Procurement Strategy for Transport - A strategy to outline the procurement by Porirua City Council for Roading and Transport activities
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Procurement Strategy for Transport A strategy to outline the procurement by Porirua City Council for Roading and Transport activities Final October 2019
VERSION HISTORY
Version Date Description Owner Revision Due
1 12/9/2014 Manager Roading 2016/17
2 01/09/2018 Transport Manager 2021/22
3 2 September 2019 Major rewrite in Transport Manager 2022/23
advance of tender
round for Network
Maintenance
3.1 16 Sept 2019 Edits Transport Manager 2022/23
3.2 16 Oct 2019 Edit post NZTA Transport Manager 2022/23
feedback PS
Final 18 Oct 2019 Finalisation Transport Manager 2022/23
Roading Procurement Strategy October 2019 2
;
CONTENTS PAGE
1. Executive Summary ........................................................................................... 4
1.1 Overview ..................................................................................................... 4
1.2 Recommendations ...................................................................................... 5
1.3 Council Endorsement .................................................................................. 5
2. Context .............................................................................................................. 6
2.1 Strategic Objectives .................................................................................... 6
2.1.1 Council’s Overall Strategic Objectives .................................................. 6
2.1.2 Growth in Porirua ................................................................................. 6
2.1.3 Specific Transport Enhancements ........................................................ 8
2.1.4 Asset Valuation and Condition ............................................................. 8
2.1.5 Overall Financial Strategy .................................................................... 9
2.2 Outcomes and objectives for the Transport Procurement Strategy ............ 10
2.3 NZTA’s Procurement Requirements .......................................................... 11
2.4 Other Factors affecting Procurement......................................................... 11
2.4.1 Organisation-wide Procurement Policy............................................... 11
2.4.2 Regional Procurement ....................................................................... 12
2.4.3 Public Private Partnership model in Porirua City ................................ 12
2.4.4 Other Strategic Documents ................................................................ 12
3. Procurement environment ................................................................................ 13
3.1 Analysis of Supplier Market ....................................................................... 13
3.1.1 s17A and Delivery Strategy. ............................................................... 13
3.1.2 Professional Services Providers ......................................................... 13
3.1.3 Physical Works Contractor Market ..................................................... 14
3.2 What do we need to buy? - Analysis of planned spend ............................. 15
3.3 Impact of Council Procurement on others.................................................. 17
4. Procurement Programme ................................................................................. 18
4.1 Procurement Programme .......................................................................... 18
4.1.1 Contracting Strategy .......................................................................... 18
4.1.2 Detailed programme and procurement approach ............................... 19
4.1.3 Simplified Programme timeline ........................................................... 23
4.2 Unusual/Advanced procurement ............................................................... 23
5. Implementation................................................................................................. 24
5.1 Capability and Capacity - general.............................................................. 24
5.2 Internal Procurement Processes ............................................................... 24
5.3 Performance Measurement and Monitoring............................................... 25
5.4 Communication Plan ................................................................................. 25
Appendix 1 – Council Transport Structure ............................................................... 26
Roading Procurement Strategy October 2019 3
1. EXECUTIVE SUMMARY
1.1 Overview
Porirua is experiencing and planning for additional considerable growth. Annual
residential growth is over twice the historical average, and there are major
investments in the region such as the Eastern Porirua Regeneration Project, Porirua
Adventure Park, Kenepuru Landing, Plimmerton Farms etc. This growth, and the
completion of major projects such as Transmission Gully will increase the pressure
on our roading and transport network.
Porirua City Council (Council) has undertaken significant long-term planning with a
Growth Strategy 2018 to 2048 and a Long-Term Infrastructure Strategy 2018 to
2038. To accompany these and Council’s other planning initiatives, this procurement
strategy outlines how Council will plan and procure the delivery of projects and
services to support the transport network.
Historically, the investment in the transport network has been less than ideal. Council
had other infrastructure and funding priorities so adopted a ‘high risk’ investment
profile and capped funding in transport for a period; but is now moving to a medium-
risk profile. In addition, our contracting strategies and internal management
processes to monitor these have not always resulted in the desired levels of service
and/or outputs.
The following diagram summarises the issues/challenges and how these are
addressed in this procurement strategy.
