Today marks the launch of the Building in the Dark report, which examines construction supply chain risk in Australia and New Zealand.
The report, developed in collaboration with industry consultancy entwine, finds that organisations in construction are operating blindly against an evolving backdrop of supply chain risks and changing business landscape, due to a staggering lack of supply chain transparency.
Mike Davis, CEO, Felix said, “We are seeing a major confluence of significant issues in construction today due to Australia’s historic infrastructure boom and more recently, the impact of the COVID-19 pandemic. The consequent skill shortages, greater reliance on outsourcing and sharply increasing cost pressures are just some of the challenges dialling up the overall risk of adverse outcomes for projects. Alarmingly, many of these risks are not immediately visible and remain unaddressed by organisational leadership.”
Leah Singer, author of the report and director of entwine, said, “The report is a rallying call to action for the industry to play their part in this increasingly complex supply network environment. Organisations need to improve supply chain risk management towards better industry outcomes as well as broader social and environmental benefits.”
The report highlights significant issues that contribute to risk in projects, including lack of supplier due diligence, lack of effectiveness in ongoing supply chain risk management, communication and information sharing within organisations and externally with the wider supply network.
“Broadly, the industry responses indicate that organisations are primarily focused on protecting the here and now of project delivery. Concern about risk outside of the traditional paradigm is significantly lower, including the risk of modern slavery, fraud, corruption, or the black economy,” explained Singer.
Key findings from the report include:
The report strongly recommends effective and efficient communication and information sharing throughout the life cycle of projects. Enabling information flow in all directions will help establish the quality of both the supplier and its extended supply chains, as well as to identify and manage ongoing risks associated with the network.
Commenting on the report findings, Davis said, “Digital is the biggest source of opportunity to enable greater transparency and accountability in the network, maximise efficiencies and enhance the quality and safety of projects delivered in Australia.”
However, while many organisations recognise the value of going digital, over half (56%) of the research participants believed their organisations were not investing enough in digital tools. The lag in adoption prompted Felix and Entwine’s joint submission to the recent Parliamentary inquiry into procurement practices, outlining strong recommendations for digitisation to promote efficiency, meet capacity constraints while modernising procurement.
Davis added, “Construction is at a critical juncture, with the number and complexity of large projects colliding with rising costs, supply chain constraints and increasing competition. The landscape has shifted dramatically in recent years and the risks lying in construction supply chains are multifaceted and complex. Leadership in construction organisations need to ensure they have adequate systems to drive transparency, accountability and sustainability throughout their supply chains as we embark on an unprecedented level of building and infrastructure.
Effective risk management is a whole-of-industry issue, and it requires a demonstrable commitment from all parties, including industry leaders, clients and government.”
To download a copy of the Building in the Dark report, please click below.
Watch our on-demand webinar where Mike Davis and Leah Singer discuss the implications of the report findings for the industry. To access the recording, please click below.
About the Building in the Dark Report:
The Building in the Dark report is based on a survey of over 150 individuals across both Australia and New Zealand, a selection of one-on-one participant interviews, and extensive desktop research of existing reports and industry commentary.
Felix operates a cloud-based enterprise Software as a Service (SaaS) procurement management platform and vendor marketplace. Felix connects contractors and third-party vendors by digitising, automating, and streamlining a range of critical procurement-related business processes – reducing supply chain risk and improving transparency and governance.
entwine is a boutique industry consultancy dedicated to driving meaningful, evidence-based change within the construction industry. Services include the design and facilitation of strategic and operational improvements for any party within the sector, with expertise spanning procurement, design, and complex, high-risk work streams such as offsite.
A new Australian Government policy is designed to prevent Black Economy activities from harming the integrity of the supply chain involved in the government's procurement.
Procurement is undeniably one of the most crucial aspects of any business - regardless of any business factor, whether it is business type, customer base, financial model or otherwise, procurement is a significant part of what enables a business to provide value to consumers.
On Thursday, 7 April, Felix hosted its second luncheon and roundtable event, discussing the key findings from our recently released whitepaper, Building in the Dark – risk mitigation in 2022.
Be the first to know when we publish new insights.