Manukau City Council's procurement arrangements

 
 
Manukau City Council's procurement arrangements
HEALTHY PEOPLE IN SAFE AND PRODUCTI V E WORKPL ACES




    Principals achieving health and safety outcomes
    Manukau City Council’s
    procurement arrangements
        Case study of best practice
Manukau City Council's procurement arrangements
Acknowledgements

    Prepared for the Department of Labour by Health Outcomes International Pty Ltd. The views
    expressed in this paper do not necessarily represent those of the Department of Labour.

    The authors wish to thank the Manukau City Council staff, contractors and other
    stakeholders for their time and feedback. In particular, we acknowledge the significant
    assistance provided by Manukau City Council’s Health and Safety Manager, Health and Safety
    in Contracts Officer and Craig Macdonald.



                  Image
    Disclaimer: This evaluation has been undertaken based on information provided by Manukau
    City Council and external stakeholders who participated in key informant interviews. The
    authors have relied significantly on feedback and data provided by individual commentators,
    which has not been independently verified. The evaluation was undertaken during June–July
    2009. The relatively short time available to undertake the evaluation meant that data analysis
    was limited to summary data from existing Manukau City Council reports.

    The Department of Labour has made every effort to ensure that the information contained
    in this report is reliable, but makes no guarantee of its accuracy or completeness and does
    not accept liability for any errors. The information and opinions contained in this report are
    not intended to be used as a basis for commercial decisions, and the Department accepts
    no liability for any decisions made in reliance on them. The Department may change, add to,
    delete from or otherwise amend the contents of this report at any time without notice.

    The material contained in this report is subject to Crown copyright protection unless
    otherwise indicated. The Crown copyright protected material may be reproduced free of
    charge in any format or media without requiring specific permission. This is subject to the
    material being reproduced accurately and not being used in a derogatory manner or in a
    misleading context. Where the material is being published or issued to others, the source
    and copyright status should be acknowledged. The permission to reproduce Crown copyright
    protected material does not extend to any material in this report that is identified as being
    the copyright of a third party. Authorisation to reproduce such material should be obtained
    from the copyright holders.



    ISBN 978-0-478-33396-1

    February 2010

    © Crown copyright 2009

    Department of Labour
    PO Box 3705
    Wellington
    New Zealand
    www.dol.govt.nz
2
Manukau City Council's procurement arrangements
Principals achieving health and safety outcomes
Manukau City Council’s
procurement arrangements
  Case study of best practice
Manukau City Council's procurement arrangements
Contents
    EXECUTIVE SUMMARY...................................................................................................3
    1. INTRODUCTION..............................................................................................................7
            1.1 Background................................................................................................................ 8
            1.2 Methodology............................................................................................................. 9
    2. THE MANUKAU CITY CASE STUDY.........................................................................10
            2.1 Overview of Manukau CC’s approach............................................................ 11
            2.2 Implementing the new arrangements.......................................................... 14
            2.3 Impacts and achievements............................................................................... 21
            2.4 Contractors’ perspectives................................................................................ 27
            2.5 ACC and Departmental perspectives.......................................................... 28
            2.6 Value for money...................................................................................................... 29
            2.7 Good practice principles..................................................................................... 32
            2.8 Looking to the future........................................................................................... 34
            2.9 Conclusion................................................................................................................. 36
    APPENDIX: EVALUATION OF MANUKAU CC’S APPROACH
    AGAINST THE DEPARTMENT’S DRAFT GUIDELINE................................................37




           List of Tables and Figures
    Figure 1: Typical life cycle of a physical works contract....................................... 13
    Table 1: Summary of key changes to Manukau CC’s procurement
    arrangements in relation to health and safety........................................................ 17
    Table 2: Manukau CC data on health and safety in physical
    works contracts...................................................................................................................... 26
    Table 3: Costs per case, by severity, injury and type of cost,
    2004–05 ($)................................................................................................................................ 31




2
Manukau City Council's procurement arrangements
Executive Summary




This case study was commissioned by the Department of Labour (the Department) to
describe Manukau City Council’s procurement arrangements and assess their effectiveness
in enhancing health and safety outcomes. It provides information that will be of use to
other local councils and principals on meeting the requirements of the Health and Safety in
Employment Act 1992 when contracting out services.

Manukau City Council (Manukau CC) is the major purchaser of physical works in New Zealand’s
fastest growing and most ethnically diverse city. In 2008/09, Manukau CC spent over $135
million on physical works contracts including roading, parks, solid waste, storm water and
properties.

In 2004, Manukau CC identified physical works1 as a major risk area for health and safety.
A dedicated team was established to manage health and safety in contracts to ensure
statutory requirements were being met. An independent consultant was engaged to assess
risks and recommend a process for improvement. Implementation of the new arrangements
commenced in 2005.

In 2008, Manukau CC was awarded first place in the Department of Labour Best Initiative
to Address a Safety Hazard category in the Safeguard NZ Workplace Health and Safety
Awards. The award recognised Manukau CC as a leader in the use of procurement to achieve
desirable health and safety compliance outcomes when services are delivered.


1. In this context, ‘physical works’ includes any work involving construction, maintenance or installation of physical
infrastructure or equipment, for example, work relating to roading, use of boats, trimming trees, helicopter water       3
sampling, parks, storm water, waste water, waste collection, property construction/maintenance, events, community
services such as construction or maintenance work in town centres, and temporary installation and operation of site
investigation or testing equipment.
Manukau City Council's procurement arrangements
Overview of Manukau CC’s arrangements
    Manukau CC works in partnership with its contractors to maintain a high level of safety on
    physical works contracts. A systematic approach is in place to ensure that all physical works
    contractors, subcontractors and their employees prevent injury and comply with legislative
    requirements. Before physical works contractors can successfully tender for a Manukau
    CC contract, the contractor must either be a Certified Partner in health and safety with
    Manukau CC or be in the process of becoming a partner (and their application must be
    approved prior to the final decision in the competitive process).

