2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION

Page created by Travis Harmon
 
CONTINUE READING
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
YEARBOOK 2017 • VOLUME 7 NO 1

          INFRASTRUCTURE
           NEW ZEALAND'S
     2017         WISHLIST
                                                                       PROPERTYANDBUILD.COM

AI IN CONSTRUCTION
                                                                       INFRASTRUCTUREBUILD.COM

Benefits and implications

ROUGH RIDE AHEAD
FOR PETROL POWER
Vehicle revolution changing fuel mix
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Infrastructure New Zealand membership
provides you with the opportunity to connect and
contribute with leaders in the infrastructure sector,
and keep pace with the latest developments and thinking,
nationally and globally.

What our member’s say they value most from their
membership:

   Infrastructure New Zealand’s in-depth and focused
   analysis of current infrastructure issues
   Networking opportunities
   Ability to position their organisation among
   infrastructure leaders
   To contribute positively to New Zealand’s long
   term development
   Opportunity to raise the profile of their organisation
   Professional and personal development opportunities

                                Join Us
                                09 377 5570
                                infrastructure.org.nz
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
TOTAL PACKAGE: a fully integrated
                                                     planning, governance, funding,
                                                     regulation, delivery and resource
                                                     management system more
                                                     responsive to change is needed,
                                                     says Infrastructure New Zealand
                                                     CEO Stephen Selwood

                                                                                                                                                             FIRST WORD
New Zealand’s infrastructure
priorities for 2017
Responding to Auckland’s growth challenge and fixing planning legislation and
local government funding and structures are the top infrastructure priorities for
New Zealand in 2017, says Infrastructure New Zealand CEO Stephen Selwood

“Congestion in Auckland is              Selwood says the East West Link                                               government’s ability to deliver the
disproportionate to the city’s        is essential to enabling movement                                               infrastructure needed to support
size and is rapidly deteriorating,”   between State Highways 1 and             “A first principles                    regional development and growth.
he notes. “Of greatest concern,       20 and fixing congested access           review of our                            “A freshly elected parliament in
travel times along the State          into and out of Auckland’s premier                                              2017 provides an opportunity to
                                                                               governance, funding
Highway 1 motorway corridor           industrial zone.                                                                undertake a first principles review
have increased by 30 per cent in        “When the Waterview Connec-            and institutional                      of our infrastructure and local gov-
just the last three years and are     tion comes on early next year, it        structures should                      ernment, planning, governance and
projected to get much worse."         will be vital for resilience and effi-   be a priority for                      funding arrangements nationwide,”
  Earlier this year Infrastructure    ciency of the network that traffic       the newly elected                      Selwood maintains.
New Zealand produced a video of       can move between the two key                                                      He believes what’s needed
the already unacceptable state        corridors as easily as possible,”
                                                                               government in 2017”                    is a “fully integrated planning,
of congestion.                        he insists.                                                                     governance, funding, regulation,
  “Major works underway on              “But we mustn’t forget that                                                   delivery, and resource manage-
the Central Rail Link and motor-      efforts to deliver on Auckland’s                                                ment system that is much more
ways must continue at pace and        transport priorities can only be                                                responsive to change”, which will
the next tranche of projects to       successful if we have an aligned           “Infrastructure New Zealand          drive regional social and economic
deal with 50,000 more people          growth plan which focuses                favours capturing value created by     development, improve environ-
per annum brought to market,”         development in areas where the           public investment in infrastructure    mental outcomes and strengthen
he maintains.                         transport system can accommo-            and putting tolling in place to both   local democracy and community
  Chief among these is the East       date it.                                 raise funds and manage demand,”        engagement.
West Link. “The Onehunga Penrose        Guest speaker at Infrastruc-           Selwood says. “These are among           “This will require much more than
manufacturing and industrial zone     ture New Zealand’s Annual                options that need to be explored       constant tinkering with existing
employs approximately 68,000          General Meeting, Deputy Mayor            sooner rather than later.”             legislative, governance and fund-
people and contributes $4.6 billion   Bill Cashmore, highlighted the             Beyond Auckland, he believes         ing systems,” Selwood admits.
a year to New Zealand’s economy,      financial constraints facing the         “fragmented and unnecessarily            “A first principles review of our
but the current transport             city and how these are impacting         complex governance structures,         governance, funding and insti-
connections into and through          the ability to fund the transport        complicated and disintegrated          tutional structures should be
the area are either incomplete or     investment needed to support             planning laws and insufficient         a priority for the newly elected
highly congested.”                    Auckland’s growth.                       funding” are frustrating local         government in 2017.”

