Inland Rail Project in Need of Better Procurement Strategy

Posted: 03/10/17 10:37

inland rail project australian tenders

The Australian Rail Track Corporation (ARTC) needs to be better prepared in spending the government’s $8.4 billion on Inland Rail Program according to a report by the ANAO.

The Australian National Audit Office (ANAO) recently audited the Australian Rail Track Corporation’s pre-construction preparations for the Inland Rail and concluded the ARTC to examine whether value for money is being delivered and reports that better preparation is needed in how the $8.4 billion is used for procurement of services.

The ARTC, Department of Finance and Department of Regional Infrastructure have agreed with the recommendations outlined in the report.

The Project

The Inland Rail program involves the construction of a rail line covering around 1700 kms from Melbourne to Brisbane. The Australian Government provided $300 million in 2014 toward pre-construction work of the rail line, and this year has provided $8.4 billion for construction. The ARTC was selected by the government to deliver the full program of works expected to be complete by 2024-25.

The dedicated freight network will transform the way we move goods between Melbourne and Brisbane, connecting our farms, mines, cities and ports to global markets. It will support Australia’s four richest farming regions; provide supply chain benefits and substantial cost savings for producers.

This transformational rail project will bring lower costs and greater efficiencies to freight customers and will ultimately deliver more produce and goods to consumers along the eastern seaboard, create long-term jobs, boost regional economies, and help businesses grow.

Procurement

The ANAO investigated the pre-construction preparations and has reported that the ARTC needs to place a greater importance on achieving value for money in its procurement activities. Testing a sample of 54 procurements for the Inland Rail program found that insufficient consideration was given in regards to competition in the early phase of the program where 17% of the samples were sole sourced. 

The report recommends improving existing business functions and procurement practices throughout the pre-construction phase and have commenced initiatives to strengthen administration. The initiatives should be fully implemented for effective management of the program in the years to come in order to deliver value for money. 

The review also found that the ARTC did not have appropriate ICT systems to support procurement for the pre-construction phase of the Inland Rail program. There was a heavy reliance on manual processes, paper-based approvals and non-standardised records management procedures. As at July 2017, specifically for the Inland Rail program, the ARTC has upgraded the Contracts module and implemented a Tenders management module in the corporate Financials & Supply Chain system, and is at an early stage in deploying a system for records management.


Response by the ATRC

"As a general observation, ARTC considers the findings do not adequately reflect the uncertainty and lack of clarity associated with the initial funding, longevity and responsibilities for the program during the period when decisions were being made as to the future of the Inland Rail project.

"Indeed, it was only in May 2016 that ARTC was confirmed as the delivery agency and in the May 2017 Budget that the funding commitment was confirmed. This imposed constraints on ARTC’s approach to procurement, contract management and the project’s risk management approach.

"Notwithstanding this high level of uncertainty, 45 out of 54 tested procurements were competitively sourced through tenders, standing offers and quotes. Within this context, ARTC was also focused on achieving value for money. Even though, as observed, ARTC is not obliged to follow the Commonwealth Government Procurement Guidelines, subsequently, ARTC has sharpened its approach to Inland Rail’s procurement and contract management. In addition, monthly management reporting is being enhanced."

Further information on this topic can be found via the following website Inland Rail Project.

Click here to view the list of Inland Rail Tenders.

Tenders relating to rail can be found at Australian Tenders. See the original news article regarding the Inland Rail Project here and the article about ROI for the project here.

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