    To become a Certified Partner, a contractor must have their health and safety processes
    pre-approved by Manukau CC. This process involves completing a pre-approval form,
    providing an example of a site-specific health and safety plan, nominating referees who
    can provide feedback on past health and safety performance and allowing a Manukau CC
    representative to conduct a health and safety audit of their systems if requested.

    Applicants must also provide evidence that their health and safety systems and processes
    meet an accepted external standard, including ACC Workplace Safety Management Practices
    (WSMP) or Workplace Safety Discount (WSD) schemes, AS/NZS 4801:2001, QEST (Quality,
    Environment, Safety – Total Integrated Management) or Operate Safe.


        Impacts
    Since the implementation of the new health and safety arrangements in physical works
    contracts:

    •   Manukau CC has established processes and is growing organisational capability to
        effectively manage contractors’ safety

    •   all stakeholders (internal and external to Manukau CC) have increased knowledge and
        awareness of safety in physical works contracts

    •   contracts are being awarded to higher-quality contractors in regard to health and safety
        practices, due to the requirement for contractors to be Certified Partners

    •   there is a faster and more streamlined evaluation process for tenders

    •   contractor performance in health and safety has improved, and continues to improve

    •   serious harm accidents and improvement notices issued by the Department have reduced

    •   physical works contractors and professional services consultants are usually reporting
        their health and safety statistics monthly to Manukau CC, and the council’s Senior
        Management Team receives monthly reports on health and safety statistics and trends
        in physical works contracts.

    Stakeholder feedback suggests that subcontractors in Manukau are increasingly
    recognising the necessity and business advantages of providing evidence of their training
    and competency in health and safety to their clients and to have comprehensive hazard
4   management systems in place prior to work commencing.
Manukau City Council's procurement arrangements
Feedback from local Departmental and ACC staff indicates increased confidence in
Manukau CC’s health and safety arrangements as a result of the new approach. Where the
Department previously saw a need to take a proactive role in managing hazards identified
in Manukau CC contracts, confidence in Manukau CC has now increased to the point where
the Department will bring such hazards to Manukau CC’s attention with the expectation
that appropriate steps will be taken to manage these issues as they arise. Similarly, ACC has
noticed increased awareness of health and safety requirements among contractors and
subcontractors and has received increased enquiries about the WSMP and WSD, which were
attributed to referrals from Manukau CC.

Benefits for Manukau CC and contractors are principally related to reduced risk. Although
contractors’ reporting of accidents and incidents to Manukau CC is not 100% complete
or accurate, available statistics suggest reductions have been achieved in accidents and
serious harm injuries.

Manukau CC data based on monthly reports from Certified Partners (see Table 2) suggest a
reduction in the number of accidents requiring medical attention and first aid over the last
four years, as well as a reduction in the number of serious harm injuries.

The increasing number of partner contractors registered on Manukau CC’s website is also
shown. For context, Table 2 also shows the total value of physical works contracts each year,
which has remained relatively static.


   Good practice principles
Manukau CC’s approach to health and safety in physical works contracts is consistent with
legislation and broadly consistent with the Department’s draft guideline.

A feature of Manukau CC’s approach to this overarching process is a practical focus, aimed
at improving everyday business for the council and contractors and “taking the pain out of
compliance”.

For example, Manukau CC coordinates its site visits and audits with other organisations
including ACC, the Department and professional services consultants to ensure their efforts
are not duplicated and do not impose an unreasonable burden on contractors. This helps to
support efficient use of collective resources as well as contractor buy-in.

The practical focus also recognises that paperwork is a means to an end. While paperwork
may be fully compliant, managing hazards on site is what improves safety, and this is more
variable in practice. Therefore, Manukau CC concentrates more time and resources on
assessing practices on site rather than compliance with documentation.

Contractors and Manukau CC staff spoke highly of the inclusive and non-confrontational
approach to implementation and the Health and Safety Team’s ongoing commitment to
developing mutual trust through partnership. This was recognised as a success factor both
in implementing the new processes and in their ongoing efforts to create awareness and
bring about culture change within Manukau CC and its contractor community.
                                                                                                5
Manukau City Council's procurement arrangements
Conclusion
    Manukau CC is a leader among local authorities in its approach to health and safety in
    physical works contracts. Its policies generally reinforce the principles set out in the
    Department’s draft guideline.2 The systems are still becoming embedded at Manukau CC and
    in some contractor organisations – practice is catching up with policy and requires ongoing
    culture change. However, improvements have already been achieved in health and safety
    practices and outcomes. Importantly, Manukau CC’s arrangements enjoy strong support
    from external stakeholders as well as internally from senior management.

    Councils have the potential to significantly influence health and safety practices in small
    to medium-sized companies due to the scope and scale of physical works contracts for
    which they are responsible. Manukau CC experience shows that this influence is effective in
    enhancing contractor health and safety practices when it is linked to eligibility to enter into
    contracts with Manukau CC and links contractors to appropriate supports. To be effective
    nationally, consistent processes and consequences are needed across all local bodies.




6   2. Department of Labour, 2008, A principal’s guide to contracting to meet the Health and Safety in Employment Act
    1992.
1 | Introduction




The Department of Labour (the Department) commissioned this evaluation of the
procurement arrangements of Manukau City Council (Manukau CC) in recognition of the
council’s work in using procurement to achieve desirable compliance outcomes when services
are delivered.

This evaluation report presents a case study of Manukau CC’s procurement policies and
practices and assesses their effectiveness in enhancing health and safety outcomes. The
case study provides information that will be of use to other local councils and principals
on meeting the requirements of the Health and Safety in Employment Act 1992 when
contracting out services.