Issues/Challenges Addressed in this Procurement
Increasing Growth in Porirua strategy
Specific transport initiatives (TG Increased investment – from high risk
impacts) strategy to medium risk strategy for LTP
funding
Prior under-investment in roading
infrastructure Specific projects to address TG linkages
and impacts
Backlog of maintenance
Unbundling contracts to get greater focus
Asset condition deficits on maintenance activity and good value
for money
Market conditions
Increased focus on RAMM data quality in
Under capability/capacity within new contracts
Council
Council change in structure to ensure it
has capability/capacity
Roading Procurement Strategy October 2019 41.2 Recommendations
Council recommends:
a) the New Zealand Transport Agency (NZTA) endorse this strategy and the
programme described within it; and
b) continued approval by NZTA under s26 of the Land Transport Management
Act for the use of in-house professional services.
Council also notes that three are no advanced components or variations to the NZTA
Procurement Manual.
If approval of the full Procurement Strategy is delayed then approval of the Roading
Maintenance Contract procurement component is sought ASAP to allow this to go to
the market in Q4 2019.
1.3 Council Endorsement
Procurement Strategy Owner: Transport Manager
Once endorsed this strategy will apply to all procurement involving NZTA funding and
will be owned by Council’s Executive Leadership Team, specifically managed by the
Transport Team, and overseen by the Procurement Committee.
This is not a standard alone document but is to be read in conjunction with the
Transport Activity Management Plan 2018-21.
The Procurement Strategy will be reviewed on an on-going basis as part of the
Management Plan Review. A full review will occur at least every three years or when
a major change in funding policy or process occurs. Next review date is 2022/23.
Roading Procurement Strategy October 2019 52. CONTEXT
2.1 Strategic Objectives
Council’s Overall Strategic Objectives
The transportation activity fits within Council’s strategic priorities as set out in the
Long Term Plan 2018 to 2038 of;
• a growing prosperous and regionally connected city
• a great village and city experience –ensuring that our city’s infrastructure is
resilient and fit-for-purpose, connecting our city through walking, cycling and road
networks.
Our transport network plays a big part in this as it helps us connect safely and
efficiently. We want an integrated network to ensure that our drivers, pedestrians,
cyclists and public transport users can travel safely and conveniently around and
through our city.
Growth in Porirua
Council has developed a Growth Strategy 2018 to 2048. The Growth Strategy is in
response to, and to influence future growth pressures in Porirua. These include:
• Residential growth is currently running at 2.2% per annum – a significant increase
on the historical 1% per annum
• Porirua may get as many as 29,000 extra people by 2048
• There is significant urban development planned and underway. There is $1.5
billion of investment in Eastern Porirua through the regeneration strategy. There
are a number of other urban developments – both greenfield and increasing
intensification of residential areas.
The growth principles included are (highlight added):
• A diverse and inclusive city
• A harbour-centred city
• A compact and liveable city
• A connected and active city
• A city of opportunities and prosperity
• A resilient city
The principles of “Compact and liveable”, “connected and active” and “a resilient city”
have clear implications for transport networks. The effect of growth will be an
increased pressure on the roading network. In Porirua, 57% of residents use a car to
get to work with 12% using public transport (2013 census). In addition, in the
Wellington region, cars represent 68% of all trips and 81% of distance covered
(Ministry of Transport, Household Travel Survey 2015-18).
The following spatial layout from the Growth Strategy indicates the 30 Year Growth
Horizon and expected intensification of development, including some major transport
routes:
Roading Procurement Strategy October 2019 6Spatial Layout from Council’s 2018-2048 Growth Strategy: Roading Procurement Strategy October 2019 7
Specific Transport Enhancements
Transmission Gully (TG) is a
significant investment in the
region and should improve
overall resilience. Council is
contributing around $40m for its
Link Roads due for completion
by July 2020. These changes will
have a significant effect on the
way traffic flows through, and
within, the Porirua City region.
In addition, due to the direct
linkage with TG, the Kenepuru
Corridor is expected to see
significant changes of use. For
example, the southern section is expected to incur increased vehicle usage by about
4,000 plus vehicles per day (a 20+% increase).
