The need for a construction supply chain council

Lindsay Le Compte, general manager, Construction and Infrastructure, at Ai Group outlines how the organisation is taking steps to prepare the industry for the infrastructure boom.

In August 2019, the Australian Industry Group (Ai Group) established the Construction Supply Chain Council (CSCC). It brings together businesses in areas such as steel, concrete, cement, aggregate and bitumen, off-site manufacturing, electrical, mechanical and plumbing, ICT, and recyclables.

Why, you may ask, is this a necessary action and what will the CSCC be doing?

Australia is in the middle of an infrastructure boom with just the east coast states predicting expenditure of over $230 billion over the next four years.

Even the federal government is getting into the act by allocating expenditure of $100 billion over the next decade.

What we also know is that this boom is like no other because it is projected to continue well past the next decade. But one question that industry is asking itself is whether the industry’s supply chain has the capacity to provide all of the essential materials, products, and systems when the construction contractors need them.

Ensuring that clients are able to receive their completed projects on time and within budget will be a major test for the industry.

The size and longevity of the boom does give industry the opportunity to organise itself, but it needs to be coordinated and there must be significant collaboration between clients, contractors, and the supply chain.

The Australian Constructors Association (ACA), with the NSW and VIC governments, has established the Construction Industry Leadership Forum (CILF) to develop greater collaboration and coordination between the industry’s head contractors and government clients.

The CILF is developing better practice notes for the way projects are developed and delivered and is also addressing industry and government capability and capacity to deliver projects as well as actions to change the culture of the industry itself. The critical missing link to this work is the role and function of the industry’s supply chain.

So, Ai Group has taken action to bring the supply chain together so that construction materials, products and systems businesses can obtain greater line of sight on project pipelines and be involved earlier in projects to ensure deliverability of contractor needs is able to be achieved.

Of course, a critical outcome for the CSCC will be to assist businesses to be sustainable into the longer term.

How will the CSCC operate?
The CSCC is intended to operate as a forum for the industry’s supply chain to discuss and recommend improvements to the means by which construction projects are developed and delivered. The CSCC will become the third leg of the chair that will support the work of the CILF and similar actions by governments across the country

The aim is to achieve a more sustainable supply chain and, through collaboration with clients and contractors, improvements to project completions of community infrastructure and in the general commercial and residential sectors.

CSCC charter
One of the first actions of the CSCC will be the development of a formal charter to guide CSCC operations. The following criteria would be indicative of the functions of the CSCC:

  • Operate as a forum where the construction supply chain may interact in an open and transparent manner to develop best practice supply chain delivery models for construction and infrastructure projects and general building projects.
  • Contribute to a collaborative relationship between construction contractors and their public and private sector clients.
  • Contribute to the development of industry skills to deliver improved productivity and performance demanded by the changing profile of investment and modern methods of construction.
  • Encourage innovation and allow for earlier and integrated supply chain involvement in projects through input in the development of improved competition and procurement processes.
  • Provide advice on:
    • new construction methods and products coming to market;
    • long term sustainability of key materials based on identified demand through government and industry pipelines of work;
    • opportunities for the use of recycled materials; and
    • opportunities to reduce the industry’s carbon footprint.
  • Examine complementary opportunities for industry development initiatives.
  • Undertake and contribute to quantitative and qualitative research to identify, develop and disseminate best practice in supply chain management, industry capability and capacity, and involvement in construction and infrastructure projects.

The benefits of membership of CSCC
The CSCC will operate across all Australian jurisdictions and will thus represent the interests of businesses that are both national and/or state specific.

CSCC members will receive and exchange information, contribute to policy development and industry positions, and attend events and forums.

A National Leaders Group will develop and drive policy and operational activities based on input from general members.

The CSCC will meet at least twice each year and otherwise as required. Sub-groups will meet more regularly depending upon issues in the marketplace and strategic planning decisions.

Ai Group will provide executive administration, governance, and probity support, including the attendance of a probity officer at all meetings.

The CSCC will establish sub- groups to ensure focus on specific and critical areas. Sub-groups will expand and contract as required. Flexibility is key to success.

The following indicative sub-groups would meet at least quarterly and otherwise as required.

  • Early involvement in the development of projects;
  • Reducing time and cost of tendering;
  • Optimising risk allocation between government and industry;
  • Harmonisation of critical contractual and commercial terms and definitions;
  • Building common understanding of capability and capacity gaps; and
  • Coordinated approach to addressing skill gaps in the sector (short, medium and long term).

The sub-groups will be supported from within the CSCC membership as well as from collaboration with industry stakeholders as determined.

For more information about joining the CSCC, contact Ai Group and Lindsay Le Compte, at lindsay.lecompte@aigroup.com.au or by phone (02) 9466 5522.