Transcript
Speaker: Is sustainable procurement seeing a once in a generation opportunity? Find out today on Infrastructure Connections. You we think we're at a pretty defining moment for infrastructure across Australia New Zealand.
Speaker: Welcome back to Infrastructure Connections, the podcast where we explore what makes sustainable infrastructure work. Brought to you by the Infrastructure Sustainability Council, I'm your host, Seth Scott, and today we'll be speaking with Richard Martin.
Speaker: Richard is Executive Director at Connell Griffin in Sydney and a chartered civil engineer with over 25 years experience delivering major infrastructure projects across Australia and Europe.
Speaker: In recent years, Richard has provided extensive project development and transaction advisory services on a series of high profile infrastructure projects across Australia. Having led several complex multi-billion dollar project transactions in the road, energy, water and rail sectors, Richard brings deep practical insight into how procurement can shape outcomes, influence markets and unlock real sustainable impact.
Speaker: Well, Richard, welcome to the show. Great, thanks for having me. Thanks for being on. So, Conal Griffin and the ISC just completed this thought leadership piece called Transforming Infrastructure Delivery Through Sustainable Procurement Reform. yeah That's just been released. What's the core problem you are trying to address?
Speaker: Yeah, sure. and So, i guess just sort setting the scene, we think we're at a pretty defining moment for infrastructure across Australia and New Zealand.
Speaker: um you know The scale of the pipeline is massive as it has been for for many years. But at the same time, we're dealing with a number of increasing pressures from from various various areas.
Speaker: So first of all, it's climate and carbon pressures. ah Infrastructure, as we all know, contributes significantly to our carbon emissions as a country. And that's from you know materials we use, construction techniques, and then even how we we operate the assets at the the end of delivery.
Speaker: ah We've seen that our governments and clients are absolutely committing to net zero. However, our procurement ah practices are not adapting quickly enough to align with this commitment from our clients.
Speaker: um We're seeing that you know the definition of value for money really needs to evolve. We all say value for money does not mean lowest price. ah But whole of life outcomes you know really do matter. We've seen a lot from the UK, a significant switch to the concept of Totex, so total expenditure, rather than just a focus on CapEx, meaning value for money.
Speaker: ah Year on year, we see supply chain disruption. That's becoming more and more frequent because of various events around the globe. And a big one, ah you know social license. So there's increased community expectations that we we are delivering our infrastructure more sustainably.
Speaker: So we've consistently seen is that the ambition is there. ah Governments, private sector clients and industry all want to do better and deliver those sustainability outcomes.
Speaker: ah But when you look at actually how the projects are delivered, our procurement practices are still quite inconsistent. And importantly, that embedment of that sustainability concept is happening far too late in the the project development lifecycle.
Speaker: So the core issue we're trying to address in this thought leadership piece is that you know procurement can no longer just be a ah commercial function, which often that's what it's seen as. you know We can really use it as strategic tool that shapes how we how we build, how infrastructure, how it's built and who benefits from that infrastructure.
Speaker: Hence, we really want to you know take this opportunity to position procurement as a lever to drive better outcomes. But right now, as I mentioned, the the system isn't set up consistently yet to make that happen.
Speaker: That makes a lot of sense for, especially for asset owners who are going to be holding onto these assets for years, that total cost. Sure. From your perspective, what's the biggest insight coming out of the report? I think in days gone, sustainable procurement was seen as a bit of a niche or, you know specialist topic or a specialist issue.
Speaker: um Whereas actually it can be real sort system level lever. um So as I mentioned, it influences you know what gets built, how we deliver, ah how the market responds. So you know what what does what does the supply chain do and ultimately whether sustainability outcomes can be achieved or not.
Speaker: I guess what surprises a a bit less, ah but is reinforced very strongly through the research we did and our own observations as practitioners in procurement. Again, is that sustainability ah is just being introduced far too late in the project lifecycle.
Speaker: So rather than right up front, we're seeing that it's been introduced ah during the procurement phase, sometimes even when we're at tender, when we're actually engaging with the supply chain. So it's not been embedded early enough for consideration.
Speaker: What is the most common misperception of sustainability when it comes to procurement? Sure. um I think, again, you know, um the I think the biggest one is that sustainability is seen as a, you know, as ah as an add-on or a tick-the-box exercise on any project.
