Reports about the plight of evacuations of Sydney residents from several apartment buildings have been disturbing.  While the level of rectification and assistance for affected populations has been variable, the disruption and distress to owners and occupants will leave a lasting impact.

The first issue occurred with the Opal Tower at Sydney Olympic Park in Homebush and further evacuations have since occurred at both Mascot and Zetland.

The Opal Tower Investigation Final Report (February 2019) mentioned several reasons for the cause of damage. Among them include the changes made from original design to actual construction, use of inferior quality of materials rather than what was specified, and errors in construction.

Given the existence of governance mechanisms such as the National Construction Code (NCC) and Australian Standards particularly AS3600 (Concrete Structures), one would question why and how these problems occurred?

In an earlier review, Building Confidence (February 2018), a total of 29 recommendations were published. All recommendations point to reinstating integrity within the construction sector by strengthening governance and addressing consumer confidence.

For procurement professionals, it reinforces our resolve to be part of the solution, which we can do through the adoption of sustainable procurement.

One may ask what is the relevance? Consider the International Standard’s (ISO 20400) definition of Sustainable Procurement, ie: “procurement that has the most positive environmental, social and economic impacts possible over the entire lifecycle.” (ISO 20400).

We procure to do something.

In this case, the objective was to provide a compact city dwelling for individuals or groups who need to be satisfied with the overall value of their investment. Clearly, this has not been the case because within a short space of time, they are faced with immediate and long-term adverse effect on their financial and social well-being.

Drivers

A paper prepared by the Australian ISO 20400 Committee, ‘Building a Business Case for Sustainable Procurement in Australia’, groups organisational drivers for sustainable procurement into four main areas:

  1. Cost/Income;
  2. Compliance;
  3. Reputation; and
  4. Organisational

Of most relevance to this scenario are

  • Compliance which includes regulations and norms of behaviours and support of key public policies for example . Reviews and investigations found practices that are in contravention to codes and standards.
  • Reputation including responding to customer, investor or civil society expectations and promotion of investor confidence. The responsible parties have suffered a loss of confidence of customers and investors and need to rethink their practices if they are to recover that confidence.

A focus on the right drivers from the outset helps to ensure appropriate behaviours and outcomes.

The ISO 20400 refers to 7 core subjects of sustainable procurement, being

  1. organisational governance
  2. human rights
  3. labour practices
  4. the environment
  5. fair operating practices
  6. consumer issues
  7. community involvement and development

While all are equally important, the two that resonate the most in this case are:

  • Organisational governance – A Sustainable procurement policy & strategy would be driven by the Executive, include values and commitments and cover, for example, Accountability, Ethical Behaviour, Respect for stakeholder interests, Respect for the rule of law, Focus on needs, etc.

 

A lack of governance poses a threat to the stability of organisations. Both the Opal Tower Investigation and Building Confidence Reports mentioned earlier found deviations from original design and the use of materials inferior to specifications.  With strong governance focussed on quality and integrity, it is difficult for anyone to cut cost or compromise quality for expediency.

  • Consumer Issues – organisations have responsibilities to their consumers and customers in respect to protecting their health and safety, being fair and factual in marketing and contract practices and providing service, support and complaint and dispute resolution.

 

Confidence and trust are very important considerations when people buy and commit to large expenditures.  Having their customers and consumers among their top priorities will help ensure organisations build a product that is fit for purpose.

For more information download our paper on How to get started with Sustainable Procurement