                                                                                                                INFRASTRUCTUREBUILD.COM YEARBOOK 2017   3
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Autonomous Vehicles pg 9

           Cover stories                                          Security 
           First Word – The Auckland challenge,                    The vexing question of managing risk
                                                                                                                          Check out the following
CONTENTS

           planning legislation and local                          in a local government environment
           government funding top priorities for                   thrown into stark relief by the                        Best of the Best
           2017                                 3                 Kaikoura quake                 24-25                  AsiaPacific Infrastructure
           On the surface 2016 showed
                                                                                                                          articles of 2016 at
           significant steps in infrastructure but
                                                                   Transport                                             infrastructurebuild.com
           dig a little deeper and a year of much                  Autonomous vehicles are a future fact
           less progress emerges – Stephen                         of life but how they are used is the key               Cities: Nelson Street Cycleway
           Selwood Infrastructure NZ         22-23                to their success or failure – Praveen                  Communication: Local
                                                                   Thakur KPMG                          6-8              telecommunications world-class
           Energy                                                 Electric Vehicles may become popular                   Construction: Isaac
                                                                                                                          Theatre rebuild project
           Natural gas and zero-carbon fuels are                   much faster than expected fuel
                                                                                                                          Energy: Petroleum
           expected to satify 60 per cent of the                   distributor Z has produced a report on
                                                                                                                          Conference report
           rise in global energy demand by 2035 –                  the issue                        9-12
                                                                                                                          Environment: Urgent
           Wood Mckenzie                      13
                                                                                                                          action needed to keep
                                                                   Water                                                 the temperature down
           Management                                             Hawkes Bay District Council sets the                   Local government:
           Pipeline forecasts will drive better                    standard for efficient and economic                    Evolution or revolution
           procurement planning for clients and                    water supply for small towns  19-20                   Training & Management:
           suppliers – Caroline Boot Plan A &                                                                             Tips and tricks to avoid
                                                                   Kaikoura quake a sharp reminder of the                 tender template traps
           Clever Buying                     14-17
                                                                   need for greater pipeline resilience
                                                                                                                          Transport: Electric vehicles
                                                                                                     20-21
                                                                                                                          Water: Getting and
                                                                   Bayer spend $3 million on new water                    keeping it clean
                                                                   treatment station                  21

           Editor                          Art Director                    Managing partner               Printed by                        Subscriptions
           Geoff Picken                    Lewis Hurst                     Phil Pilbrow                   Crucial Colour                    Digital editions free to
           021 2 507 559                   lewis@hcreative.co.nz           027 564 7778, 09 489 8663      24 Fairfax Avenue, Penrose,       qualified readers.
           geoff@infrastructurebuild.com   021 14 66 404                   phil@infrastructurebuild.com   Auckland +64 9 589 1550           Annual subscription print edition
           Associate Editor                Web development                 Publisher                      Published by                      $39 Overseas rates – see online
           Steve Best                      Neo Chen                        Mike Bishara                   Media Solutions Ltd
           027 510 0241                    neosync@icloud.com              027 564 7779                   3c, 12 Tamariki Ave, Orewa 0931   www.infrastructurebuild.com
                                                                           mike@infrastructurebuild.com   PO Box 503, Whangaparoa 0943
                                                                                                          09 444 5140, 09 489 8663          www.propertyandbuild.com

           4    YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Future cities pg 40

                                                                                                                                                                                                                                                   CONTENTS
Cover Story                                                                         Construction                                                                        Property 
The need to have an established                                                      The potential efficiencies of new                                                    Corporates reap benefits of shared
workplace recovery programme                                                         technologies could lead to further                                                   office space paying for what they need
is greater than ever in the face of                                                  growth for a booming construction                                                    and only when they need it – JLL 28-29
unpredictable natural disaster and                                                   sector – Brian Clayton & Bruce
                                                                                                                                                                          Flexibility and global connectivity drive
terrorist attacks – Regus        27-28                                              McClintock Chapman Tripp        32-33
                                                                                                                                                                          office leasing solutions – Regus 29-30