Manukau City is the third largest of New Zealand’s districts, with a population of 328,968
at the 2006 Census. In population terms, it is the fastest growing city. It is also the most
diverse and multicultural urban environment with over 180 ethnic groups, including 15% of
its residents who identify as Maori, 28% as Pacific and 22% as Asian.3 The district covers
55,387 hectares of land, with more than 3,200 hectares of open space, including over 400
parks, 90 civic areas and 150 kilometres of esplanade.4 There are 10 council-operated leisure
and recreation centres in the city, including six pools. Manukau also has 15 public libraries, six
community arts centres and 23 urban marae.

Manukau CC is the major purchaser of physical works in the district, spending over $135
million on physical works contracts in 2008/09, including roading, parks, solid waste, storm
water and properties.



3. See www.manukau.govt.nz/default.aspx?page=statistics.
4. This excludes the 3,600 hectares of regional parks in the city, which are the responsibility of the Auckland   7
Regional Council.
Manukau CC identified physical works as a major risk area for health and safety and has
    incorporated health and safety within its capability criteria for pre-qualification and
    tendering in physical works contracts. Manukau CC also spot checks vertically through
    the supply chain to ensure that the standards required of pre-qualified contractors are
    extended to their subcontractors.


        1.1 Background
    The Workplace Group of the Department of Labour is the Government’s principal advisor on
    employment policy, workplace health and safety policy and ACC policy. The Workplace Group
    also delivers employment relationship and workplace health and safety customer services.

    The Government has a 10-year Workplace Health and Safety Strategy for New Zealand
    for the decade to 2015. A central objective in its own practice is to “provide leadership in
    workplace health and safety through the Government’s role as employer and purchaser”.

    Among the actions it envisages to fulfil this objective is a “review of government purchasing
    and contracting guidelines and practices, to promote workplace health and safety within a
    fair and effective trading environment”.

    Some 30% of prosecutions under the Health and Safety in Employment Act 1992 are taken
    under Section 18(1) of the Act, which states that:

    Every principal shall take all practicable steps to ensure that

    (a) No employee of a contractor or subcontractor; and

    (b) If an individual, no contractor or subcontractor,

    is harmed while doing any work (other than residential work) that the contractor was
    engaged to do.

    Various industry sectors are concerned about principals’ liabilities in respect of contractors.
    The Department produced draft guidelines in June 2008 that set out a broad process for
    building health and safety into contract management. The guidance is able to be adapted to
    specific contractual situations or industries.

    This case study complements the draft guidelines by presenting one council’s experience in
    implementing new systems and processes to ensure it meets its statutory obligations for
    health and safety in physical works contracts.

    The case study:

    •   describes Manukau CC’s procurement arrangements (including the current
        arrangements, how they came about, challenges and successes encountered)

    •   benchmarks Manukau CC’s procurement arrangements against the Department’s draft
        guideline (including key areas of convergence/divergence to the guideline and rationale
        for this)
8
    5. Department of Labour, 2008, A principal’s guide to contracting to meet the Health and Safety in Employment Act
    1992.
•   evaluates whether the investment has been worthwhile from several perspectives,
    including impacts on contractor behaviour, health and safety outcomes, value for money,
    good practice principles and opportunities for improvement.


    1.2 Methodology
The evaluation was conducted during June–July 2009. It combined a review of core
documents, face-to-face interviews with key stakeholders and analysis of available data.
Core documents included Manukau CC procurement guidelines, internal reports and
memoranda on the implementation of the new arrangements, and the Department’s draft
guideline.

Stakeholder interviews were undertaken to collect narrative information on issues related to
procurement practices. The evaluators interviewed:

•   representatives of Manukau CC, the Department and ACC

•   a sample of contractors and professional services consultants

•   the independent consultant who was engaged to develop and implement the systems and
    processes for Manukau CC.

Quantitative data analysis sought to make use of available data from Manukau CC to address
the evaluation objectives. Departmental and ACC data was also investigated but was not
included due to an inability to distinguish accidents in physical works contracts for Manukau
CC from work done for other principals.




                                                                                                9
2 | The Manukau City Case Study




     In 2004, Manukau City Council (Manukau CC) decided to establish a dedicated Health and
     Safety in Contracts Team to ensure Manukau CC met its statutory requirements for health
     and safety in physical works contracts. Physical works contractors6 (rather than council
     employees) had been identified as the highest risk group for accidental injuries and deaths
     due to the nature of work being performed and the risks associated with this work.

     An independent consultant was engaged in mid-2005 to assess risks and recommend a
     process moving forward, with the objectives of:

     •   preventing injuries to Manukau CC employees, contractors (and their employees),
         ratepayers and members of the public

     •   ensuring Manukau CC meets its statutory requirements for health and safety in physical
         works under the Health and Safety in Employment (HSE) legislation

     •   ensuring that the processes introduced complied with the requirements of the ACC
         Partnership Programme (Tertiary).

     Securing buy-in from stakeholders was recognised as critical to meeting these objectives.

     Following the council’s acceptance of the recommended approach, the consultant was
     engaged to implement the new arrangements from August 2005 to April 2009.


     6. According to Manukau CC’s guideline (see footnote 7), physical works includes any work involving construction,
     maintenance or installation of physical infrastructure or equipment. Physical works contracts are generally based
     on NZS 3910, but other forms of the contract may be used where this would be more appropriate. Examples of
     physical works include work relating to roading, use of boats, trimming trees, helicopter water sampling, parks, storm
     water, waste water, waste collection, property construction or maintenance, events and community services such as
10   construction or maintenance work in town centres. Physical works also includes temporary installation and operation
     of site investigation or testing equipment such as taking bore-logs or installing traffic counters.
2.1 Overview of Manukau CC’s approach
The following overview is based on current arrangements as at July 2009. Full details of
these arrangements are available on Manukau CC’s website.7 The approach continues to
evolve, and this case study also highlights enhancements currently being developed.