Asset Valuation and Condition
The transport assets in Porirua have a total replacement cost of $332 million (as at
December 2018 as follows:
Depreciated
Replacement Replacement Annual Cumulative
Asset Group Cost Cost Depreciation Depreciation
Formation $ 69,273,453 $ 69,273,453 $- $-
Subbase $ 31,897,872 $ 29,993,867 $39,681 $ 1,904,005
Basecourse $ 39,407,108 $ 18,327,236 $440,001 $ 21,079,872
First Coat Seals $ 12,458,627 $ 5,052,709 $154,700 $ 7,405,918
Surface $ 17,116,771 $ 5,856,046 $969,319 $ 11,260,725
Carparks $960,001 $472,239 $23,231 $487,762
Bridges & Large Culverts $ 27,199,009 $ 17,251,378 $291,978 $ 9,947,631
Drainage $ 16,769,503 $ 6,096,291 $277,671 $ 10,673,212
Footpath $ 46,902,766 $ 21,562,427 $613,692 $ 25,340,338
Islands $928,967 $429,121 $13,991 $499,846
Minor Structures $890 $415 $59 $474
Railings Railings $ 1,406,331 $519,075 $65,269 $887,257
Retaining Walls $ 13,892,447 $ 6,493,471 $232,114 $ 7,398,976
Signs $ 1,777,541 $613,366 $118,503 $ 1,164,174
Street Lights $ 16,985,410 $ 9,976,734 $566,181 $ 7,008,676
Surface Water Channel $ 35,379,932 $ 17,618,349 $472,522 $ 17,761,582
Traffic Signals $127,636 $ 25,527 $ 8,509 $102,109
Total $ 332,484,263 $ 209,561,704 $ 4,287,422 $ 122,922,560
Roading Procurement Strategy October 2019 8The following are the performance measures reported through our LTP/Annual
Report processes:
Measure Result 2018/19 Target 2018/19
Response to service requests:
Percentage of customer service
requests relating to roads and
footpaths responded to within the More than 85% within
agreed timeframes 64% agreed timeframes
Road safety: Number of fatalities
and serious injury crashes on the
local road network (expressed as a Contribute to a reducing
number) 17 trend over 5 years
Road condition: The average
quality of ride on sealed local roads More than 75% quality of
(smooth travel exposure by NZTA) 79% ride
Road maintenance: Percentage of
sealed local road network that is 9% resurfaced (external
resurfaced 3.7% contractor)
Footpaths: Percentage of footpaths
that are in average or better More than 97% in better
condition 97.4% or average condition
Resident satisfaction with the More than 70%
condition of: satisfaction
47%
(a) local roads More than 70%
(b) local footpaths 51% satisfaction
In addition, some of our Road Assessment and Maintenance Management (RAMM)
database data is not as reliable as we desire and we are investing to insure we
continually improve the quality of our RAMM information.
Overall Financial Strategy
In addition to the Growth Strategy, Council has developed its Long Term Plan 2018 –
2038. Rather than a 10 year view we are now taking a 20 year view of financing and
funding. Included in this is a specific Infrastructure Strategy, linked to the LTP and
the Asset Management Plans:
Roading Procurement Strategy October 2019 9The financial strategy indicates forecast 4.98% rates increases for the next two years
of the Long Term plan. A significant amount of this increase is just to address the
historical underfunding of depreciation across Council and is not for additional
service levels.
The funding in the Infrastructure Strategy aims to address the following:
• The backlog of maintenance to be addressed in the next 2-3 years (however
funding is constrained on 2019/20).
• Large capital to address capacity issues and alleviate congestion points. The
Long Term Plan is moving to a more targeted funding of transport projects over
the next ten years. This will include capital projects, improvement and
maintenance that have longer term impacts on the City’s networks, both for
vehicle movements and the movement of the people around the City by cycle or
foot
• In the last few years the Council has moved from a high risk strategy to a medium
risk strategy, with the objective of bringing much of the network up to a fit for
purpose condition and providing a network that delivers value for Council and all
the users of the Transport system.
2.2 Outcomes and objectives for the Transport
Procurement Strategy
A key outcome is to deliver value for money and a coherent response to the
challenges and opportunities that present themselves to Council in the next three
years (and beyond). Investing in the transport network is part of the critical
infrastructure to promote and support economic growth.
Council is a significant user of public money, and that the expenditure of this money
has a significant impact on the local and domestic economy and the overall
performance of the Council. Every action undertaken to spend these funds is publicly
discoverable and the use should reflect the practice of good governance and
financial management. To this end the Transport team uses the Council and NZTA
procurement processes and frame works to deliver value for money on the transport
programme and for the wider council. This strategy aims to be consistent with the
Porirua City Council Procurement Policy (#969114), the One Network Roading
Classification (ONRC) requirements and the NZTA Procurement Manual.
NZTA are a significant funder and partner of Council transport infrastructure. This
procurement strategy is to align with NZTA requirements.
