WA building reforms to include fairer contracts: Master Builders

Member consultation resulted in 18 recommendations
Covers three critical areas
Recommendations reflect the challenges currently faced

The commercial construction sector may see changes to tendering, contracts, and more as a new set of industry reforms is recommended by the peak body.

Master Builders Association of Western Australia (MBA WA), today, released its Building Industry Reform Package 2022. The package is the result of Master Builders’ consultation with its members.

The release comes as the building and construction industry endures an ongoing “profitless boom”, with the package of 18 core recommendations aiming to ensure a more sustainable and diverse building and construction industry in Western Australia.

The Building Industry Reform Package includes recommendations in three critical areas, said MBA WA executive director John Gelavis, including procurement reform to model and process, contract format rationalisation to address risk sharing, and industry jobs and skills.

“The industry has been heavily impacted by massive price escalations, material and supply shortages, skilled labour limitations and global supply chain disruptions as countries around the world are using construction to rebuild their economies post the COVID-19 pandemic,” said Mr Gelavis.

“These factors, coupled with the imbalanced contractual risks of modern contracts, builders are extremely cautious in engaging in future contracts in both the public and private sector. The risks associated with the current framework and extreme regulatory environment that exists at present are far too onerous.

John Gelavis, MBA WA executive director

“Contract reform is critical, as many contracts place excessive risk onto builders, so we would like to see the risk apportioned to reflect fairer levels for all parties.”

Mr Gelavis said MBA WA is calling on the Federal, State and Local Governments, private sector developers and industry stakeholders to support these recommendations so the building industry can feel confident engaging in future contracts knowing risk is shared more equitably and fairness is applied.

“Considering the State Government is one of the largest principals in WA, we are calling on them to take a leadership role in supporting a more sustainable building industry by adopting these recommendations across all State Government projects in 2023.

“Master Builders WA look forward to working with the State Government and all stakeholders in adopting these reforms and building a stronger and more sustainable construction industry,” said Mr Gelavis.

A shorter work week

Among the recommendations is the enforcement of a shorter working week:

“The WA building and construction industry has 127,279 workers, representing 8.7 per cent of the states total workforce, including 18.1 per cent female representation, which we would like to increase diversification in a bid to recruit and retain construction workers. One such recommendation is the universal adoption of a 5-day work week for the commercial sector,” said Mr Gelavis.

Changes to the tendering process have also been recommended in order to avoid a race to the bottom.

The report executive summary said:

“The current approach to selecting a Builder in the Commercial Sector offers limited transparency and is heavily weight on the ‘lowest price wins’ scenario. This approach has resulted in a race to the bottom which has directly contributed to insolvencies within the industry.”

Other improvements to the tender process were recommended, including the discouragement of an open tender process and financial reimbursement for more complex tenders.