Local Government Magazine
Contracting

On panels and prequals: Improvements will help councils, contractors & communities.

By Peter Silcock, chief executive, Civil Contractors New Zealand

Over the past few years Civil Contractors New Zealand has provided feedback on numerous local authority and CCO procurement strategies. We work with the members of our local branches to provide an overall contractor view on these documents.
It has been great to see the growing understanding and engagement between local authorities and contractors and the recognition that councils, as long-term asset owners, benefit from having a healthy civil construction industry in their region.
Put simply, a healthy civil construction industry is one where skilled and qualified clients, consultants and contractors produce outcomes that deliver value for money to all participants.
The opportunity for contractors to provide feedback on procurement strategies and processes outside of a tender process is hugely valuable.
My experience has been that contractors have some very practical and workable ideas and when they get together as a group, under the banner of CCNZ, individual company politics get swept away very quickly.
There is a very welcome change occurring. Contractors and clients are realising that both parties get best value if they move past the master / servant relationship and work in partnership. Effective and efficient supply chains are sophisticated partnerships that work at all levels including quality, whole-of-life value, and health and safety.
Two issues that come up again and again are contractor panels and prequalification systems.

Panels

CCNZ supports panels provided they don’t limit the number of competent and appropriately-qualified contractors that can bid for work.
To reap the benefits of a panel it is critical that there are savings in compliance and administrative costs. This requires local authorities to make amendments to the documentation required from contractors when they bid for projects.
It is critical to clearly identify these changes and ensure that they are made at the same time as the contractor panel is established.
Too often we hear contractors say, “I provide all this information to get on the panel or as part of a prequalification system yet still have to produce it again and again every time I tender.”
Simply restricting the numbers on the panel to an arbitrary number has some serious downsides:

  • It locks people out of a direct relationship with councils, thereby reducing competition;
  • It can restrict access to innovation and the adoption of new technologies if they are not held by those on the panel; and
  • It means local authorities pay additional margins to engage companies with specific skills and expertise that need to come in as subcontractors.

We currently have a very busy civil construction industry with record levels of infrastructure investment. The industry’s capability and capacity is being stretched. The question is, why in this market would you preclude competent contractors from working directly for you?

Prequal

Using prequalification schemes sounds like a great idea until you look at the reality that contractors face every day. Each client they deal with wants a different prequalification system. A recent industry survey indicated that most contractors are already running multiple prequalification or contractor management systems. The record so far is 12.
CCNZ is opposed to clients stipulating compulsory adoption of a single prequalification system because it drives up compliance costs and is a leading factor in health and safety schemes becoming a hugely expensive and wasteful box-ticking exercise.
What we would prefer is for the clients to spell out the outcomes they want and let contractors develop their own scheme or choose a commercially-provided scheme that meets the requirements. That way we will:

  • Get choice and innovation;
  • Avoid duplication and creating monopolies; and
  • Have a greater focus on what works to improve health and safety.

This article was first published in the October 2017 issue of NZ Local Government Magazine.

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