Manukau CC works in partnership with its contractors to maintain a high level of safety
on physical works contracts. A systematic approach is in place to ensure that all physical
works contractors, subcontractors and their employees prevent injury and comply with the
requirements of HSE legislation.

Before physical works contractors can successfully tender for a Manukau CC contract, the
contractor must either be a Certified Partner in health and safety with Manukau CC or be in
the process of becoming a partner (and their application must be approved before the final
decision in the competitive process).

To become a Certified Partner in health and safety, a contractor must have their health and
safety processes pre-approved by Manukau CC. Contractors applying to become Certified
Partners must:

•   complete and return a health and safety pre-approval form

•   provide evidence (such as a current Accreditation Certificate) that their health and
    safety systems and processes meet the requirements of:

    –   ACC’s Workplace Safety Management Practices (WSMP) programme at a minimum of
        Primary Level, or

    –   ACC’s Workplace Safety Discount (WSD) scheme, which is available to businesses with
        10 or fewer employees, or

    –   AS/NZS 4801:2001, or

    –   New Zealand Contractors Federation’s QEST,8 or

    –   Operate Safe

•   provide an example of a site-specific health and safety plan

•   provide a list of referees who can provide feedback on their past health and safety
    performance in physical works contracts

•   allow a Manukau CC representative to conduct a health and safety audit of their systems
    (if requested).




7. Manukau CC, 2009, Managing health & safety of physical works contracts in Manukau City Council.
www.manukau.govt.nz/SiteCollectionDocuments/Managing%20health%20and%20safety%20of%20physical%20
works%20contracts.pdf.
                                                                                                     11
8. www.nzcontractors.co.nz/qest.php?gclid=CKHAuKrA_psCFRwDagodeFFc-w
Part of the pre-qualification criteria involves demonstrating training/competency in
     performing hazardous tasks (such as qualified and competent to work at heights, confined
     space entry, safety supervisor’s qualification, traffic management and so on).

     To maintain their status, a Certified Partner must:

     •   continue to meet the requirements of their external health and safety auditing body

     •   continue to have a person appointed as Safety Officer within their organisation

     •   comply with Manukau CC’s Contractor health and safety requirements for physical works
         contractors

     •   provide monthly reports on health and safety performance during the life of each
         contract with Manukau CC

     •   implement any corrective actions for any health and safety non-conformances as
         requested by Manukau CC or their authorised representative.

     Tenderers who are not Certified Partners (or in the process of becoming partners) are
     eliminated at the pre-tender qualification stage. Qualifying tenders are then assessed
     against a wider range of weighted criteria that include health and safety as well as price,
     track record and other factors.

     Manukau CC has published guidelines to be adhered to by their representatives when
     managing the health and safety of physical works contracts from the procurement stage
     through to completion.9 The guidelines reflect Manukau CC’s legal responsibilities to its
     contractors, subcontractors, their employees and the public, to ensure all reasonably
     practicable steps are taken to prevent harm from any hazards that exist in physical works
     procured by Manukau CC. Therefore, the guidelines emphasise the importance of health and
     safety being an integral part of the contract process.

     The typical lifecycle of a physical works contract at Manukau CC is depicted in Figure 1. The
     full procedure for health and safety in physical works at Manukau CC is available on their
     website. These processes may be adapted depending on factors such as the level of risk in a
     particular contract, the size/nature/duration of the contract, the type of work, the nature
     of the hazards and Manukau CC’s and the contractor’s knowledge of the work.




     9. Manukau CC, 2009, Managing health & safety of physical works contracts in Manukau City Council.
12   www.manukau.govt.nz/SiteCollectionDocuments/Managing%20health%20and%20safety%20of%20physical%20
     works%20contracts.pdf
Figure 1: Typical life cycle of a physical works contract

      Step 1                          Step 2                        Step 3                           Step 4
       Risk                           Select                      Develop Site                        Site
    Assessment                      Contractor                    Safety Plan                      Induction


                                                                                                    Step 5
                                                                                                   Monitor
                                                                                                 Performance

                                     Step 6 · Review Overall Performance

Source: Manukau City Council, 2009, Managing health & safety of physical works contracts in Manukau City Council.



The guidelines identify key roles in the health and safety process as follows:

•   The Health and Safety in Contracts Officer is employed by Manukau CC and is the
    council’s health and safety representative who is responsible for ensuring health and
    safety standards and processes in the council’s physical works contracts are developed,
    implemented, reviewed and improved on an ongoing basis. This person is also responsible
    for maintaining health and safety records and databases including those of pre-qualified
    physical works contractors. They report to the Health and Safety Manager.

•   Professional services consultants provide technical and/or professional (such as legal)
    advice, opinion, review, analysis, design and/or documentation. This may include the
    management, observation, supervision and/or monitoring of the works provided by others.

•   Project managers are council employees responsible for the project/contract and its
    delivery. A project manager may also simultaneously be the project engineer.

•   Project engineers or contract managers are responsible for the day-to-day contract
    administration, supervision and/or monitoring of the physical works contract. They may
    be council employees or Professional Services Consultants. They are always independent
    of the physical works contractor.

•   Contractors are the entities engaged by Manukau CC to carry out all or part of the
    physical works. This includes any subcontractor engaged by a contractor.

Each of these roles has particular responsibilities in physical works contracts with Manukau
CC, which are detailed in guidelines available on their website. For example, contractors are
responsible, among other things, for preparing and implementing an approved site-specific
safety plan before work commences, keeping it up to date and communicating the safety plan
to all affected parties for the duration of the contract.

