A massive challenge to face
The impact on the road network was particularly significant. “Almost two thirds of our road network was closed or had limited access at some point in time during the 2010-2011 floods and around 6,700 kilometers of the network was damaged and required reconstruction from the events with a total bill of just under AUD5 billion,” noted Shane Doran, Program Director for the Transport Network Reconstruction Program, part of the state’s Department of Transport and Main Roads. “But what many people don’t realize is that this was just one – albeit a rather big one – of four floods that we’ve endured between 2010 and 2013 in Queensland; in fact, the floods in 2012 and 2013 both caused around AUD2 billion of additional damage to the road networks.”
Not surprisingly, some of the biggest challenges facing the reconstruction effort were a result of the scale of the damage. John Curran, CEO of Local Government Infrastructure Services, was involved in helping Queensland’s local councils deal with the reconstruction effort. “Many local governments across the state were facing massive reconstruction projects of between 5-10 times their normal annual capital expenditure (CAPEX). As a result, they were finding it really difficult to cope with all the work that needed to get done, which was in addition to their normal annual CAPEX”.
Assessing what’s available
Resourcing was a particular problem. On the one hand, the state lacked the internal capacity to manage all of the procurement and project management that would be required to fulfill the reconstruction mandate. But they also didn’t know exactly what resources they had available to them, particularly in terms of construction capacity and supplies.
“It wasn’t just about understanding the capacity of the construction industry and the availability of materials, we also had to think about how we would release work out into the market in such a way as to ensure that we wouldn’t constrict the supply of those materials or overstretch the construction companies which, in turn, would drive up prices artificially,” added Shane Doran.
Innovative approaches to procurement
Recognizing that the traditional procurement model for infrastructure would be insufficient to manage the scale of work required, a number of new procurement approaches were created. For example, the Department of Transport and Main Roads developed a Performance Incentivized Cost Reimbursable Works Contract model that allowed the state to get work out to the market without having the scope of that work fully defined. Essentially, the Department would work with the constructor to refine the scope of the work and then use a pain share/gain share arrangement based on the particulars of the specific project.
According to Shane Doran, this approach has not only allowed the state to get projects out to the market faster, but it has also helped minimize disputes and ensure that focus is being placed on getting work done rather than administrating contracts. “Now that we’ve moved further into the lifecycle of the program we’ve returned to more traditional procurement models, but I think our ability to be more flexible in the procurement of packages of work was a real innovation and benefit for the reconstruction effort,” added Mr. Doran.
Getting value for money
For local councils, the ability to leverage some of the procurement approaches being led by state departments and panels was key to speeding up the procurement process. “We helped local councils use already-established panels and their pre-qualified lists of providers so that we could move quickly to expressions of interest,” noted John Curran. “We have found that contractors have been rather competitive and are working hard to ensure local councils are getting value for their money.”
With billions of dollars in procurement contracts moving rapidly into the market, governance has been a key focal point for Queensland’s reconstruction effort. “One of the big challenges for local councils – particularly from smaller localities – is a lack of understanding when it comes to creating proper governance arrangements for this type of work,” noted Mr. Curran. “All too often, they are trying to do the work as part of their ‘business as usual’ process which simply isn’t going to work when you are dealing with spend of this magnitude.”
For the most part, the state used existing governance processes and frameworks to ensure they were receiving value for money and that the procurement process was being conducted transparently and in line with regulation. “The big difference was in frequency; most of these processes and requirements were conducted on an annual basis before 2011, but since the floods we have been running them on a monthly or even daily basis,” added Mr. Doran. “This means we are able to quickly identify problems with the program and make improvements, and I think that is where we have seen a significant difference in governance.”
According to both Mr. Curran and Mr. Doran, preparation is key to ensuring a successful recovery and reconstruction effort. In most cases, infrastructure and public leaders are well aware of the ‘big risks’ that face their communities and should be able to identify what would be required in the face of a sudden disaster.
“You’ve got to have all of your processes and procedures in place and know how you are going to manage the program well ahead of an actual disaster,” added Mr. Doran. “If it’s not really well understood or documented up front, you’ll have a lot of confusion on the ground once the effort begins and – ultimately – waste time, money and resources unnecessarily.”
Mr. Curran agrees. “When these disasters hit, the impact is often massive and far outside of the ‘business as usual’ capabilities for most governments, local or otherwise. So leaders really need to think about what approach they are going to use, what partners they will work with, what governance processes they will apply and how these works are going to be released into the market.”
Based on the success of Queensland’s reconstruction efforts since 2011, it seems that their advice is well founded.