A recent survey of senior executives in the private and public sectors has exposed alarming challenges for infrastructure megaprojects.
The results, collected and analysed late in 2024, highlight persistent underperformance and fundamental flaws in how high-value infrastructure projects are managed in Australia.
While the findings mirror those in previous studies, they reveal that many of the long-standing issues remain, incurring substantial avoidable costs to the sector and nation.
The research confirms a troubling trend that Australians might have anecdotally thought to exist: that large infrastructure projects frequently exceed budgets and timelines.
A striking 80 per cent of respondents to the survey agreed or strongly agreed that large infrastructure projects are often over budget and behind schedule. This poor performance has persisted for decades.
Investors lamented the widespread lack of realistic project scopes, fit-for–purpose designs, suited to current and emerging needs, and accurate costings, leading to poor performance. Failed planning at the outset was reported to be causing costly variations and delays.
Excessive government interference, particularly from ministers and fragmented control across departments, related to delays and was seen as a significant barrier to project success. Many criticised the excessive focus on cost-based tendering at the expense of value and effective risk collection.
Despite evidence that well-governed, alliance-based contracting consistently outperforms other methods, its use has declined due to shifting political priorities. Investors expressed a preference for practical and functional contracts that support realistic scopes of work and better balance cost considerations with long-term project outcomes.
Professional services firms working in the built and natural environment have a vital role in managing these issues as they play dual roles in the dynamic major project delivery ecosystem. As providers of professional services, consulting engineers and urban planners are key agents for driving change.
Professionalism and transparency are crucial to ensure stakeholders have realistic expectations from a project’s get-go. Predictive modelling and scenario analysis can also help identify risks early and propose proactive mitigation strategies.
Read more: How does Australian investment in public infrastructure match up globally?
Performance improvement not incentivised
The survey highlights a critical issue: a lack of incentivisation for performance improvement along the value chain. When respondents were asked about the extent to which improved performance was incentivised, 68 per cent said, “not at all” or only “to a small extent”.
These issues are creating poorly aligned goals, where stakeholders often aim for minimum requirements rather than striving for excellence.
This impacts project outcomes and creates challenges like misaligned goals, where stakeholders aim for minimum requirements over functional and aesthetic excellence.
Each party focuses on its narrow responsibilities rather than the overall project success, leading to disjointed efforts and inefficiencies.
The ‘race to the bottom’ mentality during the tendering process, where firms submit unrealistically low bids without fully considering potential risks and challenges, also contributes to poor communication and siloed thinking.
Additionally, respondents noted that innovation was often assumed rather than deliberately acknowledged, rewarded or leveraged by clients. This meant clients were not incentivised to work creatively, leading many firms to lack the motivation to go beyond the minimum requirements.
This dynamic reinforced the industry’s risk-averse and cost-driven approach, creating a disincentive for forward-thinking solutions.
Two takeaways
The research gathered insights from 125 senior executives in the delivery chain of high-value infrastructure projects, including investors, designers, planners, constructors, operators, end-users and owners.
Beaton conducted the survey on behalf of the high-value infrastructure project (HVIP) partnership, comprising experts from Innergise, Autodesk, Cambridge University, Max Hardy & Associates, and Beaton.
The partnership aims to address these critical issues and drive improvements in the design and delivery of infrastructure projects across Australia. This survey’s findings underscore the urgent need for smarter planning, effective contract and construction management, and a collaborative approach to enhance infrastructure project outcomes.
Two key takeaways stand out. One: incentivisation of performance improvement along the value chain is middling at best. And two: it’s what people don’t say that also stands out.
For example, data is not seen as a problem in performance, yet it’s not being used well to inform performance improvement.
The research should help to catalyse an evidence-based overhaul to improve how high-value infrastructure projects are run and incentivised in Australia.
Dr George Beaton is Executive Chairman of Beaton
Dr Nick Fleming is Founder of Innergise and former National President and Chair of the Board of Engineers Australia
To, Dr Nick Fleming,
I am a Chartered Professional Electrical and Instrumentation engineer and I have worked in Design and Construction for over forty years and one thing that I constantly come across on projects is the poor supervision on projects.
Client Management does not tightly control contractors enough, often failing to adhere to change management procedures.
The contractors procurement is loosely controlled and allows the contractors to deviate from design specified items, usually because the contractor wants a cheaper alternative. This invariably leads to systems not performing to expectation and failures occurring when it comes to final commissioning, thus adding delay to project completion.
Cost overruns are often due to the Contractor originally putting in a lower bid and then trying to seek variations, often leads to contractual disputes and project delays.
Yours sincerely,
John Squire AMIEAust CPEng NER
Mob:: 0424 585 146
As an overseas trained chartered engineer in civil and structural engineering, I think the technical capacity in the design consulting firms, contractors and clients are not adequate to delivery mega projects. Simply the local industry does not have many opportunities to work on those complicated projects, resulting in inaccurate scope, technical specification, design suitable for construction and operational maintenance, poor construction quality and slippage of program and hiking of costs.
As a retired engineer who specialised in complex buildings for the health & laboratory sectors over 45 years, the removal of Clerks of Works from contracts and the almost religious trust in the lowest tender mechanism are significant contributors to the current dire situation. Drafting legally complex & often unfair contracts contributes to a risk averse mindset, and as John Squire has also commented above, participants respond by “staying in their lane”. [One major builder/developer transferred operations to a different city after no-one would tender for them due to their unfair contract]. I fear for the same flawed construction processes delivering the proposed nuclear power stations especially given the tiny number of trained nuclear engineers in Australia. Inadequate & over optimistic commissioning time for complex buildings also contributes. Even the ostensibly more collaborative PPP process doesn’t manage this well if one of the “partner” members of the consortium hijacks the process – typically by under-scoping the build stage & leaving the operating partners to sort out the mess.
Government project budgets are historically inadequate for even basic infrastructure like schools, as the surprisingly long gestation periods [typically 8-15 years] ensure that the original budget & scope is whittled away by inflation. My son learned in Grade 5 about the proposed Science Wing proposed for his state high school – it was finally delivered to students when he finished his Masters degree some 12 years later… Why is it always a such a surprise that new residential developments will require schools, kindergartens, childcare, health centres, shops, roads, buses, trains….?
The demand for quality infrastructure is not unreasonable – the expectation that we can have it for a low price without paying via taxation, tolls or other financial contribution is wishful thinking.
All Engineers and Project Managers need to read (or listen to); How Big Things Get Done
Australia is not alone on failing megaprojects, we often don’t even finish small projects on time/budget or benefits. From uniqueness bias to many other pitfalls.
Let’s change it. Let’s plan better and then execute well.
In my 32 years experience in project design, procurement, scoping, and estimating in a major Australian electricity utility, the single most significant contributor to project cost overruns, is scope creep, often turning into a scope gallop. The second most significant factor is completing a major project in multiple start-stop phases rather than completing it from start to finish in a single operation.