All personnel working on Manukau CC projects must have a minimum Site Safe Passport, and
those supervising safety on projects must have a Site Safe Gold Card, safety supervisor’s
certificate or equivalent. Additionally, proof of competency (such as training to NZQA unit
                                                                                                                    13
standards) is required in areas such as working at heights; confined space entry; traffic
management; wheels, tracks and rollers; GROWSAFE and hazardous substances.
2.2 Implementing the new arrangements
     A staged implementation process was followed, with Manukau CC’s Senior Management Team
     (SMT)10 approving each successive step in the implementation process and being informed
     on progress throughout. The following paragraphs provide a chronology of key events in the
     implementation process.

     In March 2004, an internal report to Manukau CC’s Organisation Management Team (OMT)
     recommended the establishment of a Health and Safety in Contracts Team. The key objective
     of this team was to ensure Manukau CC meets its statutory requirements for health and
     safety in physical works contracts. Prior to this, contract managers were responsible
     for health and safety as part of their diverse and multi-faceted roles, but there was no
     dedicated team responsible for ensuring that health and safety requirements were being
     met comprehensively and consistently.

     In mid-2005, an independent consultant was engaged to scope a process for managing
     health and safety in physical works contracts. In August 2005, the consultancy was engaged
     to manage the implementation of the new process.

     The project reviewed current practice, defined best practice and developed processes and
     documentation for managing health and safety requirements in physical works contracts, to
     ensure Manukau CC would meet minimum legal requirements.

     The project comprised four stages of work, which were undertaken in the second half of
     2005:

     •   Stage 1: Finalisation of process development (in consultation with internal and external
         stakeholders).

     •   Stage 2: Development of communications and training programmes for Manukau CC
         staff, physical works contractors and professional services consultants.

     •   Stage 3: Implementation of communications and training programmes with staff,
         contractors and consultants across Manukau CC’s five portfolio areas that manage
         physical works contracts (Parks, Properties, Waste, Transport, and Storm Water).

     •   Stage 4: Commencement of an ongoing process of health and safety audits and reviews
         in projects across the five portfolio areas.

     This was recognised as the beginning of a significant process to change behaviour and
     culture to achieve safe working practice with all physical works contractors, professional
     services consultants and Manukau CC staff. Accordingly, there was a strong emphasis on
     working in partnership with stakeholders and obtaining buy-in to the changes.

     The consultant interviewed representatives from each of the five portfolio areas and
     obtained documentation and processes used to manage safety on physical works contracts.
     This initial review found that Manukau CC’s health and safety processes to manage contract
     safety were generally robust but were:

14
     10. The Manukau CC Senior Management Team has since changed its title to the Executive Leadership Team (ELT).
•   inconsistent between portfolio areas, physical works contractors and professional
    services consultants, exposing the council to unnecessary financial and legal risks

•   duplicative across the five portfolio areas (for example, each business unit had its
    own approved list of contractors based partly on health and safety attributes),
    which provided an opportunity to centralise the management of contractor safety
    requirements and save time and effort for Manukau CC and tenderers during the
    contract process

•   costly – some business units were using external resources to manage health and safety
    in physical works contracts

•   limited in terms of monitoring and review of health and safety performance in physical
    works contracts, for example, safety checks during site visits were frequently not
    documented, there was frequently no reporting on health and safety performance in
    physical works contracts, and safety performance by physical works contractors and
    professional services consultants was not reviewed on completion of contracts.

Following the initial review of Manukau CC’s processes, the consultant:

•   finalised a draft process to manage health and safety in physical works contracts, in
    consultation with representatives of the five portfolio areas

•   developed draft procedures, checklists and templates to manage safety on physical
    works contracts11 and the arrangements for partnership in health and safety with
    Manukau CC

•   reviewed the draft process and proposed minimum safety requirements with a small
    selection of physical works contractors and professional services consultants to identify
    areas for further improvement

•   developed a training module and training calendar to facilitate training in the new
    processes for Manukau CC personnel and relevant representatives from physical works
    contractors and professional services consultants

•   delivered the training to Manukau CC employees and representatives of physical works
    contractors and professional services consultants

•   established a database of pre-approved (for health and safety) physical works
    contractors and professional services consultants, containing all relevant information
    such as contact details, competencies, health and safety certifications (such as the ACC
    WSMP programme), Manukau CC workshops attended and correspondence sent

•   updated the health and safety section of the Manukau CC Contract Management Manual



11. This includes a process for managing health and safety in physical works contracts, contractor health and safety
requirements (including guidelines for 20 significant hazards commonly found on Manukau CC physical works sites –
such as fencing and barriers, traffic management, working in confined spaces, working at heights and signage – based
on Department codes of practice and guidelines) and minimum training and health requirements for physical works        15
contractors.
•   commenced random site safety assessments to establish levels of safety present ‘in the
         field’, with feedback going back to the physical works contractors, professional services
         consultants and Manukau CC representatives

     •   obtained SMT approval of the draft process to manage health and safety in physical
         works contracts

     •   implemented monthly health and safety reporting submitted by physical works
         contractors to Manukau CC and commenced quarterly health and safety reporting to
         SMT

     •   updated the Manukau CC website to include health and safety information and
         documentation for physical works contractors and consultants

     •   implemented initiatives aimed at enhancing the relationship between physical works
         contractors, professional services consultants and Manukau CC, for example,
         breakfast meetings were held for physical works contractors to discuss Manukau
         CC’s requirements, the support and resources available from ACC for physical works
         contractors and updates from the Department, and Manukau CC also issues quarterly
         newsletters to physical works contractors and professional services consultants
         highlighting safety issues (injury trends, case studies, training and so on) on an ongoing
         basis.

     At this point, the draft processes developed and training undertaken met the minimum
     legal requirements under the HSE legislation. However, Manukau CC recognised that it still
     had some way to go to bring its safety practices and safety standards on physical works
     contracts up to a level of best practice commensurate with the pre-existing practices
     of several of Manukau CC’s main physical works contractors and professional services
     consultants.