Speaker: And I think when it's done that and it's an afterthought, it can be quite an expensive add-on when it's not thought about. So, you know, i think I think traditionally that's what's happened. You know, we are seeing pockets um of of change, particularly how how we're proposing to do procurement in our thought leadership. So that there are pockets among clients that are trying to do things a bit different.
Speaker: um you know And what what they what the paper you know says is that you know if if you know when sustainability outcomes and requirements are are embedded properly early into projects development, i.e. before procurement,
Speaker: it actually really helps better decision making for the project. So this could include, you know how do we reduce material use? How do we improve energy efficiency?
Speaker: How do we minimize waste on a project? And so very often it can actually really help you know cost and delivery outcomes as well, not not just during the procurement phase. So you know we're really trying to encourage clients to develop solutions with sustainability already embedded. you know It's already costed and hence it's funded.
Speaker: So, you know, where we've seen projects that have done that and clients have embedded sustainability right from the start, we're seeing a ah macro improvement in cost reduction, ah reduction in in risk profile of the job,
Speaker: and ultimately improve performance of the asset, not the other way around. So this shift is really about moving from sustainability as a constraint or something that we just have to do rather than really as a value driver. And obviously, you know procurement, that's where procurement comes in to to really enable that.
Speaker: It's good to see organizations bringing this in and it's starting to become more mainstream. What do you think is driving that? um So i think the the main driver um yeah clearly is the governments and and even our private sector to clients and and supply chain industry. you know We all want to do better and we all want to see better sustainability outcomes.
Speaker: um yeah In addition, you know as a society and a community, you know we we have those expectations on government and clients that we you know we they're doing things better from a corporate responsibility perspective.
Speaker: um Obviously, you know a big part of this is is the scale of government purchasing power. Public procurement represents a huge portion of the Australian and New Zealand economy.
Speaker: So the way governments spend that money can you know obviously directly shapes markets. So through procurement, governments can embed you know carbon reduction, ah circular economy, principles, social outcomes, workforce development, etc.
Speaker: you know They can embed that right into project requirements. And so it means that you know the supply chain gets to be able to respond to those requirements. We're seeing the formalization of more ah more frameworks. So, you know ISO 20,400, which is ah the sustainable procurement.
Speaker: Again, it's pushing a much broader definition of value. Again, you know as I mentioned earlier, you know going beyond that that capex and ah you know capex being best value for money, it's it's really yeah looking at you know the Totex and bringing in environmental, social and economic value uplift into a solution.
Speaker: So that shift in the early stages is starting to come through in some procurement thinking, ah but on a whole, we're still seeing very traditional ways of procurement and their approach to sustainability.
Speaker: That makes sense because procurement really ties into so many other departments and areas. The report talks about this as a system level reform. What does that actually mean in practice?
Speaker: Sure. um So sustainable procurement reform essentially means that we embed you know environmental, social and economic outcomes into how we plan, procure, deliver and operate our infrastructure and the assets.
Speaker: um So you know there is a real opportunity that we you know we use procurement and we position it as a real lever for instigating the change needed. I think the thing is with the with the with the targets that we've set by ah by by the dates, um you know incremental change probably isn't going to get us there. It really needs a complete rethinking about how the whole system works, particularly procurement.
Speaker: So a system level reform really means changing how projects are are planned from the outset. ah You know, how procurement strategies are designed, ah how performance is measured across the life cycle of a project. So it's really about aligning, you know, policy, procurement and delivery. So they're all working together for the same outcome. um What we see at the moment across a lot of clients is that, you know, those those elements are often quite disconnected.
Speaker: So policy might say one thing, ah the procurement process thinks about something else, and then the poor delivery teams are left trying to reconcile the two over, you know, what do we do here?
Speaker: So that's what we're calling for a shift in, you know where sustainability becomes a real core commercial driver on all infrastructure projects. So it's something that really shapes decisions. It's not something about that we add later down the track because we have to do it.
Speaker: And so to do that, and you know clients need consistent tools, clearer frameworks and a stronger capability uplift across all roles within our clients.
Speaker: It makes sense. Well, central to this paper is the plan source manage framework. And why is that important? um So it's super important because it really reflects the reality that ah you know procurement, um even it's often seen like this, is is not just a single event. It really is ah a lifecycle process. So this plan source manage framework, what what do we mean by that?