Cities                                                                              Engineering                                                                         Whatever happened to New Zealand’s
                                                                                                                                                                          great rock venues – Bayleys Realty
Legislation, planning and funding for                                                Government restoring Kaikoura coastal
                                                                                                                                                                          Group45-46
infrastructure is needed to encourage                                                route and Wellington buildings subject
world class property development –                                                   to new targeted checks for public
Connal Townsend Property Council NZ                                                  safety – IPENZ SESOC NZSEE 38-39
                                                                                                                                                                          Relocation 
                                40-41                                                                                                                                    Having the right building in the right

Megacities, innovator and observer
                                                                                     Local Government                                                                    location is part of the puzzle but
                                                                                                                                                                          putting a deal together than works for
cities of C40 rise to the Paris                                                      Review of 2016 shows the regulatory
                                                                                                                                                                          both parties makes the difference
Agreement challenge to ensure                                                        and legislative burden on local
                                                                                                                                                                          – PFI                              36-37
sustainable cities and economic                                                      government imposes unnecessary
growth – Arup & C40 Group      42-44                                                costs on local communities and new
                                                                                     national council confirmed – Lawrence
Compliance & legal                                                                  Yule Local Government NZ       34-36
Industry insured losses from
earthquakes may reach $5.3 billion
– Air Worldwide                   38

Supporters
Autonomous Vehicles Asia������������ 7                       Iplex Pipelines������������������������������������26              Procurement & Contract                                     Street Lighting
Chapman Tripp ����������������������������������31           Kliptank ������������������������������������������������19        Management Summit ��������������������16                  Conference 2017������������������������������ 8
Clever Buying��������������������������������������17        New Zealand Red Cross����������������47                            Quest Apartment Hotels��������������48                    Sub Surface Detection������������������25
DiveCo��������������������������������������������������21   PFI ����������������������������������������������������������37   Regus�������������������������������������������� 29-30   Thrifty Car Rental������������������������������12
Infrastructure New Zealand ���������� 2                      Plan A����������������������������������������������������15       Skyscrapers Asia Summit������������39
www.infrastructurebuild.com www.propertyandbuild.com Free access to searchable archives in key categories such as Local Government, Construction, Cities, Energy,
Environment, Transport, Water, Communication, Property Development, Investment & Policy, Training & Management, Technology and Innovation. Free online access to daily
news features, case studies and events. Original material may be reproduced with permission and acknowledgement. mike@infrastructurebuild.com
ISSN 2324-3163 (Print) ISSN 2324-3171 (Online)

                                                                                                                                                                                         PROPERTYANDBUILD.COM YEARBOOK 2017                  5
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Road to nowhere or nirvana?
                           Autonomous electric vehicles are no longer a science fiction and cities such as
                                  Auckland have two choices, according to Praveen Thakur
TRANSPORT

