Untying the knots in shoelaces. Untangling a bundle of fairy lights. Unpicking a broken construction contracting model. Consult Australia’s Head of Policy and Government Relations, Kristy Eulenstein, has always been drawn to complex problems – and the intractable problem of disputation in Australia’s construction industry is in her line of sight.

Changing public policy takes a lot of patience and persistence – characteristics that Consult Australia’s Kristy Eulenstein has in spades. To keep her inquiring mind occupied as a child, Kristy was often set the task of unravelling fairy lights and spools of thread.

“I like untangling things. The more impossible it seems, the better I like it,” Kristy says. “I like to work out why something is such a mess and find a better way to stop it getting tied up again.”

A trained lawyer who has spent most of her professional life as a policy advisor, Kristy has become laser-focused on the “unfair business practices” that plague Australia’s construction industry and prevent consultants from securing the insurance they need to operate.

In the four years she has worked with Consult Australia, Kristy has fielded countless calls from members weighed down by unfair contracting. 

“Poor contracting behaviours and professional indemnity insurance are interconnected. If a contract opens your business to potential claims well beyond the scope of your services, an insurer may look at that and say: ‘You can’t manage your risk’. If you can't get insurance, you can't operate. That’s the end of your business.”

Most project delivery mechanisms on large infrastructure projects are a complex web of contractual relationships rather that a cohesive collaboration. Project risks and rewards are often passed down the chain by virtue of bargaining power, rather than the risk sitting with the most appropriate party.

In today’s tough insurance environment, inappropriate transfer of risk drives the cost and availability of professional indemnity insurance beyond the capacity of some consulting firms to obtain and retain over the often long-life of the liability exposure.

Insurance premiums have risen substantially over the last 18 months, with 79% of Consult Australia members reporting an increase in the most recent Industry Health Check.

It is not an easy problem to solve, and all parties have legitimate concerns, Kristy notes. Governments are worried about stretching every taxpayer dollar further. Constructors look to claw back costs in the face of margin creep. Insurance companies must weigh up the risk and reward equation. 
“We need a collaborative approach to fix this broken model. Not one individual client can fix this. Our team champions many solutions, from legislative reform to behavioural change. Our key message is simple: we must work together to find solutions.”

Consulting firms often respond to onerous risk by either pricing it into their bid or deciding not to bid on a particular project. This in turn drives up price by reducing competitive pressure. Deloitte Access Economics has estimated that a 5.4% saving could be realised through better risk sharing and other better practices.

These better practices are outlined in the Model Client Policy, developed by Consult Australia and the Australian Constructors Association. Kristy calls this a “powerhouse policy” that outlines a set of principles to ensure contracts are fair, ethical and in step with market conditions.

Consult Australia also provides regular client briefings and produces plain English guides to support its members. “Smaller firms, especially, may not have legal expertise within their teams. We provide resources to help them push back on unfair contract provisions.”

Consult Australia’s popular Contracts for Consultants course also offers education and insight. Run by barrister, mediator, construction and insurance law expert Tony Horan, the course recently ticked over the 2,000-participant mark. 

“We’ve never had a negative review about this course. Engineers, architects and lawyers all love Contracts for Consultants because of the deep insights they gain from someone who has spent two decades helping building professionals and consulting engineers to resolve disputes and navigate professional negligence and insurance litigation.” Every new Consult Australia team member who advocates for members undertakes the course as part of their induction, Kristy adds.

Kristy is also putting the finishing touches on a new paper, Doubling Down, which will unpack some of the most common unfair claims and provide recommendations to governments to “close the current loopholes”. Expect Doubling Down to land later this in 2023.

Is the contracting model broken? “We call it Design, Construct and Litigate for a reason. But I am optimistic that we can fix it. I always think we can do better. There is always a pathway through to better policy, even with the most complex and tricky issues.”

There are positive signs on the horizon. When Kristy joined Consult Australia, the phrase “professional indemnity insurance” would elicit an eye roll – or, even worse, a glazed expression. 

“That doesn’t happen anymore. We’ve gone from glazed or rolled eyes to some open eyes. Governments and constructors both know it’s a problem and they ask questions about how to solve it. That’s a positive step forward.”

Consult Australia has established strong relationships with other participants in the value chain, notably the Australian Constructors Association and the Insurance Council of Australia. The Collab X defence forum is another valuable platform. “We are not the lone voice bringing unfair contracting to the table anymore,” Kristy adds. 

“Our team at Consult Australia is doing the hard work to untangle these problems. A mess of fairy lights isn’t unravelled in 10 seconds. You have to sit with the problem, and then patiently and systematically set to work. That’s what we are doing.”