Speaker: So planning is all about where you set the ambition, you know you set the requirements, what do we want to do? ah Sourcing or procurement is what turns that ambition into contracts and in particular things like commercial settings.
Speaker: And managing is where you actually deliver and verify those outcomes. So so that's that's our definition of that framework. So where we've seen sustainable procurement tending to fail is that those stages are disconnected and outcomes are not necessarily aligned.
Speaker: So you might get great sustainability outcomes in the in the planning phase, like in a business case, but the problem is then that's not transferred into the procurement and then not into, say, construction contracts.
Speaker: Or sometimes when they're in the contract, ah They're not necessarily enforced, so we don't get those outcomes from the contract. Or again, um you know we're not actually adequately measuring those outcomes to confirm that the ambition we had has actually been delivered and we've we've actually met the outcome.
Speaker: So if you look specifically at at the planning phase, that's probably where the biggest opportunity sits. ah Most of the key decisions for a project are set at that phase. So you know the high level scope, ah that tends to lead to what type of materials we're going to use, what design pathways do we follow? and The problem is all those are effectively locked in at that very early, particularly at the business case stage.
Speaker: Importantly as well, um it's at this stage that project budgets are set and budgets are approved and so they're they're all there to implement a certain solution. So again, this whole early integration is is so, so critical and it's why procurement needs to start much earlier than we traditionally think, which is when we start approaching the market.
Speaker: All of that move together creates a change in procurement that could be a once in a generation opportunity. Why do we see it that way? um I guess you know it really comes down to ah scale and timing.
Speaker: um yeah I mentioned earlier, we've got this enormous infrastructure pipeline ahead of us. um This is combined with very strong and clear net zero commitments um from from our governments.
Speaker: However, we're still seeing those pressures on supply chains and ongoing productivity challenges across the sector. sector So we've got really clear net zero targets and that goal of reducing carbon across all facets of infrastructure.
Speaker: ah this This along with this massive pipeline, including this you know this huge energy transition ambition, ah that we have in this country and globally, those combinations, you know, for us, we really think this is a once in a generation moment that we we need to tackle right now.
Speaker: So, you know, for us, you know, procurement sits right at the center of all that. ah It's got the ability to drive decarbonization, ah shape how our markets evolve. It can support local industry capability, ah create a circular economy, and really improve long-term performance and resilience in how we develop, deliver and operate our infrastructure.
Speaker: So when you bring all that together, what you see is it isn't just about improving procurement, it's about using procurement as as a lever to transform the whole of system infrastructure development and delivery.
Speaker: Well, I certainly agree that it is a once in a lifetime opportunity, but it's not just me. um I understand for this thought leadership piece, you also went out to engage the industry as well. What does that industry engagement tell you about where the status is today?
Speaker: Yes, so we you know we reached out to different facets of industry with surveys and discussions just to make sure it wasn't just Carl Griffin's view of the world. We wanted to get ah lenses from you know clients, contractors, designers, etc. um So again, the consistent theme is that the intent or the desire is really strong.
Speaker: Everyone's on board with what we're trying to do. ah But again, it's it's the capability and systems are just lagging behind that desire. So I guess in essence, what that means is what we need to do um is is very strong, but how do we go about it is is is is the weak point of this whole concept.
Speaker: So, you know, government, industry, supply chain, um clear desire to deliver better sustainability outcomes. um But, you know, in particular, our clients are working with fragmented systems and inconsistent tools and quite often unclear expectations on them.
Speaker: ah One of the biggest insights was that sustainability is still embedded, you know, far too late. um And that's often because, you know, the teams, so that could be the procurement team or the sustainability team or even the delivery team are working in silos rather than all together in one integrated system or team.
Speaker: So clearly the the challenge isn't ambition. That that is there. it's Again, it's coming back to that you know general alignment, capability uplift and consistency from project to project.
Speaker: That's great to see, um but there are still organizations that are struggling with this. So practically what needs to change first for organizations to be able to adopt this? and The big shift, um you know, put simply is for organizations, whether they're private or public, is really to start to think about sustainability outcomes earlier in the project lifecycle.
Speaker: ah Don't just start having to think about it when either you're about to start procurement or worse still, you're actually in procurement because as I mentioned, trying to retrofit that ah could be quite expensive and might not necessarily deliver you value for money.
