Recently, MBB Managing Director, Peter Jones sat down with Ansarada to talk through the challenges facing Australian developers, project owners and procurement professionals. The discussion ranged from the changing dynamics of fixed-price contracting in the Australian market, to the challenges of a potentially “fragile” social license for linear infrastructure and why private capital is moving into the early development phase.

The articles has been published in Ansarada’s new white paper and reproduced here.

The industry is seeing significant cost escalation. Is the traditional fixed-price contract still viable for major renewable projects in Australia?

Fixed-price, DNC (Design and Construct)-style arrangements are extremely challenging for projects delivered at scale. The last decade of Australian infrastructure was characterised by cost blowouts risking both companies’ future and public confidence. It’s now unlikely any board will sign up for a fixed-price contract on a major project because the risk is too high. It has also become unrealistic for construction businesses, given the margins they’d require to cover the volatility in resourcing.

Little wonder we have shifted toward collaborative forms, like Alliances or ITC (Incentivised Target Cost) models, where “pain share and gain share” replace partisan liability. These are predicated on open book transparency and symmetrical information, so when change occurs, solutions come from a common understanding rather than both parties resorting to a litigation.

Why is this collaborative model particularly necessary for renewables and transmission specifically?

Because the scope for uncertainty is genuine. If you are doing 10km of tunnel in a city, you can do your geotech and hydrology investigations with a higher level of confidence. But if you are building 600km of transmission line, the level of investigation required to genuinely quantify and transfer risk is a much harder proposition.

It’s this uncertainty which is tightening the gap between the procuring agency and private delivery partners, simply because the inherent risks are just too difficult to quantify in isolation.

In these large-scale public sector projects, how significant is the risk of data fragmentation across different digital systems?

Fragmentation is a real risk. The engineering documentation must stay in the engineering domain for version control. The record management systems must be maintained by public agencies for freedom of information requests. Cabinet-confidential documents cannot be shared outside agency systems. It’s a question of managing risk, and having a clear, cohesive and current view of the project.

Using a platform like Ansarada allows project professionals to adopt a “document of record” approach. It allows us to know, whatever is happening downstream in other systems, we have a single, verified contractual baseline. If there is a change,

it goes through a gated process, and the new document of record is controlled from that point forward.

How does that digital “document of record” approach aid in the transaction advisory process?

This approach is essential for managing the relationship with the market, particularly regarding probity – the strict regulation of how government engages with the private sector.

The “document of record” system gives full auditability. Project leads can track exactly who is viewing documents, and how often, and then manage the full download protocols. When a project is audited, we have a full and accurate record of the information history, version control and access. The “document of record” approach also allows us to transition from the procurement phase directly into the contract form and the contract database. Of all the systems we’ve used, it’s really the only one we rely on to manage the market interface.

There is a growing concern about a “disconnection” between generation projects being ready before the transmission network is ready. How critical is this gap?

This is one of the key conversations across the country right now. Transmission is generally lagging behind the required program. Given the availability of transmission drives the appetite for generation, investor confidence in generation projects is justifiably impacted.

One of the major issues we’re seeing is the challenge of securing social licence to build. These projects are invasive – you can’t bury or hide 600km of power lines. You have to put them somewhere – which often requires greenfield construction. Which requires social buy-in.

Landholder opposition is a major risk. How can the industry secure this social licence to operate?

It is an incredibly emotional space.

Unlike legacy generation projects such as power stations, which are often major local employers, transmission lines and wind farms do not provide long-term local employment, at volume, after construction. It is hard for a community to balance the idea of the project as a public good when it isn’t necessarily great for them personally. If one landowner in the middle of a 600km route says no, your project can suddenly double in size requiring 1,200km of transmission to go around them. If you fall back on compulsory acquisition powers, you’ve instantly damaged the social licence.

It’s a delicate balance. We are on the precipice of an energy issue – when the lights start going out, attitudes might change, but it might take that to drive the point home.

We are seeing a shift in how capital is deployed. Is private capital entering projects earlier than it used to?

Yes, and that is a genuine change from five or six years ago. Because government-backed capital is more constrained, we are seeing the use of private capital in the

development phase for field investigations, surveys, and geotech. This brings the Early Contractor Involvement phase forward, as you’re creating an integrated team where funding is coming from both parties. This should generate more efficient projects because the people who are actually going to build the asset are involved in making choices about capital deployment from the start.

Beyond capital, what are the primary logistical hurdles for the Australian market?

Geography and scale. We have a clear energy transition strategy at state level, with associated funding at project level, but Australia is huge. This makes projects geographically challenging for international suppliers and internal logistics. Port facilities need to be upgraded to handle the volume of turbines needed and the ports may not be ideally located. So, once the turbines land, you might be driving them 500km to the installation site. It’s not ideal, but it’s cheaper than building a new port. Or a new rail line.

The workforce is another consideration. While 70% of people live in capital cities, these turbines are usually in remote regions. This means many projects requires labour encampments and FIFO (Fly-In Fly-Out) workers, which adds logistical complexity and cost.

While none of these issues are insurmountable, they require smart thinking from the start – and effective management throughout.