Roading Procurement Strategy October 2019 102.3 NZTA’s Procurement Requirements
The NZTA’s procurement requirements are:
• Value for money
• Competitive and efficient markets
• Fair competition among suppliers
The proposed contracting strategy in the following sections has taking that into account
with the contracting strategy and programme. Council has based its procurement
policy on the Government Procurement Rules. The NZTA Procurement Manual is used
to drive the transport programme and its related programmes. Council is driving
improved procurement practices across the Transport Team and the entire
organisation including ensuring:
• Each procurement decision is driven by the principles of ‘best value over whole of
life’, having due regard to propriety
• Using the Government Procurement Rules and guidance to inform and direct
Council’s procurement policy
• Promote open and effective competition including full and fair opportunity for all
suppliers
• Promote awareness of its Sustainable Procurement Policy among Transport staff
involved in the procurement of infrastructure and services
• Establish organisational targets and measure associated progress to support
continued improvement in procurement practices.
Council also aligns its procurement activity with NZTA requirements. Council’s
Procurement Policy states that ”any officer engaged in any NZTA subsidised work
should have a clear understanding of the NZTA procurement manual, its requirements
and principles”. It also states that ”All procurement projects for NZTA subsidised work
shall follow the procedures set out in the NZTA Procurement manual. The tender
evaluation procedure must be specified in the Conditions to tendering and the method
specified must be adhered to”.
2.4 Other Factors affecting Procurement
Organisation-wide Procurement Policy
This Transport Procurement Strategy fits within Council’s Procurement Policy of July
2018. The purpose of the Procurement Policy is to provide guidance to staff and
suppliers to achieve our Long-Term Plan objectives. It defines how Council will
undertake procurement decisions, the processes involved and provides clarity to
suppliers and the community on what Council will consider in procurement and the
guiding procurement principles.
The Scope of Council’s Procurement Policy applies as follows:
• All Council staff with responsibility for procuring goods and services do so in
accordance with the Financial Delegations Policy
• Consultants or contractors used to advise on, arrange or manage a procurement
process for Council
Roading Procurement Strategy October 2019 11• Any Officer engaged in any NZTA subsidised work should have a clear
understanding of the NZTA procurement manual and its requirements as well as
the principals in this policy.
Regional Procurement
There are no immediate plans to secure wholesale regional procurement of
Transport services at the current time. Currently Council does secure traffic signal
maintenance and operation via a regional procurement process. However, the
Transport team is aware of the procurement strategies, contracts and contractors
working on road assets in adjacent authority areas. For example, the One Network
Road Classification (ONRC) involves categorising roads based on the functions they
perform as part of a national network. These classifications will assist local
government and NZTA to plan, invest in, and maintain and operate a transport
network in a more strategic, consistent and affordable way throughout the country.
Council may investigate the potential of joint procurement of some further transport
asset services at a future date, if it is deemed to deliver value for money and is not
inconsistent with the procurement strategy or procedures in operation at that time.
At this stage, regional procurement is not expected to realise tangible value as there
is no one contractor who could service more than one council in any real and efficient
fashion.
Public Private Partnership model in Porirua City
The TG programme involves Council in the construction of the two Link Roads
(connecting to/from Waitangirua and Whitby) associated with the development.
Construction of TG began in 2015/2016. The Council Link Roads are being procured
using a separate, standard, Design and Construct contract procured via the TG
Public Private Partnership (PPP). Under this procurement process, Council has
contracted directly with the principal construction subcontractor as part of the PPP
Consortium. This work is now current and ongoing with practical completion
programmed to occur prior to July 2020.
Other Strategic Documents
Key planning documents that inform the transport programme and the development
of this procurement strategy include:
• Land Transport Management Act 2003
• Local Government Act 2002
• Porirua City Council District Plan
• Porirua City Council Long Term Plan
• Porirua City Council Growth Strategy 2018 to 2048
• Porirua Long-Term Infrastructure Strategy 2018 to 2038
• Porirua City Council Transport Asset Management Plan 2018
• Government Procurement Rules
• NZTA Procurement Manual
• Wellington Regional Land Transport Plan 2015
• Wellington Regional Land Transport Strategy: 2010-2040
• Making Cycling Safer and More Attractive The NZ Transport Agency’s cycling
safety action plan 2015
• Safer Journeys - NZ’s Road Safety Strategy 2010-2020
These documents are available on request from the relevant authority.
Roading Procurement Strategy October 2019 123. PROCUREMENT ENVIRONMENT
3.1 Analysis of Supplier Market
s17A and Delivery Strategy.
Councils are required to determine the cost-effectiveness of different funding,
governance and service delivery options under s17A of the Local Government Act
2002. A review of roading and transport activities under s17a confirms the overall
contracting out of the physical works and retention of in-house of governance and
management capability.
Council retains an in-house team to plan and manage the delivery of the transport
projects with its major purchases being professional services and physical works.
Council continues to provide some professional services in-house to improve the
effectiveness of strategic alignment and delivery e.g. the preparation of funding
applications and the design of small / low risk transportation and safety improvement
projects, while outsourcing specialised professional services and when additional
capacity is required.
