Presented at the OECD expert meeting "Construction Risk Management in Infrastructure Procurement: The Loss of Appetite for Fixed-Price Contracts", held on 17 May 2023 at the OECD, Paris and online.
Executive Agency of the Dutch Ministry of Infrastructure and Water Management - M. Valkenburg, ECI coordinator, Rijks Waterstaat
1. 1
• RWS is the largest public sector
procuring body in the Netherlands
• RWS tenders annually over a billion
worth of Infrastructure Works
• We see contractors loose interest
for tenders for large, complex,
fixed price infrastructure works
• In recent years, contractors have
i.e. too often lost tenders, incurred
high transaction costs, taken on too
much work and have not properly
assessed contractual risks
Rijkswaterstaat (RWS) => Executive Agency of the
Dutch Ministry of Infrastructure and Water Management
0
1
2
3
4
5
6
2017 2018 2019 2020 2021 2022
Bidder interest tenders infrastructure works
Overall average number of bids per tender Construction and renovation tenders specifically
2. 2
• Dynamics in imperfect market encourages
contractors not pricing risks.
• Current design of fixed priced contracting
reduces attractiveness to submit bids.
• Calamities threaten continuity of construction
companies and other companies in the
infrastructure sector.
• Rijkswaterstaat has reduced (design) knowledge.
• Labour productivity lags structurally, especially in
construction companies.
• Various barriers hold back innovations.
• Collaboration with other sectors needed for
technological innovation.
• Challenging labour market for well-trained staff.
The 2019 survey conducted
with the help of McKinsey &
Company: the challenges for
the infrastructure sector
Market
dynamics and
dealing with
risks threatens
the infra sector
Improvement
potential is
insufficiently
addressed
Risk of not being
able to fulfil the
social public task
Risk of major
undesired economic
consequences for
the sector
Towards a resilient infrastructure sector
3. Track 1
Organising and guiding
Track 2
Learning and developing
Track 3
Experimenting and securing
Track
4
Communicate
and
involve
Track
5
Monitoring
and
adjusting
More explicit focus on
climate resilience
Rijkswaterstaat and her market parties have started
a joint process of transition
The Netherlands safe,
accessible and
liveable:
Where:
Sustainable towards
climate neutral and
circular
In doing so:
Maximise digitalisation
opportunities data & lV)
An attitude aimed on
working together based
on sufficient expertise,
while focusing on the
public task at hand
A financially sound,
productive sector, with
risks under control
Sufficient room
for innovation and
learning
Social public
task
Conditions
i.a.
• Collaborative 2-step project approach
• portfolio approach