The Implementation of the New Engineering Contract in Australia : An Institutional Perspective

Abstract: Current traditional delivery models used in the Australian construction industry are seen as highly bespoke and adversarial where there is an inappropriate contractual risk allocation, lack of collaboration and poor project management. With the pipeline of investment compounded with the impact that global macroeconomic trends and events (e.g., COVID-19, climate change, political instability, social change, digital revolution) have on supply chains and risk profiles; there are calls from practitioners and researchers for fundamental change to contractual delivery arrangements to support the implementation of collaboration. The standard form of contract known as the New Engineering Contract (NEC) is seen as a logical step in the right direction; however, there is a lack of in-depth investigation to understand and support its implementation, particularly in Australia. This thesis aims to understand whether NEC could be utilised to a greater extent in the Australian construction industry by using institutional theory as a frame of reference. This paper reports on an exploratory interview study with a range of professionals in the construction industry in Australia to understand the current problems with traditional procurement, NEC’s perceived role and contribution to developing contractual practice, the barriers to change and the roles that various actors play in driving the development of NEC. The study confirms that the industry has a range of economic, knowledge-related and cultural factors that motivate the need for change. The effect of these practices has become part of the institution of the construction industry, ‘the way we do things. This has resulted in inefficient and poor performance outcomes. The general perception and experience amongst industry participants is seen as positive to NEC, where many acknowledge clear advantages but also various issues to its implementation. Key institutional actors are perceived to act as barriers to further adoption of NEC are the government, clients/public sector organisations and the legal profession. Other main barriers identified include the limited number of trained professionals and the culture and mindset in the industry. Greater adoption of NEC requires the active role of government, clients, and industry and professional bodies.