The Culture of Renegotiation

Grattan’s analysis into mega projects "Megabang for Megabucks" was published on 17 May 2021.

In my mind the hidden gem in the analysis is tucked away on page 40 that talks to the “culture of renegotiation” that plagues the industry. The culture is defined by:

- Renegotiations on a regular basis rewards firms that lobby effectively over those that cost the work more accurately but less aggressively. In other words, it can lead governments to choose the wrong bidder.

- Routine engagement in renegotiations encourages carelessness. Instead of adequate scoping and development, it rushes to market with the notion that it can fix any problems later.

- Weak project selection because decision-makers don’t have good enough information when they decide to proceed with a project. This means that white elephants are more likely.

Consequently, the recommendations in the report that go to reforming this culture are to me the most powerful:
- invest in up front project shaping,
- break up mega projects to enable competition, and
- greater transparency about project data.

These aren't new ideas, but the light shone on our culture of renegotiation is the best argument I've seen yet to make these things happen.