The objective of the audit was to assess progress to improve the security of payments made to subcontractors by contractors on WA State government construction projects and compliance with the Building and Construction Industry Training Fund and Levy Collection Act 1990.

We based our audit on the following lines of inquiry:

1. Have the recommendations of the Small Business Development Corporation’s (2013) Final Report: Construction Subcontractor Investigation been implemented?
2. Have Treasury and Housing reviewed their policies, processes and practices for management of their contractors against the recommendations of the SBDC report?
3. Have agencies implemented policies and procedures to monitor contractor compliance with legislation, specifically the Building and Construction Industry Training Fund and Levy Collection Act 1990?

We focused on the activities of BMW, Housing, Treasury, the Building Commission and BCITF from July 2013 to November 2016.

The audit was not intended to address the issue of insolvency of contractors on government building projects, although we did focus on financial sustainability checks done by agencies. Information related to the effectiveness of initiatives underway, such as project bank accounts (PBAs), was only gathered as available.

In conducting this audit we:

• assessed the policies, processes, strategies and guidelines for BMW, Housing and Treasury for management of their contractors
• reviewed pre-tender and prequalification documents, panel reports and documented outcomes of panel meetings, where available, for BMW, Housing and Treasury
• tested the administrative processes for a sample of 5 construction projects at each agency (15 in total)
• reviewed Building Commission documents to determine the extent it had undertaken work to address the SBDC report recommendations. We also considered the statutory review of the CCA and the CCA amendment bill based on the review’s recommendations
• reviewed the policies and procedures of BMW, Housing and Treasury for collection of the BCITF levy and tested a sample of 41 government construction projects to the BCITF database
• met with members of the Master Builders Association
• attended a seminar run by BMW to provide information about the prequalification process for contractors looking for work.

This was a narrow scope performance audit, conducted under section 18 of the Auditor General Act 2006 and in accordance with the Australian Auditing and Assurance Standards. Narrow scope performance audits have a tight focus and generally target agency compliance with legislation, public sector policies and accepted good practice. The approximate cost of tabling the audit is $265,000.