The following table summarises the delivery mechanisms:
Activity Delivery mechanism
Asset Management In House / Contracted
Specialist technical and asset management advice In House / Contracted
Community safety In House
Structures inspections and management In House / Contracted
Associated road strategy and maintenance issues In House / Contracted
Physical works contract management In House / Contracted
Operational aspects of managing Porirua roads In House
(overweight permits, corridor access requests CARS
temporary traffic management plans etc.)
Maintenance physical works Contracted
Physical renewals and improvements Contracted
Professional Services Providers
Council currently uses a professional service provider to deliver Roading Asset
Management Professional Services. The scope of the work includes but is not limited
to:
• Pavement Testing and Analysis
• Condition Rating
• Development of Maintenance Strategy
• Pavement Performance Modelling (dTIMS)
• Road Asset Valuation.
Specialised professional services will continue to be sourced from external providers
where no internal expertise and/or capacity exists.
Roading Procurement Strategy October 2019 13Physical Works Contractor Market
There are ongoing macro-economic considerations for the physical works market:
• Cost of capital is generally low, with historically low interest rates, but there are
uncertainties about future global economic demand, the effects of climate change
and climate change policies on roading/transport projects etc.
• Cost of labour is increasing with a generally low unemployment rate and forecast
rises to the minimum wage having a knock-on effect to the next tier of workers
• Cost of inputs increasing and variable, with oil prices and exchange rates
increasing, and supply of materials such as aggregates sometimes uncertain
• The impact of increased focus on Health & Safety and traffic management plan
requirements which are necessary and appropriate but do sometimes constrain
capacity, flexibility, and increase costs.
The contracting market in the region is notable for:
• Three (3) major contractors dominating the major capital and long term
transportation maintenance contracts, being Fulton Hogan, Higgins, and Downer
with all being major national providers
• Minor contractors available for small works, often subcontracting to one or more
of the aforementioned major contractors.
The contracting market is in a period of heightened uncertainty as:
• TG as a major project which is tying up considerable resources of equipment and
labour with a revised, stated, completion date of ‘sometime’ in 2020 although
there is the potential for this to be delayed.
• The Otaki Expressway is also a significant project which is programmed to
continue through to 2021
• Challenges for local councils to deliver on their chip resealing and renewal
activities
• Uncertain commitment to the next tranche of major physical transportation
projects. Many Roads of National Significance (RONS) projects are on hold or
postponed.
The above factors transpire into an observed increase in civil construction costs with
indications that roading unit rates have increased significantly in the lower North
Island. Contractors appear to be ensuring that all tenders are appropriately
profitable, and in some cases are not tendering if they do not immediately have
sufficient resource and/or certainty of making a minimum financial return. There is no
indication that contractors are securing long term work for certainty at reduced
profitability.
This uncertainty in the contractor market is expected to last through the next 2-5
years (which is also the timeframe when the major regional projects such as TG and
the Otaki Expressway are completed) and this needs to be taken into consideration
in procurement planning.
To ensure reliability of supply of emergency works, the primary response is included
in the Roading Maintenance Contract.
Roading Procurement Strategy October 2019 143.2 What do we need to buy? - Analysis of planned
spend
Council has allocated additional subsidies from NZTA (being the increased Funding
Assistance Rate (FAR) to 56% and new subsidies on footpath work) particularly to
areas that have fallen behind, such as sealed pavement maintenance, sealed road
resurfacing, sealed pavement rehabilitation and footpath renewals. Where possible
drainage renewals and structures maintenance have also received additional budget
allocations compared to historical spend, to start catching up on previous
underspend and to finance particular projects.
Intersection upgrade projects are programmed for areas of growth and change due to
TG. There is a significant expenditure envisaged for revocation and/or TG
Integration planning work, the cost of which is estimated by Council but not yet
approved by NZTA due to NZTA not progressing their Revocation business case.
Walking and cycling projects are the other major capital expenditure projects. There
is also known slip, seawall and erosion work to be managed.
These projects have been submitted via Transport Investment Online (TIO) and into
the Regional Land Transport Programme (RLTP).
The budget below sets out the annual profile of spend on physical assets for
Transport. The programme includes physical works for all Transport activities
(subsidised and un-subsidised).