            Two divergent futures await
            within 10-15 years when
                                                  Scenario one: A recipe for gridlock
            autonomous electric vehicles          The introduction of autonomous           to use cars. This will lead to an       In the future, with rooftop solar
            become the primary form of            vehicles with a continuation of the      increase in the number of             and battery storage the cost
            city transport:                       current norm of private car own-         trips taken.                          of running electric vehicles will
            • a scenario with privately           ership is expected to significantly                                            reduce even further.
              owned autonomous vehicles           worsen congestion.                       Longer car trips
              would significantly exacerbate        KPMG analysis of this scenario         Today, long driving trips are         More car travel in inner areas
              congestion in our cities            estimated a 29 per cent increase         associated with fatigue, boredom      Today, the cost and hassle of park-
            • in contrast, the introduction       in average trip time and 23 per          and frustration. With autonomous      ing is a significant disincentive to
              of autonomous ride-sourcing         cent increase in person kilometres       vehicles, people will be able to      driving to inner city locations in our
              has the potential to ease           travelled in car.                        sleep, read, work, watch movies or    major cities.
              the burden of congestion.             This will lead to a significant        television or relax as they travel.     With autonomous vehicles, this
              KPMG utilised its proprietary       increase in demand for road infra-         As a result, people will accept     disincentive no longer exists. This
            Land Use and Transport Interac-       structure and significantly worsen       longer travel times, particularly     will mean more road congestion
            tion (LUTI) model and applied it      the level of congestion.                 on freeways where the ride will be    in inner areas at the expense of
            to Melbourne as a case study of         The reason for this is simple:         smooth and comfortable.               public transport and active modes.
            the urban form/spatial impacts of     autonomous electric vehicles will          Lower vehicle operating costs         An autonomous vehicle will drop
            self-driving autonomous vehicles.     make car travel cheaper, easier          will further encourage long-          you exactly at your destination,
              The analysis considered             and more convenient, which will          distance travel. Electric vehicles    saving time to find a parking spot
            multiple scenarios related to         lead to more and longer car trips,       are far cheaper to run and maintain   and walk to the destination.
            autonomous vehicles on a              and more car travel.                     than petrol vehicles.                   The vehicle will drive to a
            weekday morning peak period in                                                   Even today, running an electric     cheaper parking area, or even
            2046 and compared them to a           More car trips                           vehicle in Australia is estimated     better, service fare-paying
            business-as-usual scenario.           Today, only adults with a valid          to be 56 per cent cheaper than a      passengers, earning money for the
              A scenario with private             driver license and access to a           petrol vehicle.                       vehicle owner.
            autonomous vehicles showed            car can operate vehicles. Others
            an increase in urban sprawl,          must rely on lifts from family and
            while a scenario with mass            friends, public transport, walking       “Autonomous ride sourcing will contribute
            take-up of autonomous ride            and cycling.
            sourcing showed an increase in          With autonomous electric
                                                                                           to a seven per cent reduction in average trip
            population density in inner and       vehicles, this barrier to driving will   time and nine per cent reduction in person
            middle-ring areas.                    no longer exist. Anyone will be able     kilometres travelled by car”
            6   YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Scenario two: A better way to move
The introduction of autonomous         use these services for select            enough to ensure the wait times
                                                                                                                           Autonomous
electric vehicles provides an alter-   trips, relying on the private car for    are minimal, particularly in the           advantages
native to car ownership.               most daily travel.                       inner city.
  In this scenario, people would         Private car ownership involves           For residents who choose
rely on autonomous ride-sourcing       high fixed costs such as financing,      to forego car ownership in the             Autonomous vehicles
services for daily travel.             registration and insurance, for an       autonomous era, many will choose           offer several major benefits
  These services will be like          asset which is idle 96 per cent of       to live in the inner suburbs to
                                                                                                                           as they:
today’s Uber and taxi services, but    the time, rapidly depreciates in         optimise autonomous ride-sourc-
                                                                                                                           • communicate with each
with no driver, and a much lower       value and takes up valuable land         ing fares.
price tag.                             for parking.                               These residents will use a mix             other and/or the road
  Using Melbourne as a case              With car sharing and ride              of high-quality public transport,            infrastructure itself,
study, KPMG analysis shows that        sourcing, these fixed costs are          walking, cycling and autonomous              maximising vehicle
autonomous ride sourcing will          distributed among a large pool           ride-sourcing services.                      speed and flow
contribute to a seven per cent         of users.                                                                           • markedly increase the
reduction in average trip time and       Currently, these advantages are        A smaller, more                              capacity and speed of
nine per cent reduction in person      offset by the cost of a driver (ride     productive fleet                             long-distance freeway
kilometres travelled by car.           sourcing), or the inconvenience of       Car ownership involves high
                                                                                                                             travel, catalysing a shift
  This would lower the demand          finding, booking and walking to a        upfront costs such as financing,
                                                                                                                             in how and where people
for road infrastructure, ease the      vehicle (car sharing). In the auton-     registration, maintenance and
burden of congestion in our cities     omous era, these disadvantages           insurance.                                   live and how they move
and make our transport systems         will no longer exist.                      With autonomous ride sourcing,           • make long-distance travel
more efficient and productive.           Analysis undertaken by KPMG            these costs will be shared among             easier, freeing drivers from
                                       suggests that an autonomous              a large pool of users. As a result,          having to concentrate on
Inner city densification

