Local Government Magazine
Technical Briefings

Is cheap real value?

A paper by GHD New Zealand’s Tony Harrison and Carey Morris won the 2016 Hynds Paper of the Year at the IPWEA NZ conference in Auckland recently. Their paper – Is cheap real value? – looks at the experiences of Central Hawke’s Bay District Council (CHBDC).

After less than desirable contract delivery for many years and the premature end of the latest contract caused by unsustainable pricing on their network maintenance contract, CHBDC decided to take a fresh look at how they procured this major component of their business.
The contract developed needed to be flexible enough to deal with changes that would likely come about with the One Network Road Classification coming into effect. It also had to balance contractual requirements with shifting level of service delivery.
GHD worked closely with CHBDC to develop the request for tender document, and a robust evaluation and negotiation process. The recommended and adopted procurement method was quality based with a pricing model that separated out profit and overhead payment.
In a world where cheap is often considered the most desirable attribute, it was a bold move to move to 100 percent quality on a $4 million per annum maintenance contract.
Is Cheap Real Value
The full paper gives insight to the reasons behind this change, the process of procuring and negotiating with the successful contractor and how, in the quality-based procurement process, CHBDC is satisfied that the competitive price received represents value for money.
About the authors
Tony Harrison is GHD Hastings manager. Carey Morris is transport manager, GHD Wellington. The authors would also like to acknowledge Shawn McKinley, land transport manager at Central Hawke’s Bay District Council. Sections of the full paper are the combined work of GHD and Shawn.

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