How we can use new procurement models to get ‘go forward’ in construction?
Government is collaborating with the construction sector to come up with ways of getting the sector moving again and Tonkin + Taylor is taking an active role in trying to help with this.
One of the key elements of getting “go forward” in the construction sector is expediting procurement but that must be done in a transparent and accountable way. The directors of our two largest sectors – land and transport – share their ideas on how we can streamline these processes.
In this unprecedented environment, T+T’s sector leaders agree that it’s time to consider new procurement models.
“The traditional model involves all potential contractors bidding for each project, each time, providing pricing tailored to the project, health and safety details, insurance data, and, of course, a tailored methodology and project team. It’s a system that’s been in place for many years,” says Land and Civil Sector Director, Grant Lovell.
Grant believes an interim way to expedite procurement in the short term would be to repurpose proven and established alliances, “Take the NCTIR Alliance that’s worked on the Kaikōura Earthquake Recovery - it has a history of excellent work and a proven expertise in the land and transport sectors and it would be easy to just assign it to new infrastructure development work.
This “new” procurement model already exists and has been proven to work. It’s not a brand-new theoretical model that would need a lot of testing.
“The Northern Gateway team that delivered the toll road north of Auckland was novated to the Newmarket Viaduct construction; the Memorial Park Alliance that constructed Wellington’s ANZAC Park and Arras Tunnel was novated to upgrade the Chatham Islands’ Waitangi Wharf; and the Manukau Harbour Crossing team went on to work on Auckland’s Kirkbride Road. It’s a model that already exists, and already works”.
So, what are the benefits?
“The clients already know the delivery team. There’s already a relationship in place, and there’s cost certainty, known quality, and an understanding of the value the team can bring to the client”, says Transport Sector Director, Chris Perks.
“Neither party is starting from scratch. There are existing project teams that are known to work well together and already understand client, stakeholder and community needs. The client already knows the behaviours of existing teams and has their own proof of satisfaction from previous projects.”
Chris makes it clear that he’s not advocating for one team to get all the work. “The client knows the expertise that is available to them from many teams they’ve worked with in the past. This is an opportunity to put the best fitting team on the job – one with the expertise, the track record of success with the client, and the availability.”
“We can use existing contracts as a base,” suggests Grant. “Starting from scratch means losing time collecting insurances, compliance documentation, and agreeing on contractual terms etc. If we take an existing contract in place for previous work and modify it for the new project, both parties already understand the terms and conditions”.
“An alliance or panel-type model may save both time and cost,” says Chris. “As the quality assessment has already been undertaken, there will likely be lower procurement costs because of a shorter procurement process, and there’s more project cost certainty around what contractors charge, with fixed rates already decided. People will mobilise faster because the structure is there to get moving quickly – and there can be an accelerated scheme because the project team already has a history of working with the client, meaning it won’t take nearly as long to establish relationships and get up to speed.”
Many clients are custodians of public funds and are under scrutiny for how the money is spent. “If the client already has a clear brief in place,” says Chris, “they can potentially save costs on the procurement process and save time in getting the project to market. They’re also reducing their risk by working with a team who have already proven their value.”
Grant says that this type of procurement model will work well for shovel ready and almost shovel ready projects. “It’s about looking at what’s already in place with each client and adapting that to help make the procurement process as painless as possible and the whole project easier. It’s about knowing your client’s world and what matters to them.”
In a post-COVID New Zealand, it’s going to be important to get things moving quickly: the Government has already acknowledged this with its request for shovel-ready projects. The construction sector can help by putting forward procurement models that will keep up with the pace.