                                                                                                                                                            TRANSPORT
                                       ride-sourcing service would cost         the vehicle fleet would be much              the road for long periods
The autonomous era will also           $8-10 per half hour of travel.           smaller and in use for most of its           and encouraging some to
encourage inner and middle-ring          This implies that a typical Mel-       economic life. In contrast, private-
                                                                                                                             accept longer travel times
city densification.                    burnian’s annual cost of vehicle         ly owned cars are idle 96 per cent
                                                                                                                           • are also much cheaper to
  Ride-sourcing services (such as      travel would reduce from $11,000         of their life on average
Uber and taxis) and car-sharing        to $6,000-$7,000, an option that           These efficiencies will reduce             operate and maintain than
services (such as GoGet and Flexi-     will appeal to many.                     the cost of daily transport for con-         petrol and diesel vehicles,
car) have enjoyed rapid growth in        If large numbers of residents          sumers. KPMG estimated that an               increasing the affordability
our cities.                            use autonomous ride-sourcing             autonomous riding service would              of long-distance travel.
  Despite this, most people only       services, the fleet would be large       cost $8-10 per half hour of travel

                                                                                              Register before Jan 27th and save SG$300

                                 Autonomous Vehicles ASIA 2017
                                 Ÿ Main Conference:        Ÿ Pre-Conference          Ÿ Post-Conference         Ÿ Venue: Amara
                                   21 - 22 February 2017     Workshop:                 Workshop & Site Tour:     Sanctuary Resort
                                                             20 February 2017          23 February 2017          Sentosa, Singapore

          STRATEGIES AND REGULATORY ROADMAP FOR IMPLEMENTING AUTONOMOUS VEHICLES IN ASIA

          EXPERT SPEAKERS
                     Peter Damen                                  Dr. Bernhard Morys                              Seo-ho Choi
                     Chair of Executive                           Head of Driver Assistance                       General Manager,
                     Steering Committee                           & Chassis System                                Human Factors & Devices
                     Australian Driverless                        Daimler Greater China Ltd.                      Research Team Hyundai
                     Vehicle Initiative                                                                           Motor Company
                     James Williams                                Changgi Lee                                    Niels de Boer
                     Manager Policy                                Senior Deputy Director                         Programme Director,
                     – Compliance & Technology                     Ministry of Land, Infrastructure               Centre of Excellence for
                     National Transport                            and Transport, Republic of                     Testing and Research of
                     Commission, Australia                         Korea                                          Autonomous Vehicles
                                                                                                                  - NTU (Cetran)
                                             KEY TOPICS DISCUSSED

                1                                            4
                       Legislation and Regulatory                    Latest Case Studies on the        Media Partners:
                       Roadmap for Asia Autonomous                   Commercialization of AVs
                       Vehicles (AVs)

                2                                            5
                       Evaluating Infrastructure                    Enhancing Public
                       Readiness to Enable AV                       Acceptance of AVs
                       Implementation on Public Roads
                                                                                                       Researched & Developed by:

                3
                       Ensuring Risk Management,
                       Safety and Reliability for AVs

                  T: +65 6722 9388 | F: +65 6722 9397 | E: enquiry@iqpc.com.sg | W: www.autonomousvehiclesasia.com
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
compared to $34 for an equivalent
            service with a driver.
                                                    How should we respond?
             At this price, the annual cost of      Governments must begin taking                                         • provide affordable housing in            vehicles on land use – this can be
            car travel for a typical Melbourne      action now to safeguard the                                             the inner and middle suburbs             achieved with land use trans-
            household would reduce from             liveability and productivity of our                                     to encourage densification and           port interaction (LUTI) models
            $11,000 to $6,000-$7,000.               cities in the autonomous era.                                           take-up of ride-sourcing services      • consider autonomous electric
                                                       KPMG recommends the                                                • assess development plans to              vehicles in our infrastructure
            More efficient use                      following actions:                                                      ensure new developments are              planning and investment
            of road space                           • review existing planning                                              consistent with the implica-             decision-making processes
            When people make the decision to           schemes and controls to                                              tions of the autonomous era              – this includes the take-up
            purchase a car, they commit to the         ensure they support urban                                          • invest in decision-making tools          of autonomous ride-sourcing
            high upfront costs that come with          consolidation that is appropriate                                    for understanding the impact             services and the implications for
            car ownership.                             from a societal perspective                                          of autonomous and electric               travel behaviour and land use
              Once those costs are incurred,                                                                                                                       • implement road pricing re-
            the additional perceived cost            Average trip time by car, weekday morning peak, 2046                                                            form as a matter of priority
            of each trip is low, estimated by                                                                                                                        to manage demand for car
                                                                                   15
            KPMG at $2.10 per half hour of                                                                              +29%                                         travel, and as a policy lever
            city travel.                                                                                                                                             to encourage ride sharing
              Autonomous ride sourcing has                                                                                                                         • encourage an eventual transition
            no upfront costs, saving the user                                                                                                                        from private ownership to ride
                                                    Average time per trip (mins)

