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Action on infrastructure procurement

Action on procurement Featured Image Local Government Sept 2016

What’s holding us back? asks Peter Silcock, Chief Executive, Civil Contractors New Zealand.

Everyone I talk to in the construction industry seems to think that by improving our infrastructure procurement we can save hundreds of millions of dollars of public money. Given the pressure on public funding of infrastructure, that sounds like a great opportunity. So what’s holding us back?

Not surprisingly there seems to be agreement about the problem (at least at a high level) but getting agreement to the solution is a bit more challenging.

Some say it’s about educating managers and practitioners; some say it’s about scale of contracts; others cite a lack of specialist expertise; some of our members say it is the absence of a common prequalification system… the list goes on.

The reality is that there is no one magic bullet to improve our procurement processes but there are two simple actions that all procurers could take that would make an immediate impact. All procurers could firstly adopt and work according to the Government Procurement Guidelines and secondly could require anyone managing a procurement process to hold an appropriate qualification.

The Five Principles of Government Procurement state that “good procurement is about making sound commercial decisions and making it easy and worthwhile for suppliers to sell to Government”.

The five principles are:

  1. Plan and manage for great results
  2. Be fair to all suppliers
  3. Get the right supplier
  4. Get the best deal for everyone
  5. Play by the rules.

The principles are good practice and are applicable to any procurer not just government. A copy can be downloaded along with further information from www.business.govt.nz/procurement.

Councils and CCOs are different to other businesses in that they can’t relocate or switch core activities and therefore they need to have procurement policies that have a medium to long term view rather than just looking at the current job or work programme. That view should encompass the issue of maintaining supplier capability and capacity to ensure a healthy market and strong competition for the future. Making it easy and worthwhile for people to sell to you requires an understanding of the market they operate in. For civil infrastructure there is no better way to do that than having regular meetings with the wider contracting industry represented through the local branch of Civil Contractors New Zealand.

Meeting with contractors provides an opportunity for you to understand how busy the industry is, what other work may be coming up (both inside and outside of the area), what new technologies may offer and is an opportunity for you to share with the contracting industry information about your forward work programme. Given the scale of local government work this will be vital information to help guide your supplier’s decisions about investment in their people and plant.

Understanding the contracting industry will better inform the decisions you need to make about things like the timing of tenders and work, the contract format, the level of risk and a mass of other factors that can impact on getting exactly what you want both in the tender box and at the end of the job.

The recent launch of the NZQA Certificate in Infrastructure Procurement Procedures is a major step forward because it provides a practical tool to transform procurement capability.

The new qualification is the key to boosting our procurement skills. It has been developed by a working group that has adapted NZTA’s proven formula for procurement qualifications, added the government procurement principle, rules and tools and combined this with innovations from the best in worldwide procurement.

It would be great to see all councils making a commitment to developing their own procurement capacity and capability by actively supporting the new qualification. Transitioning towards requiring anyone managing a procurement process to hold an appropriate qualification and supporting procurement staff to get the qualification are the practical steps all councils can take today.

Better infrastructure procurement is not just about the dollars, it is about the alignment of clients and contractors to build and maintain quality infrastructure that exceeds 

This article was first published in the September 2016 issue of NZ Local Government Magazine.

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