2019-22
2018/19 2019/20 2020/21 2021/22 (3 years)
$000 $000 $000 $000 $000
LTP LTP
Project Description Budget Yr2 Yr3 LTP Yr4 Total
Roading & Safety Maintenance
111 - Sealed Pavement Maintenance 408 421 450 464 1,335
113 - Routine Drainage Maintenance 359 370 390 402 1,162
114 - Structures Maintenance 326 334 355 366 1,056
121 - Environmental Maintenance 454 468 493 508 1,469
122 - Traffic Service Maintenance 211 219 240 248 706
123 - Operational Traffic Maintenance 5 5 5 5 16
124 - Cycle Path Maintenance 51 53 55 57 165
131 - Level Crossing Warning Device 5 5 5 5 15
151 - Network & Asset Management 431 440 459 468 1,367
Minor Events Emergency works 107 110 114 117 341
NZTA 003 - Activity Management Plans 51 52 53 54 159
Traffic Services Maintenance -
Streetlighting Power 519 530 541 553 1,624
-
Accessways 61 63 64 65 192
Asset Management 20 21 22 22 65
CAR Management 247 250 253 256 759
CBD Canopies & Walkways 219 223 68 70 361
Footpath Maintenance 68 71 73 75 219
Footpath RAMM 15 16 16 17 49
Footpath Vegetation 77 79 82 84 245
432 - Road Safety Promotion 183 189 194 200 583
Maintenance subtotal 3,817 3,920 3,932 4,037 11,889
Roading Procurement Strategy October 2019 152019-22
2018/19 2019/20 2020/21 2021/22 (3 years)
$000 $000 $000 $000 $000
LTP LTP
Project Description Budget Yr2 Yr3 LTP Yr4 Total
212 - Sealed Road Resurfacing 1,248 1,288 1,329 871 3,488
213 - Drainage Renewals 511 159 80 83 322
214 - Sealed Road Pavement
Rehabilitation 408 421 435 449 1,305
215 - Structures Component
Replacements 61 63 65 67 195
222 - Traffic Services Renewals 382 395 408 421 1,224
321 - New Traffic Management Facilities 20 5 5 5 15
Sealed Pavement Mtce - Reseal
Preparation Work 331 342 353 365 1,060
Footpath Renewals 537 211 217 127 555
Capital subtotal 3,499 2,884 2,892 2,388 8,163
Offstreet Parking 68 71 73 75 219
Street Furniture 56 57 59 60 176
Transport (non-subsidised) Assert
Management 133 137 141 146 424
Unsubsidised subtotal 257 265 273 281 819
Roading & Safety Maintenance
subtotal 7,573 7,068 7,097 6,706 20,871
Capital Projects
141 - Emergency Works 765 365 373 381 1,119
323 - Transmission Gully 12,787 6,014 - - 6,014
341 - Minor Improvements 245 250 266 272 788
Albatross Close slip repair work 1,500 - - - -
Conversion of all Streetlights to LED 606 - - - -
Intersection Upgrades 746 2,304 1,182 1,291 4,777
LTP - New Road Connections, Eskdale 25 730 - 218 948
LTP - Roading Bridge Upgrade, Kenepuru
Culvert - - 501 - 501
Walking and Cycling Pathway Priorities 306 297 517 - 814
Seawalls - 146 490 354 990
SH1 & SH58 Revocation Project 180 210 102 275 587
Wineera to CBD Pathway 918 - - - -
Wineera to Onepoto Walkway & Cycleway 408 2,710 - - 2,710
18,486 13,026 3,431 2,791 19,248
Total 26,059 20,094 10,528 9,497 40,119
Excluding Council’s TG Link Roads, it plans to spend $40m on its transport network
in the three year funding period 2019/20 to 2021/22. The Long Term Plan (LTP)
reports Council’s aim to restrict rates increases to 5% for the 2018/19 year and
beyond. This restriction of rates increases requires an overall budget reduction in
conjunction with improved reprioritisation of funding allocation.
Roading Procurement Strategy October 2019 16The 2015/25 LTP determined to move from the high-risk scenario to a planned medium-risk scenario. This means that an additional $12.8m is expected to be required over the next ten years. This investment would take the transport network to a 30% likelihood of significant failure of an asset resulting in a loss of service. At this stage, we are two (2) years into a six (6) year progression to achieve 30% likelihood of loss of service. A purposeful progression towards reduced threat of failure and sustained prioritised investment is considered appropriate for Council, given the competing financial demands on the city’s infrastructure. 3.3 Impact of Council Procurement on others The Council considers the impact of its procurement on other approved organisations. Currently, with the contracting strategy outlined in section 4.1.1 we are focusing on our own organisation’s procurement activities and foresee limited impact on other approved organisations, or opportunities for collaboration (beyond ongoing collegial/professional dialogue). This procurement strategy will be published on Council’s website and communicated directly to regional stakeholders. Roading Procurement Strategy October 2019 17
4. PROCUREMENT PROGRAMME
4.1 Procurement Programme
Contracting Strategy
Historically our contracting approach for transport contracts has been:
• Tendering for major capital projects
• A major Network Maintenance Contract (NMC) bundling roading maintenance,
renewals/reseals, vegetation control, lighting maintenance and ancillary services.
