By Chris Olsen
CEO, Roading New Zealand
The Government has recently passed into law the Infrastructure Bill that deals with the issue of utility companies carrying out work in the road corridor. The new legislation seeks to address the age old problems of the lack of co-ordination between utility work and roadworks, cost sharing between utility companies and road owners, and reasonable reinstatement conditions on utility work carried out in the road reserve.
This new legislation contains some very good and positive initiatives to address these issues. One of those is a Code of Practice for Working in the Road. Generally speaking this code of practice is a useful document. There are, however, a number of issues of concern for contractors in the code that we at Roading New Zealand feel need to be addressed. It’s fortunate that the newly passed Infrastructure Act requires consultation on this Code of Practice for Working in the Road before it becomes a requirement.
In summary, there are three concerns for contractors. The first is the two year warrantee period for utility work, the second is the lack of accountability for ‘as built’ plans by utility companies, and the third is the inappropriate risk transfer and procurement process associated with making the contractor responsible for locating underground services from inaccurate ‘as built’ plans.
In response to these issues Roading New Zealand will be seeking to:
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Have the warranty period reduced to a maximum of one year for contractors;
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Have utility companies responsible for the accuracy of their ‘as built’ plans to within 1.5 metres; and
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Have included in the code a reference to best practice in procurement where contracts should adequately compensate contractors for the work they do.
Let me explain why we are seeking these changes.
Whenever warrantees are provided for in the manufacturing sector they exclude circumstances outside of the manufacturer’s control. They also set the time period for warrantees consistent with the time required for defects to appear.
Research in the 1980s clearly showed poorly reinstated trenches showed defects usually within the first six months of the work being completed.
Further, warrantee periods longer than six to 12 months expose contractors’ work to other external factors that cannot be controlled by the contractor. On balance, we believe that a one year warrantee period is the best balance of risk between the time required for defects to show and the effect of external factors on the work.
Utility companies have no incentives at present to ensure the accuracy of ‘as built’ plans, hence the quality of these plans is poor. This is clearly shown by the fact that utility companies ‘as built’ plans always have a disclaimer on them regarding their accuracy.
Many years ago I witnessed a Department of Labour inspector require a power company to remove this disclaimer from the plans for health and safety reasons. It was interesting to see that before the contractor got back on site, the power company had already located all its services.
This is proof that the old saying of making people accountable changes behaviour. Requiring ‘as builts’ to be accurate to within 1.5 metres will drive utility companies to have more accurate plans.
Regarding the third point, Roading New Zealand and its members believe that it is wrong to set up a contract in such a way that it requires contractors to bear the risk premium of locating underground services in positions other than that shown on ‘as built’ plans.
Contractors have no control over the accuracy of these plans so it’s inappropriate to make them responsible for locating underground services in positions different from those shown on plans.
We believe that the cost of locating underground services should be a provisional item, removed from the tender price, to ensure contractors are compensated for any work they do to locate services. Better still, why not have a collaborative type contract to manage this risk.
All in all, the Infrastructure Act is a good Act. Let’s make it even better.
Contractor Vol.34 No.6 July 2010
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