Comparing cost uplift in infrastructure delivery methods : a case based approach

In 2009 the Australian Federal and State governments are expected to have spent some AU$30 billion procuring infrastructure projects. For governments with finite resources but many competing projects, formal capital rationing is achieved through use of Business Cases. These Business cases articulate the merits of investing in particular projects along with the estimated costs and risks of each project. Despite the sheer size and impact of infrastructure projects, there is very little research in Australia, or internationally, on the performance of these projects against Business Case assumptions when the decision to invest is made. If such assumptions (particularly cost assumptions) are not met, then there is serious potential for the misallocation of Australia’s finite financial resources. This research addresses this important gap in the literature by using combined quantitative and qualitative research methods, to examine the actual performance of 14 major Australian government infrastructure projects. The research findings are controversial as they challenge widely held perceptions of the effectiveness of certain infrastructure delivery practices. Despite this controversy, the research has had a significant impact on the field and has been described as ‘outstanding’ and ‘definitive’ (Alliancing Association of Australasia), "one of the first of its kind" (Infrastructure Partnerships of Australia) and "making a critical difference to infrastructure procurement" (Victorian Department of Treasury). The implications for practice of the research have been profound and included the withdrawal by Government of various infrastructure procurement guidelines, the formulation of new infrastructure policies by several state governments and the preparation of new infrastructure guidelines that substantially reflect the research findings. Building on the practical research, a more rigorous academic investigation focussed on the comparative cost uplift of various project delivery strategies was submitted to Australia’s premier academic management conference, the Australian and New Zealand Academy of Management (ANZAM) Annual Conference. This paper has been accepted for the 2010 ANZAM National Conference following a process of double blind peer review with reviewers rating the paper’s overall contribution as "Excellent" and "Good".