Contract. Council’s latest iteration of the NMC, AM000046, started in May 2015
and has been contracted to Downers.
The current NMC has been challenging and has not met its expectations. This is
related to:
• Ongoing under-investment in asset renewals leading to lower than desirable
asset condition
• RAMM data quality not increasing appreciatively
• Insufficient contract monitoring by Client to ensure service levels are being met.
Our contracting strategy for the medium term aims to address this by significantly
changing our contract philosophy. We will carry out the following:
• Unbundling contracts. We will unbundle AM00046 services including:
o Split ‘core’ maintenance activities from renewals/rehabilitations/reseals.
Maintenance activity will be let on a medium term contract (3+1+1) to lock in a
maintenance provider (see table below).
o Renewals and reseals will be let by annual programme to give Council
flexibility, and also enable competitive bidding as major projects such TG are
completed in the region.
o Split out street lighting as this is generally a subcontracted service or a
discrete business unit within some roading companies. With the change to
LED’s there is also a changing work profile to this activity.
o Vegetation Control will be let as a standalone contract.
o Remove other minor ancillary services that are often subcontracted (e.g.
traffic counting).
• Greater financial control within contracts. We will increase use of ‘unit rates’
within contracts and reduce ‘lump sums’ so that there is greater transparency in
the delivery of services enabling payments to be more closely linked to delivery of
quality outcomes.
• Increasing Contract Management. We have increased resources and capability
within the Transport team to match both the increased internal management
required for unbundled contracts and to improve monitoring to ensure the service
output levels are being achieved.
• Ensuring our procurement processes adequately account for non-price attributes.
The overall unbundling should also support competitive markets – different
contractors may pick up portions of the work – rather than having one Contractor
dominate. This unbundling and greater financial control de-risks the contract pricing
for both the Council and Contractors and should provide greater transparency.
Our approach also has been to take into account NZTA’s objectives of obtaining best
value for money, obtained by fair competition and encouraging competitive and
efficient markets.
Roading Procurement Strategy October 2019 18Detailed programme and procurement approach Based on the contracting strategy above, the following table summarises the procurement project by segment, the nature of the activities, bundling of contracts, delivery models and selection methods, and the impact on NZTA objectives. Roading Procurement Strategy October 2019 19
Contracted Works
Segments Inclusions Existing Procurement basis Selection & Contracting Meeting NZTA Procurement
and value1 Contracts Approach Objectives
Major capital Link roads, traffic Let by Project Delivery model – Generally NZTA Price Open tendering achieving good value
(circa $6m in safety mostly staged2. Some Quality Method. and fair competition.
the next 2 enhancements etc. Contract value generally smaller
years following varies from year projects let as design Small (Contracted Works
Segments Inclusions Existing Procurement basis Selection & Contracting Meeting NZTA Procurement
and value1 Contracts Approach Objectives
Road Footpath and Current Contract Delivery model staged. NZTA Price Quality Method Achieving good value by providing
maintenance pavement repairs, expires June (PQM), incorporating an certainty for a contractor and working
(circa $2m Drainage 2020 By Medium term Engineers Estimate, and a through integration with Council
annually) maintenance Contract (3+1+1) Schedule of Prices (SoP) for processes/asset information and a
transparency. focus on maintenance outcomes.
NZS3917: 2013 as a base
document. Reference to all
appropriate NZTA technical
standards with a technical
and performance
specification developed from
good practice.
Professional A Professional Professional Delivery model mostly Will retender with a Achieving good value by reducing
services Services Contract Services Contract staged for technical weighted attribute model. transaction cost of each service
(circa $0.6m provides the basis for three years support. In-house appointment being tendered.
annually but for the majority of runs through to expertise maintained Ongoing direct appointment Transparency through the
higher with this professional 30 September for planning and for specific technical advice. Professional Services Contract.
design works) support. 2020 with a decision-making,
possible contract management ACENZ contract form will For small works avoid cost of
Additional low value extension of 2 etc. as per current. generally be used. tendering through direct appointment.
specific works (e.g. further years.
design works) may Will retender the
be procured directly Professional Services
from the Contract either at the
Professional end of the term of the
Services Contract or extension period.
from providers
directly. May also appoint
technical professional
services directly as per
the NZTA procurement
manual and in
Roading Procurement Strategy October 2019 21Contracted Works
Segments Inclusions Existing Procurement basis Selection & Contracting Meeting NZTA Procurement
and value1 Contracts Approach Objectives
accordance with
Council’s procurement
policies.
