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Sustainable Procurement on Inland Rail – A Case Study

Sustainable Procurement on Inland Rail – A Case Study

By Ramola Yardi, Senior Sustainability Advisor and Georgia Gosse Sustainability Manager 


About us

Inland Rail is a once-in-a-generation project that will enhance supply chains and complete the backbone of the national freight network between Melbourne and Brisbane via regional Victoria, New South Wales and Queensland.

Inland Rail will transform the way we move freight around the country, connect regional Australia to markets more efficiently, drive substantial cost savings for producers and consumers, and deliver significant economic benefits.

Comprising 13 individual projects and spanning more than 1,700km, Inland Rail is the largest freight rail infrastructure project in Australia and one of the most significant infrastructure projects in the world.

Within Inland Rail, there is a culture of continuous improvement and building on lessons learnt and best practices where possible. Working with suppliers to improve sustainability performance is a key objective of the Inland Rail Sustainability Strategy

Significant gains have been achieved across the program in relation to social sustainability and local and Indigenous workforce and business participation. However, it was recognised that other aspects of sustainable procurement – such as total cost ownership, lifecycle costing, innovation and environmental sustainability – required improvement for the following reasons:
  • Greater organisational awareness and buy-in
  • Improved ability to influence outcomes in the supply chain, and
  • Updating of the existing Inland Rail Sustainable Procurement Policy (April 2018).
In addition, a review of 90 Inland Rail suppliers found that only 15% had a publicly stated commitment to sustainability on their website, meaning that more than 85% of suppliers have not formally engaged with sustainability or publicly recognised its benefits to clients such as Inland Rail.

The Opportunity

Inland Rail directly engages hundreds of suppliers with a large proportion of the $9.3 billion program budget being spent through the supply chain. Many suppliers will bid multiple times, allowing for demonstratable continual improvement regarding their sustainability agendas. Inland Rail spend on the first construction project was over $479 million, including $179 million on rail construction materials. Additionally, as of March 2020, community benefits on the Parkes to Narromine project included $89 million spent with local and Indigenous businesses. More details can be found here.
Inland Rail has great potential to influence a significant supply chain to embrace sustainability and understand the long-term value it can provide. However, the supply chain needs to be provided the right guideposts to signal that sustainability is crucial to how business is conducted for Inland Rail.

New Sustainable Procurement Policy

The new Inland Rail Sustainable Procurement Policy (‘the Policy’) was collaboratively developed by the Sustainability and Commercial teams and involved wide consultation and engagement with internal stakeholders. The revised Policy was circulated for review with a discussion paper outlining:
  • Best practice approaches such as the ISO 20400 Sustainable Procurement Guidance
  • Key sustainability risks and opportunities in the Inland Rail supply chain
  • A high-level sustainable procurement maturity assessment of the program
  • Assessment of potential cost and schedule impacts from sustainable procurement.
The Policy was endorsed by executive management on 12 March 2020 and is accessible here. The Policy includes five objectives and 13 associated commitments. Performance of the Policy will be tracked and reported as part of quarterly sustainability reporting deliverables to executive management.

Key to implementation of the Policy is a Supplier Sustainability Assessment aligned with the commitments of the Policy. This tool is still under development but will enable Inland Rail to better utilise the sustainability questionnaire in the tender evaluation process. It will also provide a scored assessment back to the supplier with a guideline on how to improve their score over time.

This tool will enable Inland Rail to engage with suppliers across all phases of the procurement process and track and measure improvements in sustainability scores over time. Transparent reporting of sustainability value inherent to procured products and services will also be possible.
Benefits to Inland Rail from taking a sustainable approach to procurement decisions include:
  • Cost of maintenance and disposal of a product may exceed any savings on capital expenditure (Total Cost Ownership)
  • Benefitting communities impacted by the project through local employment and supplier targets (positive externalities)
  • Removing the possibility of reputational damage from procuring a product or service that has labour exploitation, environmental degradation or corruption in the supply chain (minimising negative externalities)
  • Seeking innovative solutions that respond to project sustainability risks such as constructing in drought-prone regions; or sustainability opportunities such as wide-scale deployment of new recycled materials (Total Cost Ownership and positive externalities).
Next Steps

Critical to the success of the Sustainability Assessment Tool will be the feedback provided to the suppliers, post review. It is envisaged that Inland Rail will provide feedback to the suppliers on how they can improve their sustainability agenda. The evidence will come in the form of supplier Sustainability Assessment Tool scores improving throughout the delivery of Inland Rail and those improvements being taken forward onto future infrastructure projects.

For more information on the Sustainable Procurement Policy and association Supplier Sustainability Assessment tool please contact Georgia Gosse, Sustainability Manager at IRSustainability@ARTC.com.au.
 
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Want to learn how to enable Sustainable Procurement in your Project or Organisation? visit our Virtual Instructor Led Training courses here. 



 
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