Sustainable community infrastructure is essential for the daily functioning and wellbeing of communities and will become even more critical as Australia and New Zealand rise to the challenge of meeting current housing needs.
Building and maintaining local infrastructure such as roads, libraries, swimming centres, community sporting facilities, public toilets and parks, enables economic development and job creation. It also enhances quality of life and delivers positive social impacts, including improved accessibility, better access to services and greater social cohesion.
However, it’s a challenging time to deliver infrastructure. Even when local governments have adequate funding, it can be difficult to attract market interest, engage the right contractors and complete projects on time, within scope and budget. Stories of projects gone wrong are not uncommon and often leave a tail of consequences for all stakeholders concerned.
The traditional approaches taken to deliver infrastructure may not be the right approach going forward. Councils should reframe their approach and adopt a more strategic, collaborative and flexible mindset toward infrastructure procurement.
Australia and New Zealand’s infrastructure boom means local governments are competing not only with each other, but also with state, federal and private sector projects.
Understanding the challenges facing councils
There are many valid reasons councils face growing challenges. Australia and New Zealand’s infrastructure boom means local governments are competing not only with each other, but also with state, federal and private sector projects. Rising material costs and ongoing skills shortages continue to drive up project costs, making financial sustainability a growing concern. When added to increasing construction company failure rates, driven in part by low margin and fixed price contracts, the risk profile of even the simplest project increases exponentially. Councils must choose carefully, not only their delivery partners but exercise robust contract management, secure skilled inhouse resources, while maintaining high-quality project outcomes which meet community set expectations in environmental, social and economic outcomes.
Some additional challenges are unique to local government. Projects are often small in scope and located in regional and remote areas, where sourcing suppliers and expertise is especially difficult. Many councils also favour fixed-dollar contracts, which appear attractive for cost control and risk transfer, but are often less attractive to suppliers.
A more strategic and collaborative approach to infrastructure procurement
Some innovative procurement strategies that can help councils better manage risk, optimise costs, strengthen financial sustainability and improve infrastructure delivery through a more strategic and flexible approach:
Vetting key suppliers before entering into delivery contracts
Strengthening cost planning and lifecycle budgeting
Councils should look beyond short-term project costs and consider whole-of-life expenses. Factoring in maintenance, operational and lifecycle costs at the procurement stage supports long-term financial sustainability and reduces the risk of budget overruns.
Bundling similar projects into larger programs
Good procurement begins with good planning. Grouping projects into larger programs of work based on asset type makes them more attractive to contractors, delivers social value and efficiencies, and stimulates local job generation.
For example, when funding became available, councils on the NSW North Coast joined forces to replace multiple ageing bridges in rural areas through the Six Bridges Project. Bundling the replacements into one contract attracted stronger market interest and delivered better value for money.
Leveraging collaborative procurement for cost savings
By teaming up with neighbouring councils, local governments can significantly reduce costs through economies of scale, bulk purchasing and shared contract management.
This lowers unit costs, reduces administrative overheads and increases negotiation power. For instance, councils working together may unlock sustainable waste management solutions that would be unaffordable individually.
Taking a more commercial approach to contracts, including risk sharing
Local governments often default to standardised approaches. However, innovative commercial models and contract structures that share risk and incentivise supplier performance can improve outcomes.
The shift away from fixed-dollar contracts is critical, as these have contributed to contractors going out of business and projects running over time and budget.
Engaging earlier with suppliers and sharing more information
Early engagement unlocks innovation and drives better community outcomes. Traditional public sector procurement has been process-driven and prescriptive, specifying solutions rather than the desired outcome.
In contrast, private sector procurement invites suppliers to propose approaches that deliver those outcomes. This approach can help deliver better economic and social value—especially as the market has expressed a desire to co-design solutions and values greater access to information throughout the procurement process.
Putting ideas into action
With Australia and New Zealand’s infrastructure boom and skills shortages set to continue, councils can improve competitiveness by rethinking how they engage with the market. By embedding cost control mechanisms, planning with a long-term financial lens and leveraging strategic partnerships, councils can strengthen financial sustainability while ensuring high-quality delivery.