Ancillary Vegetation Control, Most expire June Delivery model staged. Generally weighted Transparency as these are usually
services Street light 2020 attributes delivered by specialist
(Circa $0.5m maintenance, traffic Each service by subcontractors.
annually) counting etc. Vegetation medium term contract NZS3917: 2013 or bespoke
control – generally open service-based contracts.
value less than market (smaller
$200k contracts less than
$200k may be through
closed contest)
Traffic signals Porirua is a party Tendered regionally as NZTA methodologies Competitive markets by retaining two
operations & to a Wellington a staged delivery different contractors in the market.
maintenance Regional model at the same Transparency through a regional
Services Contract time as WCC – with agreement.
with NZTA and different contractors
other regional for each portfolio.
TA’s bar WCC.
Minor value
Roading Procurement Strategy October 2019 22Simplified Programme timeline
The following shows the simplified timeline for procurement, with considerable activity in Q4 of 2019 and early in 2020 to implement new
contracts.
2019 2020 2021 2022
Simplified Programme Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Current Maintenance and Reseals
Contract
Roading Maintenance Contract
Tender period and award Tender
Contract New Contract Ongoing -> 2023 + 1 +1
Renewals & reseals Programme
Tender Tender Tender Y2 Tender Y3
Programme of works Year 1 Year 2
Annual Capital
Tender period and award
Contract Various dates Various dates
Vegetation Control
Tender
Contract Ongoing -> 2023 + 1 +1
Streetlight maintenance
Tender
Contract Ongoing -> 2023 + 1 +1
Professional Services
Current Contract Current Contract Extension period New Contract
Tender
4.2 Unusual/Advanced procurement
No unusual procurement or advanced procurement activity is planned at this stage.
Roading Procurement Strategy October 2019 235. IMPLEMENTATION
5.1 Capability and Capacity - general
Council has recently reviewed and refreshed its staffing structure. There have been
improvements in the oversight and staffing of the transport group to give better focus
and continuity to the overall transport program. Appendix 1 outlines the new
structure.
This structure should provide sufficient capability and capacity to ensure Council can
implement the procurement programme in conformance with NZTA requirements.
5.2 Internal Procurement Processes
Council has a comprehensive procurement policy aligned with the Government
Procurement Rules and uses GETS extensively. The Procurement Committee is the
internal governance group accountable for the procurement policies and processes.
It oversees all procurement plans and all procurement over the value of $100,000 as
high risk procurement. All of these must go to the Procurement committee to be
vetted and signed off for publishing and then for the contract to be signed. This is to
mitigate any unforeseen risks in these larger, and/or higher risk, contracts and
projects.
Council’s procurement team provide the overall framework for procurement with the
Transport Team providing the specific transport technical knowledge and evaluative
expertise. Each teams’ accountabilities and responsibilities are summarised below:
Procurement Team Transport Team
Accountabilities • Procurement • Overall Transport
Framework Procurement activity
• Ensure Procurement • Funding arrangements with
Committee oversight. NZTA
• Procurement in accordance
with NZTA.
Responsibilities • Project management • Specific technical expertise
support where required for projects
• GETS coordination • NZTA approved procurement
• Monitoring and plans
Reporting procurement • NZTA approved evaluator/s.
activities
• Contract Register.
Following from the NZTA audit in late 2019, Council ensures that it has NZTA
approved evaluators on all evaluation panels and is using current versions of all
NZTA documents for evaluation purposes.
Roading Procurement Strategy October 2019 245.3 Performance Measurement and Monitoring
The following will be undertaken to measure and monitor this procurement strategy:
• Performance measures as listed in section 2.1.4 will be annually reviewed
and reported.
• Each major procurement exercise is monitored by the Procurement
Committee through its procurement plan through to reported results to ensure
fair competition, and value for money and competitive markets.
• This Procurement Strategy is reviewed every three years.
5.4 Communication Plan
The procurement strategy will be communicated through the following media:
• On the intranet for internal stakeholders
• On the internet for external stakeholders
• GETS
• Direct email to neighbouring territorial Local Authorities and NZTA
• As part of the Activity Management Plan process.
Roading Procurement Strategy October 2019 25APPENDIX 1 – COUNCIL TRANSPORT STRUCTURE Roading Procurement Strategy October 2019 26
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