The Quality Binary: The danger of silence in a commoditised market.

There is a collective habit of treating complex, high-risk engineering services as simple commodities.
How do we move past the traditional customer/supplier dynamic and transactional tendering and start building resilient partnerships?
How can we define, measure, and contract for Price versus Value in an increasingly volatile energy landscape?
This deck shares some data and insights into the need to recognise quality. Effectively, pay now or pay more later.
As Red Adair once said "if you think hiring a professional is expensive....wait until you hire an amateur"

Transcript

1. The Quality Binary The danger of silence in a commoditised market. © Simplfy 2025
2. The cost of silence In the Australian energy sector, the default evaluation metric is almost always price . If you are not explicitly articulating quality , competency , and safety as your differentiator, you are inviting the operator to evaluate you on price alone . Quality isn't just "good work" — it is the insurance policy against operational catastrophe .
3. Cost of price Market Volatility Escalating labour shortages and material volatility increase the risk of 'Lowest Bid' insolvency. The Hidden Premium Contractors often include a 10 -20% risk premium in traditional EPC contracts to cover uncontrollable variables. A focus on Value through collaboration can eliminate this "Hidden Tax."
4. price Tenderers balance other criteria alongside price. Depending on the complexity and risk level of the scope, non -price factors typically account for 30% to 60% of the total evaluation score: However, most of these requirements are about compliance and risk deflection. value Don't just fill out the tender grid provided by the tenderer. Often, those grids are designed for the procurement office's ease of evaluation, not for the business's best outcome. Challenge the evaluation. Show the tenderer what they should care about —the hidden risks they haven't accounted for in their checklist.
5. BOARDROOM PRIORITIES Uptime Risk Exposure Social License Opex Stability Every hour of lost Mitigating the threat of Adherence to IR, Indigenous Reducing the long -term production in catastrophic safety or engagement, and cost of maintenance and gas/renewables is a environmental failure. environmental standards. asset rework. massive margin erosion.
6. Critical de-risking levers Safety High -quality safety systems prevent the catastrophic "Stop Work Order" costs. Competency Compliance Skilled labor reduces rework by 30% on complex Australian brownfield sites. Certainty in local content and regulatory frameworks prevents legal delays.
7. COST Of QUALITY Accidents & Injuries Compliance Non -conformance
8. Accidents & Injuries Direct (often visible ) costs of accidents and injuries. Consequential and indirect (often hidden ) costs of fatalities, accidents and Injuries, often that occur well beyond the actual incident.
9. 2952 Accidents in WA Resources 2024 1772 Accidents resulting in Lost Industry Statistical Report Mining 2024 5 -time 20% Metal Ore Mining 38% Oil & Gas Extraction 3x 2021 – 2024 2021 – 2024 Bauxite & Alumina 3x the injury rate than any other commodity.
10. 155k 480 Industry Statistical Report Mining 2024 Days Lost 2024 FTEs Unavailable for work.
11. Accidents & Injuries Workers Compensation payments $1 Visible Insurance premium increases Medical/Emergency costs Legal Fees Fines Remediation costs Legal expenses Lost production costs Equipment and facilities damage and replacement costs Admin costs Hiring/training replacement costs Social License/goodwill $5-50 Hidden
12. Accidents & Injuries $197 M 5 Workers Compensation 2024 $1-10 BILLION 2024
13. Competency Compliance Costs of attempting to meet WHS legislation for a transient workforce where a lack of cross -industry recognition for competency assessments, mean workers are required to conduct repeated and often unnecessary assessments every time they move between sites. Competency assessment costs Lost worker availability Admin costs Delay costs of non -compliance
14. Competency Compliance Industry $ 50 Mpa Spent on unnecessary compliance assessments Vendors 150 Workers days / job Time cost of competency compliance assessments for maintenance shutdowns It is estimated that 40% 7 of the 136,000 8 WA resources workforce is employed by contractor companies. 2 days / site Time spent being assessed every time a worker is mobilised to a new site
15. Quality & Non -Conformance Variability in the system and lack of standardised work leads to variances, non -conformances and rework.
16. Quality & Non -Conformance $ x Bn pa 92 $ Non Conformances / Project 420k Direct Costs of Rework / Project Int. Lead Contractor 569 Projects $ 9 2.5M Indirect Costs of Rework / Project 8 yrs
17. Quality & Non -Conformance 20,393 19,314 Safety Incidents Non -Conformances 99% Correlation between Quality & Safety 9
18. THE VALUE ADVANTAGE Factor Low -Price Sourcing High -Value Contracting Safety Culture Minimum Compliance Zero -Harm Leadership Competency Variable Skillsets Elite Specialised Workforce Asset Integrity Short -term warranty LCOE Optimisation Risk Allocation Offloaded (Friction) Shared (Partnership)
19. ‘ if think its expensive to hire a professional, wait until you hire an amateur’ Red Adair
20. References 1. Fatality risk management: Applying Quinlan’s Ten Pathways in Western Australia’s mining industry 2. Fatal accidents in the Western Australian mining industry 2000-2012 3. DEMIRS Safety Regulation System - Incidents affecting registered plant 4. Safety Performance: Benchmarking Progress of ICMM Company Members 5. WorkcoverWA: 2024 Industry Statistical Report 6. Accidents: The total Cost – Colorado School of Mines 7. Minerals Council of Australia 8. WA Government: Economic Indicators 9. Unearthing the nature and interplay of quality and safety in construction projects: Curtin University
21. Simplfy +61 467 769 267 ken@simplfy.work © 2025