Speaker: So, you know, it's all about embedding sustainability right up front into feasibility, project planning and particularly business case phases is where real leverage sits.
Speaker: From there, it's really then about aligning teams. So bringing, in you know, the procurement team, delivery, sustainability functions all together early and keeping them aligned as we pass through those project life cycles.
Speaker: um Also, our lot of the clients we spoke to and feel that they they need to move towards you know more measurable outcomes. So rather than just policy statements and high level requirements, you know how actually going to measure that we're achieving these su sustainable outcomes.
Speaker: So importantly, we should be using procurement to actively engage the market. and We can understand through that their capability, test ideas, ah unlock innovation, you know all all to the benefit of our industry.
Speaker: So none of these in in individual changes are ah really that red radical. I guess what's different is bringing this all together really does mean a fundamental shift in how procurement works and how outcomes are delivered.
Speaker: Well, you sound pretty confident that that can happen. What gives you that confidence that this actually can happen? Yeah, I mean, as I mentioned, you know we we have seen pockets of change. um So you know we are seeing the market is starting to move um you know through a lot of the work that we do at Conal Griffin. you know we We have a lot of face to face with the market. So you know the supply chain is is ready and eager.
Speaker: ah you know We see with our clients, again, there is an eagerness to adapt and to learn. um you know a lot of our contractors we we work with and their suppliers and consultants, you know they're all investing heavily in things like low carbon materials, ah circular solutions, and even new delivery techniques or approaches.
Speaker: um So the capability is absolutely there in our supply chain. ah The big issue, as I mentioned, is unfortunately, it seems to be ahead of our procurement frameworks that we use to go buy ah those solutions or or products.
Speaker: um We've also got you know strong policy direction, so both at the you know the federal and state level, um you know there's ah there's a lot of good policy out there. So again, that intent is clear and it's established. Again, it is that linkage. So strong policy, we've got strong supply chain, it's that missing link between the two.
Speaker: So if we can bring that policy and market capability together through better procurement, ah you know That shift can happen really quickly. ah So that's you that's what's given us the confidence. So this whole opportunity, it's not just ah it's not just a ah pipe dream, it's it's real.
Speaker: ah The appetite by everyone is strong, but again, the you know the system settings just need to catch up a bit to to really enable it. Sounds like there's a lot more to explore. The paper's out there now, it's been released, but if people want to go deeper, what's the best way for them to learn more about this in practice?
Speaker: Yeah, sure. um So yeah, the the thought leadership paper between ISC and ourselves is out there. And that paper is you know really trying to help people focus on you know this whole translation of of what we need to do into the how.
Speaker: ah So look, in the coming weeks, my colleague, Bec Timmins from Conal Griffin, she's our Net Zero lead. She'll be at the ISE Connect conference on the 2nd of June.
Speaker: And on the following day, on the 3rd, Bec and myself will be co-facilitating a mini workshop on sustainable procurement. So if you're up there um at the conference, please come along and come and have a listen and get involved in the workshop. It'd be great to see ah a big turnout there.
Speaker: ah We're also starting to roll out more in-depth masterclasses in sustainable procurement. So they're happening throughout June. And again, those masterclasses, we're going to go into a lot more detail on the tools, the frameworks and some real world application across the project lifecycle of how you go do this.
Speaker: ah so all these details, they're all available on the the ISC um website. So anyone that is interested, please go have a look. There's a lot of great material there. And really, um you know we're trying to encourage people to take this opportunity to really start understanding not just the why, but but the how. How did we go do this?
Speaker: Well, I'll be at the conference as well. So I'm looking forward to seeing you there. I hope more people come and take a listen listen in. Yeah, it's going to be a good one. Great. Well, thank you so much for everything you had to say. Thanks for being on the show. Really appreciate Thanks for having me. Thank you.
Speaker: And thank you for listening to another episode of Infrastructure Connections. In case you missed it, the name of that thought leadership piece is Transforming Infrastructure Delivery Through Sustainable Procurement Reform.
Speaker: And you can find a link to it in the comments below. Please take a moment to follow us wherever you get your podcasts. And we want to know your thoughts. Leave a comment down below to let us know what you think.
Speaker: And make sure you visit the IS Connect 2026 conference coming up in Brisbane next week, June 1st through the 3rd. I'll be there, and I hope to see you there too.
