Some months ago, my old friend and colleague Noric Dilanchian pointed me to a story in the Australian Financial Review. I meant to comment at the time, but I put it aside because of other pressures. Essentially, the story said that Australian Governments had lost the capacity to project manage complex projects and that, consequently, it should outsource more. The piece focused especially on Defence spending. Here the proposed solution was the purchase of off the shelf equipment.
I agreed with the first, but disagreed with the second. How can you outsource if you no longer have the capacity to properly manage the outsourced work? Now Professionals Australia has reached a similar conclusion. I quote:
The body representing engineers, architects and consultants, Professionals Australia, says mismanagement of public infrastructure projects costs $6-7 billion a year.
Its CEO Chris Walton says governments have outsourced so much infrastructure work that they now do not employ enough people to properly procure projects and monitor their progress.
"It's like renovating your own house, not being clear what you want, changing your mind, re-working, not managing it properly and giving the builder a blank cheque," he argued.
"It's just simply penny wise but pound stupid for government - and that's federal, state and local government - to cut the people who are actually critical to managing the projects and saving that money.
Professionals Australia is a union body representing engineers and project management professionals among others. It has a bias. Nevertheless, that doesn't invalidate its point.
If you are going to let an engineering contract, you have to have the in-house capacity to define the tender, evaluate the responses and then manage the contact. Otherwise, you are in just the same position as the private home builder or renovator who becomes totally dependent on the builder or trades people involved. And we all know what happens here.
Sadly, Australian Government agencies and many companies have lost the core capacities required. This problem has become worse with time as those with actual doing experience leave the scene through restructuring or simply age and retirement. They are not being replaced.