allocated to school infrastructure, with a further $473m allocated to early learning infrastructure. This was highlighted as the biggest spend in education infrastructure in Victoria’s history.
Driving this expenditure is the projected growth in Victoria’s population, leading to the need for new schools and kindergartens in growth areas, upgrading or expanding existing schools and kindergartens, and the government’s introduction of a subsidised kindergarten program for all three-year-olds (with Victoria being the first Australian state or territory to do so).
Budget snapshot (education infrastructure)
- $624.8 million: new school builds
- $46 million: land acquisition
- $362.7 million: school upgrades
- $402 million: non-government schools
- $473.2 million: early learning infrastructure
- $101.3 million: relocatable buildings program
- $179.5 million: asbestos safety program
- $41 million: maintenance and compliance
- $20 million: inclusive and accessible facilities
These numbers also reflect the government’s pre-election commitment to build 100 new government schools in eight years, with 45 to be built during the current term. So, in summary, there’s a huge amount of work to be done within some tight committed timelines.
New versus “tried and tested”
Now, back to the theme of how industry can participate in this program. Firstly, the VSBA should be applauded for understanding the need to inform the sector on how their involvement is critical, and for actively engaging with industry to ensure they fully understand the why and the how of winning some of this business. After all, that is what the participants wanted to hear, especially those organisations which are not incumbents and see this program as a way to utilise the capabilities and experience they have from undertaking similar projects for other clients.
It was interesting to hear the VSBA claim that in 2018 the number of new suppliers overall was up. This seemed to come as a surprise to many in the room, because on the subject of architectural services, the VSBA admitted that most RFPs go to the same three or four major firms. Occasionally RFPs will also be sent to one new entrant to give them an opportunity to break into the program.
When challenged on whether this is giving all potential suppliers a fair go, the VSBA’s response was to imply that the need to use “tried and tested” suppliers was greater than the need to gain new thinking, new approaches and a marketplace that had a broader and deeper range of capabilities that could be called on.
Further, the VSBA claimed that the same three to four major suppliers have complained to the VSBA that they are not getting enough new work from them. Therefore, the VSBA feels vindicated in saying they must have the balance right! “And if new or smaller entrants want work they should be teaming up with some of the larger/existing players.”
Well, if you say that quickly it seems to make sense. However, the above comment ignores the reality that to successfully partner, organisations must have synergies in design philosophy, project methodologies, skills, resource availability and cost, and the sharing of risk. Plus, if it was so straightforward, it would have already happened to a greater degree than it has.
Sadly, the above scenario may well be replicated across the procurement of construction services. I suspect it probably is.
Long-term versus short-term benefits
My observation is that government has committed itself to a very large and very ambitious set of outcomes, within a set time period (albeit for all the right reasons). To achieve these outcomes, the VSBA (as the organisation charged with delivering them) must seek what it believes to be the best possible route.
So that gets back to risk, and how best the VSBA manages it. Present indications are that they manage risk by reverting to the same larger organisations that 1) they know how to deal with, 2) know how to deal with government, 3) have direct experience in doing the same type of projects and 4) know how government works.
However, this may be at the expense of new thinking and fresh approaches that could deliver new building and design models, improved learning environments, new energy and sustainability initiatives, greater cultural inclusion, and a more experienced and capable school design sector that is better able to export this capability interstate or overseas. This is potentially short-term benefits at the expense of longer-term benefits.
We suggest the VSBA reconsider its procurement approach to ensure a broader range of organisations are given the opportunity to show what is possible. This will be of benefit to all Victorians, especially the younger ones, who it should not be forgotten are the sole reason for embarking on this significant education infrastructure build program.