Poor project governance costs Australia over $35 billion: report

Poor project governance costs Australia over $35 billion: report

Infrastructure Australia says poor project governance in major projects in Australia costs the country billions and urgently needs addressing.

The problems with project governance are set out in Infrastructure Australia’s report ‘A review of project governance effectiveness in Australia’, with data derived from a survey conducted by Caravel Group and the Melbourne Business School.

Infrastructure Australia hopes the damning report will force businesses to address issues of poor project governance.

The report highlights the vast problems project governance teams are facing, such as lack of time, resources and skills, as well as the cost that poor project governance has on the economy.

Paul Myers, Caravel Group director and chief executive officer, told LeadingCompany research challenges traditional reasoning for business failure.

“Blame for failure has traditionally been laid at the door of the project management team. However, it appears that most of the fault actually lies with the project governance team,” he says.

Myers says while drastically improving project governance groups will take time, recommendations in the report provide both long- and short-term goals as “a way forward”, for struggling project governance groups.

The report states urgent action to improve Australian project governance is required and warns a failure to implement such changes would have severe consequences on the economy.

Estimates in the report suggest poor project governance costs companies and taxpayers over $35 billion per annum.

Michael Deegan, national infrastructure coordinator for Infrastructure Australia, told LeadingCompany conflicted and inexperienced project governance is an extremely pertinent issue that is often overlooked.

“There is absolutely nowhere near enough attention being paid to this issue, companies have their heads in the sand,” he says.

Deegan says Infrastructure Australia’s interest is to ensure taxpayers’ money is not poorly managed and misspent.

He says one of the major problems project governance teams face is that positions are given to highly senior people who lack the time and resources to carry out the role in the necessary way.

When asked if project governance is given priority, Deegan says “absolutely not”.

“Senator Chris Back has been asking us about this issue for quite a period, I asked Caravel Group to develop a report on the issue, we have published it because we think that this is a serious issue that both governments and the private sector need to be aware of,” he says.

Deegan urges Australians to read the report, saying companies need to be held accountable and people need to be aware of inefficiencies in these projects.

Deegan says the first and foremost step towards change in project governance is creating awareness that the issue exists.

LeadingCompany contacted Major Projects Victoria and the Department of Broadband, Communications and the Digital Economy who failed to respond prior to publication.

Infrastructure NSW declined to comment.

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