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No shortage of challenges for 2018

No shortage of challenges for 2018 - Featured Image - LG Mag Jan 2018

Short-term thinking around procurement needs to be tackled. Plus, here are some practical measures for the year ahead. Peter Silcock, chief executive, Civil Contractors New Zealand.

Last year I used this, my contribution to Local Government Perspectives, to call for progress on some key issues facing the industry. These followed some big events in 2016 such as water quality issues in Havelock North, the Kaikoura earthquakes and a growing housing shortage.
I am pleased to say that we haven’t had events of that significance in 2017, although we are still rebuilding the Kaikoura road. The final report of the Havelock North Drinking Water Inquiry was published at the end of the year. The Labour / NZ First government is initiating a “refresh” of the Auckland Transport Alignment Project and housing shortages are still a major challenge.
We are certainly not short of challenges for 2018.
In the main, the country is still operating in a very reactive mode. The reality we are all facing is that filling the gap created by a long period of underinvestment in our infrastructure is not easy. This is especially true when, on top of that, we are trying to retrofit the higher level of resilience which is required to deal with the challenges that climate change and living in a very geologically active area are throwing at us.
These challenges are, of course, not new. They are simply being brought into clearer focus by recent events. The greater our population, the more clustered we are around main centres. And the more reliant we are on transport and communication networks, the more vulnerable we are.
Short-term thinking
The biggest challenge is not earthquakes, droughts, infrastructure or housing shortages: it is short-term thinking.
The fact is that short electoral cycles don’t always provide the level of consistency and certainty of investment needed. And the media focuses more attention on rates rises than it does on the infrastructure needs of the community.
When something goes badly wrong, like the contamination of Havelock North’s drinking water or bursting stop banks in Edgecumbe, everyone is keen to point the finger. But, we never seem to get to the root cause which is the lack of tools available to local government to fund infrastructure, the downward pressure on rates and the dwindling capability to manage infrastructure.
While long-term plans have tried to stretch our horizons, we continue to see a massive underspend on both maintenance and asset replacement. The problem is that the plans are not being delivered. This is especially the case when it comes to our water assets.

Stop / Go

The year 2018 is ripe with opportunity. Here is my simple Stop / Go list.
• Lowest cost procurement – instead, focus on value.
• Underspending budgets.
• Passing risk on to contractors.
• Underinvesting in getting projects to market.
• Dictating the use of commercial prequalification systems – instead let contractors know what information you need and let them develop or subscribe to a system of their choice.
• Don’t load the risks on to your contractor. Good contractors simply price it in. Bad contractors… why would you want to work with them?
• Adopt ConstructSafe competency testing as a requirement for your maintenance and capital works contractors.
• Engage with the contracting community in your region. Understand their environment and make sure they know your infrastructure plans going out at least five years.
• Have simple and clear Request for Tender (RFT) documents.
• Use standard industry contract documents with minimal changes. NZTA is regarded as the country’s best public sector procurer. Its documents have fewer than five pages of special conditions. If you regularly have more than that, get a new lawyer.

We know there are challenges around funding which are hard to resolve. The Labour / NZ First government seems to be interested in making something happen in that space, which is promising.
But, let’s not ignore the fact that many councils have consistently underspent capital and maintenance budgets. Clearly, that is not a funding issue. There are big problems at the pointy end – getting work to the market on time, having effective procurement and managing contracts to deliver quality infrastructure.
It is critical that the infrastructure we invest in today builds our resilience rather than adds to our risks. This requires councils to re-examine the drivers of our infrastructure development. They need to look at how the country’s physical and social environment, and community expectations and aspirations are changing. The definition of quality infrastructure is undergoing massive change and that impacts on where, and how, we build.
Throughout 2017, Civil Contractors NZ (CCNZ) met with many clients concerned about contractor capability to deliver the $11 billion per year infrastructure work programme ahead. Our message has always been clear. Clients need to provide long-term pipelines of work and commit to quality infrastructure investment (rather than lowest price): and the industry will build the capability and capacity required.
Resilient infrastructure
CCNZ questions the capability and capacity of councils to manage the infrastructure investments they plan to make.
In 2018 it would be great to see councils getting on with the job of creating more resilient infrastructure by looking at where the blockages are and making sure they have the capability and capacity to get projects to the start line in an effective and efficient way.
There is no point in having a long-term plan if resources are not allocated to enable the plan to be acted on.
Councils can also support the positive changes being made within the construction industry which will ultimately benefit councils as asset owners:

  • The development of the Civil Trades Regime (an apprenticeship) for people working on the maintenance and construction of your infrastructure assets;
  • ConstructSafe – a system that gives you an assurance that the people working on your infrastructure have the competency to ensure their own and their workmates’ health and safety;
  • The development of an Infrastructure Careers Promotion Campaign to promote more people taking up opportunities to work and develop their skills in the civil construction industry.

We would love to see councils get in behind these programmes.

This article was first published in the Perspectives 2018 issue of NZ Local Government Magazine.

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