     This process is ongoing. In early 2009, Manukau CC appointed a permanent Health and Safety
     in Contracts Officer, replacing the independent consultant as the key person responsible
     for maintaining and enhancing health and safety standards and processes in physical
     works contracts. Further enhancements to the approach are currently being developed, as
     discussed elsewhere.




16
2.2.1 Summary of changes
Table 1: Summary of key changes to Manukau CC’s procurement arrangements in relation to
health and safety

 Previous arrangements                          Current arrangements

 Coordinated system across council

 Each council department had their own
                                                All contractor health and safety
 approved list of contractors based partly
                                                processes are pre-approved by one
 on health and safety attributes.
                                                person.
 The standards used to approve
                                                The contractor database is centralised
 contractor health and safety processes
                                                and maintained by one person.
 varied between departments.

 Step 1: Risk assessment

 Some council departments did not complete
 the risk assessment process on portal.         All council departments and professional
                                                services consultants complete the risk
 Professional services consultants did not      assessment process.
 use the council risk assessment process.
                                                The level of risk is included in the
 Level of risk was not included in contract/    contract/tender and EOI documents.
 tender and EOI documents.
                                                Hazards are listed in the contract/tender
 Hazards identified by council were listed in   and EOI documents.
 contract/tender and EOI documents.

 Step 2: Contractors return contract information

                                                Pre-approved contractors return
                                                contract/ tender or EOI documents with
 Contractors returned contract/ tender          hazard list only.
 or EOI documents, which included evidence
                                                Contractors not pre-approved provide
 of organisational health and safety
                                                evidence their health and safety system
 processes.
                                                complies with council requirements.

                                                Safety plan is not required at this stage.

 Step 3: Select contractor and approve safety plan

                                                Contractor selection based partly on
 Contractor selection based partly on           health and safety abilities and experience.
 health and safety abilities, experience and
 safety plan.                                   On acceptance, the safety plan is
                                                submitted by the successful contractor.       17
Previous arrangements                        Current arrangements

     Step 4: Site/contract safety induction

                                                  A safety induction is carried out for every
     Little council involvement in safety         contract, site, and project (as required).
     inductions for contracts by most council     The council project engineer/manager is
     departments.                                 involved in the inductions for high risk or
                                                  extreme risk contracts.

     Step 5: Monitor site safety


     Not undertaken by most council               Depending on level of risk, council
     departments – most departments               representatives monitor site/contract
     relied on the consultant, contractor         safety.
     or professional services consultant to       All contractors formally monitor site
     monitor site/contract safety.                safety.

     Step 6: Review overall health and safety performance

                                                  A specific review of health and safety
     Very general review in contract appraisal
                                                  is included in the contract appraisal at
     at contract close-out.
                                                  contract close-out.
     Review of contractor health and safety
                                                  Contractor health and safety performance
     performance not formally undertaken by
                                                  is reviewed, and a pre-approved list of
     most council departments.
                                                  contractors is updated accordingly.

     Communication

     There was no formal process in place         A formal process has been implemented
     to allow health and safety issues to be      to allow health and safety issues to be
     communicated and reviewed between            communicated and reviewed between
     contractors and the council.                 contractors and the council.

     Some council departments received a          Every contractor engaged by Manukau
     monthly report from the lead professional    CC reports monthly on health and safety,
     services consultant, which included health   enabling better reporting within the
     and safety.                                  council.




18
2.2.2 Success factors for implementation
The following factors were recognised as particularly important:

•   Strong SMT support and commitment to the changes.

•   Dedicated resources and personnel for implementation.

•   Clear policy, processes, standards and expectations for health and safety that are
    clearly communicated and made easily available and accessible for Manukau CC staff,
    contractors and professional services consultants.

•   A partnership approach with internal and external stakeholders.

From the outset, the consultant treated the development and implementation of the new
processes as a partnership with stakeholders. An inclusive approach was followed, providing
information to internal and external stakeholders, updating them throughout the project
and inviting feedback. Key stakeholder relationships included many stakeholders who strongly
supported the changes (including SMT, ACC, the Department and larger contractors and
professional services consultants) and a diverse range of stakeholders who needed to
be convinced about the necessity and value of the changes. This latter group included a
significant proportion of the medium and smaller sized contractors as well as some Manukau
CC staff.

Success factors for securing buy-in from contractors and staff included the partnership
approach and effective communications. The consultant used a non-confrontational
approach, pointing out the benefits of the changes (such as managing legal risk) and a
practical focus (including site visits to discuss real hazards and approaches to managing
these on site, with a primary emphasis on practice rather than paperwork) to establish
credibility and convince those who work on site.

The approach included both ‘carrots’ and ‘sticks’ to encourage buy-in. The use of local
contractors and keeping work opportunities and funding within the local community was
supported, showing that Manukau CC was committed to giving equal opportunities to
small businesses where possible. At the same time, it was made clear that non-compliant
businesses would not win contracts with Manukau CC. Together, these factors provided
a strong incentive for contractors to bring their health and safety practices up to the
required standard.

Feedback obtained from stakeholders was taken on board and influenced the design of
the new systems and processes. For example, stakeholders commented on the paperwork,
time and costs associated with preparing a site-specific safety plan at the tendering stage,
which Manukau CC had previously required. Consequently, the process was changed. Now,
contractors are required to submit a safety plan as soon as they have won the tender and
cannot start work until the safety plan is in place. In this way, the inclusive and consultative
approach to implementation enhanced stakeholder buy-in and ensured that the new system
was practical and feasible for Manukau CC’s partner contractors.