            thousands of dollars per year.                                                                                                                           sourcing and car sharing for
            However, the cost per trip is                                          10                                                                                daily travel, including promoting
                                                                                                                                                  -7%
            higher than if the car was privately                                                                                                                     business models that provide
            owned, estimated at $8-$10.                                                                                                                              these services – governments
              Because each individual trip                                                                                                                           must also ensure high-qual-
TRANSPORT

            costs more, people have greater                                                                                                                          ity alternatives to car travel
            incentive to walk, cycle or use                                        5                                                                                 are available, including public
            public transport. This will lead to a                                                                                                                    transport, walking and cycling
            decrease in road congestion.                                                                                                                           • address regulatory hurdles
              It will also increase demand                                                                                                                           to the mass adoption of
            for modes that use space more                                                                                                                            autonomous vehicles.
            efficiently than cars and promote                                      0                                                       Source: KPMG analysis

            public health, including public                                                    Business as usual   Private autonomous      Autonomous ride         Praveen Thakur is a director
            transport, walking and cycling.                                                                              vehicles              sourcing            at KPMG

                       award-winning conference
                       held in australia for
                       the first time
                       Don’t miss your chance to be part of Australia’s premier
                       street lighting and smart controls conference.
                       Sponsorship and trade booth opportunities
                       are open now, but filling quickly. Registrations
                       open 1 December, early bird discounts apply.

                       14 - 17 March 2017
                       Brisbane Convention & Exhibition Centre
                       South Bank, Brisbane, Qld, Australia

                                                                                                                                         Smart Lighting for Smart Cities

                                                                                                                                        www.streetlightingconference.com.au

                                                                                   S LP
                                                                                   STRATEGIC LIGHTING PARTNERS
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Gearing up for changing
transport trends
How fast are electric vehicles approaching national acceptance and what does it mean for
New Zealand fuel companies? One major fuel distributor has been looking at the road ahead…

Electric vehicles (EVs) may
become popular much faster
than previously anticipated and
will constitute over 33 per cent
of the country’s passenger and
light commercial vehicle fleet by
2030, according to Z Energy.
  The company’s latest research
report, Electric vehicles Making
a positive contribution to New
Zealand, believes it’s “inevitable”
that local roads will see a lot more
EVs – particularly Plug-in-Hybrid

                                                                                                                                                                               ENERGY
Vehicles (PHEVs) that have both
an electrically driven powertrain
and an ICE or internal combustion
engine (ICE); although Hybrid
Electric Vehicles (HEVs) that aren’t
powered by an external electricity
source will also be a disruptive
influence given their relative
energy efficiency improvement
over ICE vehicles.
  Developed using Business NZ
Energy Council scenarios, Z’s
report sees two scenarios for           FAST GAME: an EV fast charger can fully charge a car in 10-25 minutes, making them ideally suited for areas such as airports and
EV uptake:                              supermarkets where people park for a lengthy period
• in a Kayak future, markets
  drive supply chain decisions
  and innovation, with consumers        on the back of global technology                                                         fleet each year to 64,000 vehicles
  making informed decisions             developments.                                                                            in 2021 – equivalent to the Waka
  based on price and quality              Combined with New Zealand’s               The government see                           scenario for EV and PHEV uptake
• in a Waka future, heightened          commitment to a lower carbon                EVs as one of the                            at 2021.
  environmental awareness               emission economy and high                                                                  The 2021 target may appear am-
                                                                                    main pathways to a
  drives business, consumers and        renewable electricity base, this                                                         bitious, but the company believes
  government to make decisions          promotes exponential uptake.                lower carbon future                          there are potentially other incen-
  in the national interest.               Actual electric powertrain                and to meeting                               tives in the pipeline such as fringe
  The research indicates the Waka       vehicle fleet numbers for 2015              New Zealand's                                benefit tax (FBT), road tolling and
scenario offers the most disrup-        are tracking below the Waka                 international COP21                          ACC levy exemptions.
tive potential impact to existing       scenario; however, Z views this as                                                         In addition, the government sees
energy businesses.                      “insignificant” given that potential
                                                                                    commitments                                  EVs as one of the main pathways
  The number of vehicles in the         exponential uptake commences                                                             to a lower carbon future and to
light duty fleet increases materi-      from 2020.                                                                               meeting New Zealand’s interna-
ally over the period to 2050 (12.1        In addition, the government’s EV                                                       tional COP21 commitments (the
per cent CAGR), driven by wide          incentive scheme targets a dou-                                                          Conference of Parties that ratified
availability at economic prices         bling of the combined EV and PHEV                                                        the UN Framework Convention on

