Poor government procurement costs $239m: Deloitte

26/02/2015 - 14:33

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Poor procurement practices cost Australian governments around $239 million annually, according to a new study from Deloitte Access Economics.

WA has forecast capital expenditure of more than $6 billion this year alone.

Poor procurement practices cost Australian governments around $239 million annually, according to a new study from Deloitte Access Economics.

Improving inefficient policy and practice in infrastructure procurement could add around $5 billion in additional GDP to 2030, the Economic benefits of better procurement practices report said.

Western Australia would be almost $500 million better off by 2030.

Total infrastructure spending in Australia was now around $43 billion per year, the report said, with about 10 per cent devoted to professional services work.

But a combination of government clients having unclear project objectives, selecting inappropriate project delivery models, failing to guarantee the accuracy of information in project briefs and managing risk inefficiently through contract clauses, (such as by contracting out of proportionate liability) mean that costs for professional services contracts are about 5 per cent higher than they might otherwise be, the report said.

Additional benefits would come to project quality and delivery times, and rectifying design errors would save around $87 million annually.

The report also found that around 45 per cent of professional services firms said public sector clients were non-responsive to innovative suggestions during tender processes.

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