Construction Community of Practice Forum Construction Policy Department

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Construction Community of Practice Forum Construction Policy, Department of Treasury and Finance February 2019

Construction Community of Practice Forum Construction Policy, Department of Treasury and Finance February 2019

Major Transport Infrastructure Projects – Australia Chart showing expenditure to 2018 and forecast expenditure

Major Transport Infrastructure Projects – Australia Chart showing expenditure to 2018 and forecast expenditure to 2025 – chart removed 1

Public Construction Procurement Reforms 2016 2018

Public Construction Procurement Reforms 2016 2018

Agenda Time 3 Topic Speaker 11. 35 Ministerial Directions 101 - Purpose and application

Agenda Time 3 Topic Speaker 11. 35 Ministerial Directions 101 - Purpose and application Athena Rozenberg 11. 50 New requirements under international agreements Tim Martin 12. 05 Construction Industry Leadership Forum - Introductory Briefing Domenic Ciancio 12. 20 Construction procurement updates Belinda Richards

4 Ministerial Directions 101 Purpose & Application Athena Rozenberg

4 Ministerial Directions 101 Purpose & Application Athena Rozenberg

Why the Directions are needed Case study example looking at a development proposal for

Why the Directions are needed Case study example looking at a development proposal for the St Kilda Triangle site – photos removed 5

Purpose and principles v Purpose: To support efficient, economical and effective delivery of public

Purpose and principles v Purpose: To support efficient, economical and effective delivery of public construction procurement v Principles: • Value for money • Accountability • Probity • Scalability 6

Who the Directions apply to v Departments (8) v Public bodies subject to Standing

Who the Directions apply to v Departments (8) v Public bodies subject to Standing Directions of Minister for Finance (262) v Follow rules set by their portfolio Department (3, 700) • school councils • committees of management • certain cemeteries • registered units under the SES • volunteer brigades under the CFA 7

When the Directions apply Public construction consists of … any matter relating to •

When the Directions apply Public construction consists of … any matter relating to • construction • maintenance • rehabilitation • alteration • extension or • demolition … of any improvements on land by, or on behalf of, departments and public bodies 8 … and includes • design and construction practices • tendering processes • project delivery and • contract administration Applies to: • works • construction services

Public construction includes Public construction consists of: Public construction depending on the circumstances: 9

Public construction includes Public construction consists of: Public construction depending on the circumstances: 9

Tips for practitioners v Read and learn from reviews of procurement v Value for

Tips for practitioners v Read and learn from reviews of procurement v Value for money involves triple bottom line v There is no one size fits all approach to public construction – scalable processes v Confirm which rules apply to your agency v Confirm that you are procuring public construction v Rules apply - construction procurement is different from goods and services v Be consistent when classifying public construction 10

Questions 11

Questions 11

12 New requirements under international agreements Tim Martin

12 New requirements under international agreements Tim Martin

New international agreements v New agreements introduce additional requirements v Procurement policies have been

New international agreements v New agreements introduce additional requirements v Procurement policies have been updated v The changes make compliance more important 13

When international agreements apply v Procurement by a covered entity v Cost estimate exceeds:

When international agreements apply v Procurement by a covered entity v Cost estimate exceeds: • AUD $657, 000 goods and services; or • AUD $9. 247 million construction works v Important distinction between panels and registers 14

Basic requirements v General requirement for “no less equal” treatment v Rules on tendering

Basic requirements v General requirement for “no less equal” treatment v Rules on tendering processes, including: • Tender notices • Time requirements • Weighted criteria 15

Approach under procurement rules v Requirements are embedded in procurement policies v Construction and

Approach under procurement rules v Requirements are embedded in procurement policies v Construction and G&S take same approach v Some requirements already dealt with under general rules v Additional requirements set out in Att. 2 to Instruction 2. 1 16

Important changes v The most important new requirement is for Domestic Dispute Resolution v

Important changes v The most important new requirement is for Domestic Dispute Resolution v Allows suppliers to seek legal recourse for alleged breach v The Victorian mechanism refers disputes to arbitration v Other changes are incorporated in updated 17

Domestic Dispute Resolution v Use the DDR Tender Clause (included in our Model RFT)

Domestic Dispute Resolution v Use the DDR Tender Clause (included in our Model RFT) v Select one of the two options for available remedies v Make sure you comply with all ‘measures’ v Requirement to pause procurement once challenge made v However note ability to issue ‘public interest certificates’ 18

Note on the Australia – New Zealand GPA v The Instructions have a separate

Note on the Australia – New Zealand GPA v The Instructions have a separate section on the ANZGPA v ANZGPA applies to all procurements (not just ‘covered’) v Treat suppliers from New Zealand other Australian States and Territories the same as Victorian suppliers 19

Key take away messages 1) Because of Domestic Dispute Resolution, complying with international agreements

Key take away messages 1) Because of Domestic Dispute Resolution, complying with international agreements is now much more important. 2) Ensuring compliance is relatively easy – closely adhere to the Ministerial Directions and Instructions. 3) Covered entities should build the two financial thresholds ($657, 000 for G&S and $9. 247 million for construction works) into their processes. 4) For all covered procurements, decide which of the two options on financial compensation to take, and select that option in the Request for Tender. 5) Allow for the longer lead times required for covered procurements. 6) For genuinely urgent procurements, consider whether the procuring entity’s Accountable Officer ought to issue a Public Interest Certificate. 7) 20 If you receive what you think may be a formal challenge, pause the procurement and engage a lawyer.

