New NSW Government Commercial Principles

On 1 September 2022, the NSW Government published its "Commercial principles on escalation risk for infrastructure projects" (Commercial Principles) to guide contractors and government agencies through the current inflationary environment. The Commercial Principles recognise cost escalation as a foreseeable risk that can be managed. These are intended as a framework for government agencies to adhere to.

The Commercial Principles apply to infrastructure projects currently in the pre-procurement and procurement phase.

Contractors should take the following into account when negotiating tenders for infrastructure projects:

1. Government agencies are encouraged to engage with industry as early as possible to identify and understand the potential impact of escalation risks and mitigation strategies. In practice, this may include identifying locally available construction materials that are easily accessible and unimpeded by supply chain constraints;