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Insights from Across the Tasman: What can New Zealand’s Defence Estate Regeneration Investment Programme learn from the Australian experience?

Defence is a major part of many national governments’ spend. Is there a new way of extracting wider national value out of this investment? What can New Zealand take from the Australian experience of over more than a decade of significant investment in its Defence Estate investment programme?

At first glance, the scale of the Australian Defence Estate suggests there is little to compare. The Australian Estate is on a different scale to NZ and is one of Australia’s most significant single landholdings. Some facts are shown in the figure below:

Defence Estate

Yet, while obviously larger, it has many similarities. Like NZ, the Australian Estate is made up of the land, buildings, training ranges, specialist facilities and infrastructure needed to generate and support defence capability, and for both countries their Estate is a core capability enabler.  

New Zealand has made a decision to make a significant investment to address the effects of an accumulated maintenance backlog, as well as to deliver the future upgrades and replacement required across the Estate. Investment will centre on solutions that are expected to deliver value for money and, at the same time, will seek to support military capability and outputs in the most cost-effective way. So, what can New Zealand learn and take away from the Australian experience that might be relevant as it seeks to deliver its own Estate Regeneration Plan?

A focus on project delivery

A key reason why the Australian experience has been successful is because of the strong focus on project delivery, as distinct from policy and process. Projects are scheduled, planned, approved, and delivered in a way that focuses on meeting key scope, time and budget objectives. This has driven focused procurement in terms of industry involvement and allowed them to engage consultants and contractors with very clear, stated expectations about these key project metrics.

Maintaining this clarity on delivering the facilities and infrastructure that enables defence capability is always going to keep Government and users happy.

Pre-qualified partners

This has been enabled by an emphasis on strong industry partnerships; relationships they have actively sought to create and maintain. Australia has made active use of comprehensive panel arrangements to pre-qualify industry partners with demonstrated experience, capability and capacity, regularly adapting and changing these panels to reflect what it needs and expects. The panels are not so much about speeding up procurement, but rather Defence ensuring it engages partners who know what they are doing and that they can rely upon.

The panel system has encouraged member firms to invest in the skills and expertise Defence seeks. Defence tries to make its senior executives and project teams, outside of formal procurement windows, readily available to any companies who can provide the types of services it seeks. Defence project teams are willing to discuss upcoming projects, challenges on existing ones and their expectations. This approach to industry engagement has promoted and encouraged trust and better working relationships: relationships that will pay off when issues occur in delivery.

An effective Quality Management System

Over more than two decades, Australian Defence has also invested and collaborated with industry to develop the Defence Estate Quality Management Systems (DEQMS), a comprehensive web-based set of procedures, policies, manuals, information and supporting tools that provides the governance, compliance and assurance framework in which projects are delivered. This provides all stakeholders with clear guidance and certainty in terms of Defence’s expectations about quality, performance and management.

However, the downside of such a comprehensive framework can be that project teams sometimes become overly concerned with process at the cost of better decision making, particularly when skill and knowledge is still developing.

Pros & Cons of contract suites

The Australian Defence has also led Federal Government in the development of comprehensive contract suites that have given it a lot of flexibility in how it can engage consultants and contractors to suit project types, risks and scope. Although strongly in Defence’s favour, the contract suites have at least provided clarity and certainty to industry in how it will be engaged and Defence has been very consistent in their application.

A key insight for New Zealand is that contract models can be strong drivers of how industry sees risk and prices it and can sometimes constrain innovation. This is particularly important as Defence tries to better manage and deal with Estate complex issues like project risk, sustainability, whole of life asset outcomes, and innovation. The recent trial in Australia of Integrated Project Delivery contracts might be seen as an innovation by Defence to promote collaboration by all project parties and address these issues.

Early stakeholder engagement

Australia concentrates on stakeholder engagement at all levels to ensure that projects deliver outcomes and facilities that address actual rather than perceived user requirements. This includes an emphasis on early engagement in project planning, as well as a project governance and reporting structure that is intended to provide all stakeholders with the chance to inform and shape what is delivered, while keeping them informed on progress.

Defence has recently sought to improve how it captures and reuses lessons learnt on previous projects to inform not only its project teams but also stakeholders. Among other benefits, this addresses the fact that turnover in project teams often results in revisiting issues and mistakes of the past.

Developing a lessons learned database and approach should be a key objective for NZ Defence as its starts its own programme planning and delivery.

CAPEX and OPEX management is key

Lastly, a key difference between the New Zealand and Australian models is that New Zealand’s major Estate capital and operational upkeep programmes are managed by different agencies and generally delivered by consultants and contractors with skills and experience relevant to those programs. This has made it challenging to better coordinate investment decision making and Estate planning and management. It has also reduced the opportunities to maximise the effectiveness and efficiency of the total Estate investment programme. 

Australia has recently changed its decision making under an Integrated Investment Programme where investment in both CAPEX and OPEX will be considered more fully and holistically. However, no matter how well intentioned, the reality is that the priorities of different parties involved in delivering and operating are often different and competing. NZ Defence, as the ultimate asset owner, needs to ensure that these conflicting demands are balanced effectively.

For well over a decade, Australia has had tremendous success in delivering, operating and maintaining a significant Estate CAPEX and OPEX investment programme. It shows that a successful Estate Regeneration Programme will be only achieved by a comprehensive and holistic approach to programme planning, management and delivery over the entire asset life cycle.

Australia’s success and lessons have many insights to what is critical to success and how these approaches can be tailored to address NZ needs and approaches. The decision to engage an Alliance partner to support it is a great step in ensuring the framework for success is established from the start.

This article was first published in www.defsecmedia.co.nz.

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