Sponsored Post By Andrew McSeveney, Senior Product Manager, Brightly Software
Record-high fuel prices driven by the global oil crisis are just the beginning of a broader challenge for Australian communities – with flow-on impacts now hitting everyday essential services and infrastructure.
Surging costs for petroleum-derived materials such as bitumen and PVC are driving council cost blowouts of between 20 and 50 per cent for road upgrades, building expansions and other infrastructure projects. Transporting heavy construction materials, such as concrete, steel, and aggregates, has also become significantly more expensive, with road freight costs rising by 20 to 30 per cent.
For council programs with fixed funds or tied to grants, this creates an almost impossible equation: how to deliver agreed outcomes with budgets that no longer reflect market reality.
When costs shift materially over a short period, approved capital programs quickly become unaffordable without intervention. While some councils are considering rate increases or additional borrowing to maintain service levels, many are being forced to reprioritise or delay critical road, building and water projects.
In some cases, councils are switching to lower-grade imported bitumen. Although temporary waivers on national standards have enabled this, the trade-off is significant – these materials can have up to a 30 per cent shorter lifespan, raising legitimate concerns about long-term performance and future cost implications.
Others are reducing maintenance to offset rising costs, but delaying work can cause assets to deteriorate faster and lead to costs that far exceed the initial savings.
No matter how councils attempt to ease the pressure, the scale and volatility of current conditions are exposing a far more fundamental issue: the limitations of traditional annual-based capital planning.
From fixed programs to adaptive planning
To buffer against the volatility of the oil crisis, councils are seeking more flexible planning approaches to prioritise projects, rebalance budgets, and protect long-term asset and community outcomes. This is driving renewed interest in digital tools such as scenario modelling and work planning for more flexible capital programs.
By regularly modelling cost scenarios, councils can rapidly rework their programs as conditions change.
For example, if a $10 million road project increases to $14 million due to rising bitumen and transportation costs, scenario modelling can identify – within hours rather than weeks – which road segments deliver the highest return, which can be deferred, and what those decisions mean for asset performance over time.
It also ensures that decisions are guided by evidence, not assumptions. Councils can justify to elected members and the community why certain projects are delayed, how budgets are being adjusted, and what trade-offs are involved.
Making the shift to dynamic planning
To mitigate the impact of the oil crisis, first, councils need a clear understanding of asset condition, risk and criticality so they can answer questions like:
- Which projects should be prioritised when costs escalate unexpectedly?
- What are the consequences of deferring works by one or two years?
- How can budgets be allocated to deliver the greatest long-term value?
With this foundation, councils can shift to regular (e.g. fortnightly) scenario modelling. This aligns with the new Fair Work Commission (FWC) order requiring fortnightly fuel price adjustments for contractors.
Finally, councils must focus on outcomes – such as network condition, risk reduction and whole-of-life cost efficiency – rather than simply delivering a predefined list of projects. Revised outcome-based strategies and budgets can then be converted into work programs using tools that automatically adjust scopes, with clear trade-offs understood across time, geography, and asset classes.
Overcoming barriers to adoption
Despite the advantages of scenario modelling and dynamic work planning tools, many councils – particularly in regional areas – continue to rely on spreadsheets for capital planning due to lack of resourcing or data quality concerns. Ironically, these councils are most exposed to fuel price volatility due to their reliance on long-distance freight.
The reality is, modern planning approaches can deliver value even with imperfect data, and many can be implemented without internal technical capability.
Spreadsheets are not just inefficient – with the FWC’s fortnightly fuel price review, they’re a compliance risk. With the right strategic asset management and work planning tools, councils can meet the new mandate and respond effectively to change, to protect long-term assets – regardless of where fuel prices go.
To learn more about Brightly’s strategic asset management and capital planning solutions, visit Strategy & Capital Planning | Brightly
