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By Chris Olsen, CEO, Roading New ZealandAfter an extensive development and consultation process over the past 18 months, Land Transport New Zealand (LTNZ) has released its Stage 1 and Stage 2 report on the review of roading physical works and professional services procurement procedures. Roading New Zealand joined with ACENZ (Association of Consulting Engineers) and Ingenium (local authority engineers) to provide input into this review. In essence we collectively suggested: • Value for money needs to be defined, and LTNZ funding policies need to reflect and recognise what it values. • More flexibility is required to enable approved organisations to develop their own procedures that enable them to collaborate with their suppliers to achieve value for money. • A move away from adversarial procurement is required to really achieve value for money using value-based engineering, early contractor involvement and supplier performance measurement. • A culture change is required across the sector to enable collaborative procurement. It is very pleasing to see that LTNZ has agreed the following change initiatives: • Development of a framework and tools to assist approved organisations understand value for money for procurement purposes. • Development of overall procurement strategies by approved organisations, supported by guidance from LTNZ. • Provision of best practice guidance for selection of a procurement procedure most able to support value creation for the procurement task at hand. • Drafting of new and improved procurement procedures introducing more procurement options, supplier selection methods and greater procurement flexibility for approved organisations. • Production of a procurement support guide incorporating the above changes and providing an important landmark point for the implementation of change processes. • Provision of support and training to assist not only with the implementation of the above changes, but also a framework to improve contract management and procurement practice generally. • Review of in-house professional services policy to ensure that this enables approved organisations to be capable and smart buyers. • Development of a framework for performance measurement and monitoring. The challenge now is to turn these into practical tools for approved organisations, such as local authorities and Transit, while ensuring suppliers like consultants and contractors feel comfortable with them. The Stage 2 report includes an implementation plan to do this. To me it seems that for this plan to be successful the sector needs to decide: • What it values through the procurement process and what it is prepared to pay for to get the right outcomes from this process. Possible options could be the KPIs promoted by Canterbury University’s CAE or the non-financial attributes promoted by the New Zealand Construction Industry’s Council “Principles for Best Practice Procurement in Construction”. • What the key elements of an approved organisation’s procurement strategy would be, so it had flexibility to use different procedures to achieve value for money while giving LTNZ confidence in the outcomes. • A procurement procedure for improving value for money using non-adversarial collaborative procurement, incorporating value based engineering and early contractor involvement, etc. This has already been done for local government in other parts of the world. • The development of a change management programme incorporating training, mentoring, trialing and monitoring, for the introduction of non-adversarial collaborative procurement. Once these are decided and put in place (by July 2008), approved organisations will have two years to move to the new procedures. It will be interesting to see if LTNZ takes the opportunity to combine the aims of achieving value for money with making the roading sector attractive to work in. Many across the sector will be waiting to see if they do.
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