Questions 21

Questions 21

22 Construction Industry Leadership Forum Domenic Ciancio

22 Construction Industry Leadership Forum Domenic Ciancio

Construction Industry Leadership Forum Public Construction Procurement Co. P 28 February 2019

Construction Industry Leadership Forum Public Construction Procurement Co. P 28 February 2019

CILF Overview • Joint forum of leaders from industry and the Victorian & NSW

CILF Overview • Joint forum of leaders from industry and the Victorian & NSW public sectors. • Purpose: To drive improved collaboration and action around procurement and delivery of major government infrastructure projects, including through addressing capability and capacity constraints. • Convenes at least every six months – last CILF forum on 16 November 2018. • Regular working group meetings during the year. • Government and Industry working together in the interests of all

Priorities Guided by Industry Activity • • Shift in intensity More large projects in

Priorities Guided by Industry Activity • • Shift in intensity More large projects in delivery rather than procurement Delivery issues compound Acute for Victoria and NSW Chart Total construction activity – Australia by sector 1997 – 2017 and forecast to 2037 – chart removed Chart Major Transport Infrastructure projects – Australia, showing expenditure to 2018 and forecast expenditure to 2025 – chart removed

CILF TORs / Communique

CILF TORs / Communique

CILF Governance

CILF Governance

Victorian and NSW Government Construction Leadership Groups are the rollout pathway for CILP initiatives

Victorian and NSW Government Construction Leadership Groups are the rollout pathway for CILP initiatives • Pathway established for CILF initiatives from Working Groups to feed up through the CILF to the CLG for consideration and implementation. • CLG kept informed at each meeting of CILF activities and focus.

CILF Commercial Working Group Focus areas: • Reducing time and cost of tendering •

CILF Commercial Working Group Focus areas: • Reducing time and cost of tendering • Optimising risk allocation • Innovation in procurement • Harmonisation

Contract Standardisation • CILF provides a forum for dialogue between Vic and NSW agencies

Contract Standardisation • CILF provides a forum for dialogue between Vic and NSW agencies to consider opportunities for harmonisation across standard contract forms. • Treasuries are integral and are involved in the Working Group and the Victorian and NSW CLGs.

CILF Practice Note Development • Practice notes developed to final draft status and under

CILF Practice Note Development • Practice notes developed to final draft status and under consideration by the Construction Leadership Group: • • Electronic tendering Early Works Packaging Interface Risk Management Cash neutrality in the mobilisation phase Achieving value through bid cost contribution Extension of time and variation entitlements Reducing Procurement Costs Collaborative Procurement using ECI • Second tranche practice notes under development

CILF Practice Note Implementation • Practice notes encourage behavioural change through equipping project procurement

CILF Practice Note Implementation • Practice notes encourage behavioural change through equipping project procurement and delivery personnel with insights into key challenges, and avenues for addressing those challenges. • Practice notes to be released as guidance. • Promotion and practice will provide momentum to instigate policy change. • Implementation of options may necessitate change to existing government policy or procurement rules to give them broader application. • Finalised practice notes are expected to be issued jointly by the Director-General and Chief Executive, OPV to CLG members to distribute to procurement teams. • Copies will be made available on the OPV website.

Thank you

Thank you

Questions 34

Questions 34

35 Construction Procurement updates Belinda Richards

35 Construction Procurement updates Belinda Richards

Construction policy updates v Local Jobs First • some low value contracts don’t need

Construction policy updates v Local Jobs First • some low value contracts don’t need LIDP • panels treated as regular VIPP v Update to standard form contracts v Guide to Completing a Supplier Performance Report v Website – rules, templates, factsheets, guidance and contracting practice notes v Sign up to our construction policy mailing list 36

Contact Construction Policy Resources available at https: //www. dtf. vic. gov. au/infrastructure-investment/publicconstruction-policy-and-resources Contact us

Contact Construction Policy Resources available at https: //www. dtf. vic. gov. au/infrastructure-investment/publicconstruction-policy-and-resources Contact us construction. procurement@dtf. vic. gov. au 03 9651 5300 37

Thank you 38

Thank you 38

© State of Victoria 2019 You are free to re-use this work under a

© State of Victoria 2019 You are free to re-use this work under a Creative Commons Attribution 4. 0 licence, provided you credit the State of Victoria (Department of Treasury and Finance) as author, indicate if changes were made and comply with the other licence terms. The licence does not apply to any branding, including Government logos. Copyright queries may be directed to IPpolicy@dtf. vic. gov. au