Another factor that contributed to the success of the project was researching exemplar
and comparator organisations. For example, during Stage 1 of the project, a meeting was            19
held with Vector Energy, where Vector presented its health and safety ‘journey’ over the
     preceding seven years, including managing the safety of approximately 1,000 contractors in
     multiple locations, adverse environments and dangerous roles. Vector’s experience showed
     that zero lost time injuries were achievable once the safe working practices, culture and
     behaviour were embedded.

     During the course of the project and a similar project undertaken by the same consultant
     for North Shore City Council, research was carried out on the processes other councils
     had in place to manage health and safety in physical works contracts. It was identified that
     Manukau CC’s baseline procedures (prior to implementation of the changes) were at the
     same standard as some other councils at that time – Hastings District Council, North Shore
     City Council, Waitakere City Council and Auckland City Council.


     2.2.3 Implementation challenges
     The key implementation challenge has been (and continues to be) the gradual process of
     culture change that is necessary to ensure all Manukau CC contract managers, contractors
     and subcontractors fully comply with the health and safety provisions in physical works
     contracts.

     For example, during implementation, challenges were experienced in getting contract
     managers to complete basic Site Safe training. One reason was that these personnel
     considered they already had the requisite knowledge, yet the health and safety review had
     found the required processes were not being followed. This challenge was overcome when
     the CEO became involved and advised staff that attendance was required.

     Experience to date is that compliance with the new arrangements has varied between
     portfolio areas and between contracts of different sizes and types:

     •   Non-compliant tenders have not always been excluded from evaluation. For example,
         in some small tenders, contract managers may rely on a tenderer’s track record with
         Manukau CC as an indicator that contractors already understand relevant health and
         safety information, without seeking evidence of that understanding.

     •   On occasion, contracts have been awarded on the basis of price, with health and safety
         arrangements being negotiated after the contract is awarded. This runs the risk of
         appropriate health and safety measures being outside the contractor’s capability or
         unaffordable to the contractor within the contracted price.12

     •   Some processes may be routinely completed, but not always to the intended depth.
         In some instances, contract managers have ascertained that a safety plan exists but
         have not assessed whether it comprehensively and appropriately manages the hazards
         associated with the specific project.



     12. When the process is followed correctly, price is weighted heavily in the tender evaluation process but non-
     compliant tenderers are excluded from the process. Compliant tenders (that meet pre-qualification criteria including
     health and safety) are evaluated against various weighted criteria. Typically, 60–70% of weight is given to price,
20   and the remaining 30-40% is shared among all other criteria including health and safety, track record, experience,
     personnel, financial viability, technical skills, resources, management skills, methodology and so on.
•   Tenders may comply in terms of paperwork but, on occasion, insufficient investigation
    has been undertaken to ascertain whether actual health and safety practice is up to
    standard.

•   Monthly reports required under Certified Partner arrangements are not always being
    submitted.

In general, health and safety processes have been followed most thoroughly for larger,
longer-term and higher-risk contracts, suggesting that staff have made judgements of
cost-benefit and prioritised their limited time and resources to projects where health and
safety appears to be more critical.

However, the experience of the Health and Safety Team has been that these judgements
are not entirely consistent between portfolio areas, contract managers or contract types
and can, at times, be skewed by other factors such as time pressures to award a contract
(for example, to meet scheduled closure of a swimming pool for maintenance over a two-
week period), suggesting that more effective forward planning is sometimes needed to allow
sufficient time for procurement processes to be followed.

Manukau CC contract managers’ knowledge of the requirements of the Certified Partner
arrangements is reported to still be variable, signalling an ongoing need for training.
Addressing these issues also requires ongoing checking and feedback, which the Health and
Safety Team is undertaking with the Manukau CC’s business units. As a last resort, the Health
and Safety Manager is able to put in a stop order until serious health and safety issues are
addressed (such as where a contractor is working without being a Certified Partner).

It has also been recognised that compliance may improve if further enhancements are made
to improve the flexibility of procurement arrangements with regard to project size. These
enhancements are discussed in section 2.8.


    2.3 Impacts and achievements
Since the implementation of the new health and safety arrangements in physical works
contracts:

•   Manukau CC has established processes and is growing organisational capability to
    effectively manage contractors’ safety

•   all stakeholders (internal and external to Manukau CC) have increased knowledge and
    awareness of safety in physical works contracts

•   contractors are now required to be Certified Partners in health and safety to undertake
    physical works for Manukau CC – as a result, Manukau CC is awarding contracts to
    higher-quality contractors in regard to health and safety practices

•   Manukau CC and contractors follow a faster and more streamlined evaluation process
    for tenders

•   in the last 12 months, no tender worth over $200,000 has been approved where
    unaddressed health and safety risks were identified                                         21
•   serious harm accidents and improvement notices issued by the Department have
         reduced (see section 2.3.4)

     •   physical works contractors and professional services consultants are usually reporting
         their health and safety statistics monthly to the council, and the Senior Management
         Team receives monthly reports on health and safety statistics and trends in physical
         works contracts.

     Additionally, Manukau CC has won three significant awards for health and safety:

     •   2007 Safeguard NZ Workplace Health and Safety Awards – ACC ThinkSafe Best
         Leadership of an Industry Sector or Region.

     •   2008 Safeguard NZ Workplace Health and Safety Awards – Department of Labour Best
         Initiative to Address a Safety Hazard.

     •   2008 NZ Post Local Government Excellence Awards – Building Organisational Capability
         Commendation – Safe Staff, Secure Staff at Manukau City Council.


     2.3.1 Contractor performance
     Contractor performance in health and safety has improved as a result of the changes, and
     it continues to improve. The impact on contractor performance varies with the size of the
     contractor.

     In general, larger contractors and professional services consultants have taken a
     comprehensive approach to health and safety for many years and have dedicated health and
     safety staff. These organisations were already performing at a high level in regard to health
     and safety and welcomed Manukau CC’s commitment to bringing all practices up to this level.
     As one contractor commented:

         [Manukau CC is] finally starting to catch up and recognise [these organisations’]
         long-standing investment in health and safety.

