DPTI Building Projects met with key representatives from the architecture, engineering and cost management professions on Friday 27th March to review the impact of COVID-19 on the sector and explore initiatives to maintain activity.
The discussion was collaborative and demonstrated a high degree of consistency across the consultant representatives and DPTI. All agreed that a united, coordinated approach was required and that everyone needed to work collectively to achieve positive outcomes at this uncertain time.
DPTI outlined their current position as follows:
- DPTI’s aim is to keep capital works projects live to provide business continuity for the design/construction sector.
- A notice of delay has been received for some projects in construction, due to material availability, transport issues, labour availability.
- Cost of some materials has increased. Need to manage project budgets.
- 2/3 of DPTI projects are in the design phase with about 30 in construction
- There are limited projects at start up and stimulus is currently focused on civil projects, where DPTI are the client department. Inclusion of building projects in the stimulus package needs to be addressed by the relevant client departments within government. Consultants may be able to assist with briefing to assist in moving these projects forward. Also need to advocate directly to key departments for acceleration of new projects.
Current position of consultants was reported:
- Most practices are operating with at least some staff working remote. Digital interfaces are generally effective, and people are getting used to operating in this way.
- Consultants have a reasonably secure cash flow for the next 6 to 8 weeks, after which there is concern about the ability of private sector clients to pay invoices and the potential for projects to be put on hold.
- Survey by ACA shows 57% of practices have had projects put on hold. Follow up survey proposed next week to track situation.
Key issues identified by consultants were:
- Need for surety of payment. Government’s undertaking to aim to pay invoices within 7 days was commended. The capacity of the private sector to maintain payments is less certain, which makes public sector projects critical for cash flow at this time. DPTI ask that LSPC’s pay sub-consultants promptly also.
- DPTI should also retain engagement of consultants rather than novating to decrease the likelihood of disputed/delayed payments. Contractors are seeking to manage risk, including a preference for 100% documentation over novation.
- Methodology for end user consultation needs to be adapted to allay concerns about effectiveness of digital interface. Also need to consider availability of end users at a time when they are likely to be addressing other issues – health, education and police all experiencing significant impact on operation.
- Methodology for site inspections needs to be developed and agreed. This aspect of project delivery is difficult to replicate digitally, and site access needs to be carefully considered to manage interpersonal contact safely. Also need to keep records of who is present to assist with contact tracing in the event of a confirmed COVID-19 case on site.
- Concern about the ability to meet contract conditions – particularly in relation to program and cost. Ability to deliver against the contract is being affected by factors beyond consultant and contractor control. This needs to be recognised by all parties.
- Access to reliable internet connection will be critical to maintaining communication and productivity.
- Mental health needs to be considered with social isolation, uncertainty and concerns over workload and job security all factors.
- Construction sector will take time to recover – need to look at situation as having three stages: triage (current); intensive care; recovery. Need a coordinated, inclusive and targeted response to provide ongoing confidence and minimise overall impact.
- Chance to develop and refine a strong digital capability across the SA construction sector, which provides an opportunity to increase the export of services post COVID-19.
- Design to facilitate on site distancing will encourage exploration of prefabrication and other construction methodologies, which could provide benefits in the quality and time of construction into the future.
- Incentive to review previous stimulus packages to identify successes (ie coordinated approach provided by SA’s BER Controller General) and areas for improvement (quality of constructed outcomes highly variable across BER/STEM etc). Need to do this to maximise benefits: the immediate impact as well as the long-term legacy for the state.
Initiatives proposed for consideration:
- Classify construction an essential service to maintain activity. Need to have a distribution of projects across building and civil to maximise engagement across the sector. Also need projects at all phases from start up to construction to provide a pipeline of work for all.
- Pre-payment at start-up of projects to provide capacity to subcontractors to purchase materials. This will provide security and cash flow for sub-contractors and suppliers.
- Panel selection for new projects in lieu of tender. This will save time and cost for DPTI and consultants and bring start-up of these projects forward. Selection from prequalified consultants would ensure capability and allow work to be distributed across the profession. Establish an agreed fee scale to eliminate undercutting, which will place further stress on the consulting sector.
- DPTI to clearly communicate intent for relief of contractual conditions relating to time and cost.
- Maintain communication between stakeholders to share knowledge regarding the current impacts and provide clarity regarding next steps.