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Executive Agency of the Dutch Ministry of Infrastructure and Water Management - M. Valkenburg, ECI coordinator, Rijks Waterstaat

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.

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• 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
• 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
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

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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