sensum minds #7 - Construction Phase: Managing Risks and Building Relationships

Sensum Minds housing Series - Part 3

As Australia continues to ramp up housing production to meet growing demand, the construction phase becomes more critical than ever. With an influx of projects expected over the coming years, it's going to be vital to approach construction with a focus on risk management and building strong industry relationships. In Part 3 of our Housing Series, we’re looking at the complexities of tendering and construction, highlighting the importance of risk mitigation, building trusted partnerships, enabling the supply chain, and preparing for the challenges that lie ahead.

Risk Considerations in Tendering and Construction

Construction in the housing sector is inherently risky, particularly in today’s volatile market. From fluctuating material costs to labour shortages, regulatory challenges and, unfortunately the ever-present potential insolvency, numerous factors can derail a project. Sensum’s approach to tendering and construction is designed to minimise these risks by drawing on our extensive experience and maintaining stringent oversight throughout the process.

We take our role as a reliable and trusted partner for housing projects seriously, ensuring that every decision is informed by data, expertise, and a deep understanding of potential risks. We keep housing projects on track by anticipating and addressing risks proactively, managing contracts, ensuring compliance with safety regulations, and coordinating with key stakeholders.

We also recognise that establishing strong relationships with reliable contractors and subcontractors, with appropriate probity measures in place, is essential for the efficient delivery of housing projects. We protect our client’s interest by confirming that contractors working on housing projects are Federal Safety Commissioner-approved, ensuring that safety and regulatory compliance are maintained at the highest standards throughout the project lifecycle. Carrying out financial checks provides a view of tenderers current viability and potential risk. It is worth noting that when dealing with the ‘Startup World’ of MMC, many organisations may present a low score. This can also be managed by appreciating the risk and the best way to manage without unnecessarily burdening the organisations involved. Another key factor in ensuring best outcome in tendering is focusing the Tender List to three tenderers. This ensures a competitive process with a real opportunity to win.

Another consideration when preparing Procurement strategies and associated Tender Assessment Plans is the impact of the Price to Non-Price Criteria. It is safe to say that our industry has headed down the cheapest is best approach for a long time (60+% Price). From our experience, a considered and more heavily weighted Non-Price criteria (70+%) generally provides the best overall outcome for the project and presents the best value for money.

Whilst the procurement (tendering) process is important and sets the scene for construction, it is just as important to continue to manage relationships and expectations through the construction phase. Establishing good communication and effective reporting and ensuring candour enables challenges to be addressed early and with minimum fuss and effort.

Preparing for a Surge of Work

CIn the coming years, the construction industry will face unprecedented pressure to deliver at scale as governments, developers and private owners across Australia push to meet the growing demand. This presents both an opportunity and a challenge.

“Great innovation only happens when people aren’t afraid to do things differently.”

- Georg Cantor

We have a desperate need to provide good homes to thousands of Australians today, let alone meeting future needs. To meet this demand we need to do things differently. This doesn’t mean we stop more traditional delivery approaches, but it does mean we need to eagerly adopt new approaches to supplement. Modern Methods of Construction (MMC) is in many cases, a viable solution.

Sensum has been engaging, embracing and championing innovation through and within MMC since our inception. With firsthand experience in working with NSW, VIC and QLD governments in improving efficiencies, reducing costs, and deliver projects at a pace that meets Australia’s housing needs.

In the final part of this series, we’ll be going into detail on how MMC is reshaping the way housing is planned, designed and delivered, and what it means for the future of construction in Australia and helping to solve the housing crisis.

If you’re keen to know more about what we are doing in the housing or MMC space, reach out to one of our team who can take you through some case studies, or chat with you about your project.