     These larger companies were very willing to join the Certified Partner arrangements. They
     did not need or want to be told how to follow good health and safety practice. This did not
     mean that there was no room for improvement, however. For example, one major contractor
     with an accredited health and safety system was found to have excellent paperwork in place,
     but on site, its practices were not always exemplary. As an example, one site audit found that
     a hazard board had been brought in from a previous site but not updated to cover hazards
     at the new site.

     Among medium-sized contractors, there was greater variation in health and safety
     practices. Some were already working to a high level of competency. Others had been
     planning to make improvements for some time, and Manukau CC’s requirements provided
     the impetus to get started. Generally, medium-sized contractors welcomed the changes and
     recognised the benefits of these.

22
Among small contractors (10 employees or fewer), health and safety practices were even
more variable. The majority were reasonably safe on site but lacked formalised systems.
Smaller contractors were usually, but not exclusively, involved in lower-risk work. However,
there were some key exceptions such as grass cutting and cleaning windows at heights.

Smaller contractors tend to be owner-operated and do not have a dedicated health and
safety manager. Because these companies are small, there were challenges for those who
had significant work to do to meet Manukau CC’s requirements. Key challenges for these
businesses included:

•   investing management time developing and implementing required documentation such
    as risk registers, site drawings and so on (and, in some cases, engagement of consultants
    to assist with this)

•   staff and management time and costs of attending site training

•   difficulties for some in dealing with performance issues among staff and subcontractors
    that may have previously gone unchallenged.

Despite some resistance to the additional paperwork, most contractors were persuaded
of the benefits of managing liability by documenting evidence of good practice. Where
contractors require assistance to establish health and safety systems and documentation,
Manukau CC refers them to the local ACC office, which offers advice, support and templates
in relation to the WSMP programme and WSD scheme, thereby helping contractors to meet
the requirements of Manukau CC’s Certified Partner arrangements as well. Contractors gave
very positive feedback on the assistance they had received from ACC.

The Health and Safety Team were aware of only one instance where a contractor openly
elected to cease doing business with Manukau CC rather than join the Certified Partner
arrangements. As such, the new arrangements have improved health and safety in physical
works contracts with Manukau CC principally by influencing contractors to improve their
practices rather than by reducing the pool of contractors performing work for Manukau CC.


2.3.2 Subcontractor performance
From the outset, subcontractors were recognised as a key area of risk, and Manukau
CC gave careful consideration to an appropriate approach to managing subcontractor
performance. A deliberate decision was made not to extend the Certified Partner
arrangements to subcontractors, as this would have flooded the database with a multitude
of small companies over which Manukau CC has no direct influence.

Instead, contractors are required to have robust processes in place for managing
their subcontractors – similar to the health and safety processes Manukau CC uses in
working with contractors. This requirement is included in Manukau CC’s pre-qualification
questionnaire, and Manukau CC monitors the extent to which contractors follow these
processes in practice.

In general, large companies have relatively robust processes in place, and Manukau CC has
found that they usually manage their subcontractors well. Medium-sized and small companies      23
are more variable in this regard, and Manukau CC has found that “often, contractors don’t
     manage their subcontractors effectively in relation to health and safety”.

     While Manukau CC places contractual obligations on contractors to manage their
     subcontractors and employees – and monitors this – there are limits to the number of audits
     that can be carried out. Contractors and subcontractors are prioritised for audit based on
     Manukau CC’s assessment of risk. Currently, this is undertaken by the Health and Safety in
     Contracts Officer, but in the future, it is intended that this will become the responsibility of
     contract managers.

     Where contractors have been audited and deficiencies have been found in subcontractor
     health and safety practices, the new arrangements have been effective in bringing about
     practice change – at least in relation to the specific site and project. This can be assisted by
     issuing a stop order and/or blacklisting a contractor. However, to date, the Health and Safety
     Team has not been satisfied that more generalised improvements have been achieved in
     relation to subcontractor health and safety.

     Manukau CC is also committed to supporting the growth of small businesses in Manukau
     because “the subcontractors of today may be the contractors of tomorrow”. Accordingly,
     underlying the procurement and audit processes is an ethos of growing capability and trust,
     based on a shared objective of successful business as well as good health and safety.

     Stakeholder feedback suggests that subcontractors in Manukau are increasingly recognising
     the need to provide evidence (documented and practical) of their training and competency in
     health and safety to their clients and to have comprehensive hazard management systems in
     place prior to work commencing.


     2.3.3 Health and safety reporting
     It is a requirement of the Certified Partner arrangements that contractors provide monthly
     reports on health and safety performance during the life of each contract with Manukau
     CC. The content of these reports includes signed confirmation of site safety compliance,
     the number of accidents requiring first aid and medical attention, the number of near miss
     accidents, the number of serious harm injuries, the number of improvement notices issued by
     the Department of Labour and total lost time (days) due to injury.

     According to the Health and Safety Team, most, but not all, contractors comply with this
     requirement. Currently, there are no practical consequences for those who do not comply,
     i.e. contractors who do not file monthly reports are not being removed from the Certified
     Partner arrangements. The Health and Safety in Contracts Officer is currently working on
     tightening the monitoring and enforcement of this requirement.

     Many of the larger contractors also have their own processes in place for monitoring their
     health and safety performance internally.13 No evidence was identified of Manukau CC’s
     changes having influenced these, however.


     13. For example, one national company reports against a range of key performance indicators (KPIs) including injuries,
24   near misses, long-term injuries and medical conditions per 200,000 worker-hours per month. Area safety meetings
     are also held to monitor leading indicators such as critical activities and compliance with health and safety policy.
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