David Langford (infrastructure manager, New Plymouth District Council) won the Hynds Pipe Systems Paper of the Year for his presentation of this paper, Blurring the lines with the New Plymouth District Council Professional Services Collaborative Contract, at the IPWEA NZ 2017 Annual Conference in Dunedin. David acknowledges co-author Luke Meys (market director – water environmental & local government, Opus International Consultants).
The New Plymouth District Council (NPDC) Infrastructure Professional Services Collaborative Contract is a perfect illustration of the theme of the IPWEA NZ 2017 Annual Conference: Blurring the lines: Integrating our efforts.
The contract is a hybrid model: blending the best of traditional, performance and alliance contracting models. Teams have been combined in new ways aligned with the NEC3 principle of working together in a spirit of mutual trust and cooperation.
This collaborative relationship began with an innovative approach to the consulting market and has continued to develop throughout the procurement and delivery phases. The full paper (see link below) by NPDC and Opus, the successful consultancy, brings together their individual and collective perspectives on this best-practice delivery model.
Key aspects of this collaborative approach include:
- A target price and pain / gain payment mechanism used to create shared ownership of objectives, including traditionally unilateral objectives such as profitability and cost control;
- KPIs have been developed so that they can only be delivered by both parties contributing equally;
- A strong focus on health and safety that is designed to ensure a consistent and common culture and values;
- Colocation integrates the teams and improves communication;
- Project briefs are jointly developed so they deliver clarity and early discussions around cost control and risk;
- The NEC3 early warning mechanism is used to collaboratively mitigate emerging risks; and
- The contract price schedule includes a risk premium that reduces with time to encourage innovation and de-risking the contract.
In June 2016 NPDC’s roading engineering and professional services contract had reached its full term. The council then entered into a new seven-year contract for engineering and infrastructure professional services called the Infrastructure Professional Services Collaborative Contract (IPSCC).
This aimed to address a number of issues that had emerged from the previous contract. These issues had materialised in a poor working relationship between NPDC and the incumbent consultant, Opus. Underlying issues included a:
- perception by Opus staff of a master / servant relationship rather than one of equal partners;
- perception by NPDC staff of poor value for money;
- perception by NPDC staff of poor quality outputs; and
- lack of supply chain leadership as Opus acted as the management agent, supervising many of NPDC’s engineering and maintenance contractors.
It was considered that these underlying issues had developed over time due to the form and nature of the existing contract. This contract was based on the Conditions of Contract for Consulting Services (CCCS) standard form of contract with a basis of payment that predominantly used lump sum payments that transferred most of the risk to the consultant.
By applying the smart buyer principles to the design of the IPSCC the NPDC has made a step change from being a passive client to becoming an active supply chain leader. The IPSCC has created the conditions for a collaborative business relationship between two equal partners to develop.
This relationship is already providing mutual benefits, including efficiency gains, improved value for money, enhanced quality outputs, and a transformed and positive working relationship.
This change has not been without its challenges. It has necessitated, and will continue to require, sustained leadership effort and the courage to invite constructive challenge from partners.
We welcome any interest from other councils that wish to know more about how this contract is set up and working, and how they can apply its principles to their own activities.
This article was first published in the August 2017 issue of NZ Local Government Magazine.