NZ passenger and light vehicle commercial fleet numbers (Waka scenario)
TYPE               2015 (A)             2015             2020             2025              2030             2035             2040              2045             2050
HEV                   14,980           15,000        100,000           485,000          815,000           985,000          985,000           865,000          770,000

PHEV                     474           25,000          25,000           95,000          270,000           540,000          820,000           995,000          875,000

EV                       450           10,000          15,000           90,000          205,000           320,000          500,000           775,000        1,110,000

TOTAL                 15,904           50,000        140,000           670,000        1,290,000         1,845,000        2,305,000        2,635,000         2,755,000

% FLEET                   0%              2%                4%             18%               34%              47%               57%              64%               66%

                                                                                                                          INFRASTRUCTUREBUILD.COM YEARBOOK 2017            9
2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
Climate Change in 1992 at the          NZ transport energy demand scenarios – petrol (mlpa)
         Earth Summit in Rio de Janeiro).
           The increasing uptake of electric
         powertrain vehicles in the light                     2015 (A)        2015       2020        2025     2030       2035        2040      2045       2050
         vehicle fleet will, however, mate-
                                                Kayak             3,050       3,185      3,230       3,135    2,980      2,820       2,685     2,585      2,500
         rially reduce demand for existing
         petroleum-based fuel – particular-     Waka              3,050       2,870      2,845       2,450    1,975      1,530       1,200     1,190      1,180
         ly petrol.
           EVs are substantially more ener-     rK (cum)                -      135        180          85       (70)     (230)       (365)     (465)      (550)
         gy efficient than ICE vehicles – an
         equivalent journey requires less       rW (cum)                -     (180)      (205)       (600)   (1,075)   (1,520)      (1,850)   (1,860)   (1,870)
         joules of energy input.
           Both the Kayak and Waka sce-         rMP (cum)               -      (20)       (10)       (260)    (570)      (875)      (1,105)   (1,160)   (1,210)
         narios show efficiency improve-
         ments in the heavy vehicle fleet
         are less dramatic, with electricity
         not assumed to have a significant
         penetration other than for trains
                                                NZ transport energy demand scenarios – diesel (mlpa)
         and buses.
           Petrol consumption for transport                   2015 (A)        2015       2020        2025     2030       2035        2040      2045       2050
         use over the period will be driven
         primarily by transformation in the     Kayak             2,290       2,245      2,240       2,285    2,360      2,425       2,405     2,205      1,695
         light vehicle fleet and reduction in
                                                Waka              2,290       2,205      2,150       2,125    2,115      2,080       1,950     1,655      1,085
         personal car usage and/or owner-
         ship, ranging from 0.7 CAGR under
                                                rK (cum)                -      (45)       (50)         (5)       70          135       115       (85)     (595)
         Kayak to 2.5 per cent under the
ENERGY

         Waka scenario.
                                                rW (cum)                -      (85)      (140)       (165)    (175)      (210)       (340)     (635)    (1,205)
           Diesel consumption for transport
         use will be driven by the transfor-
                                                rMP (cum)               -      (65)       (95)        (85)      (53)         (38)    (113)     (360)      (900)
         mation in the light vehicle fleet
         and the reduction in personal car
         use and/or ownership, offset by an
         increasing need for heavy vehicle
         transport due to economic growth.      Carbon price ($ per T CO2)
           Both hydrogen and biofuels
         become viable for heavy vehicle                                    2015      2020          2025     2030      2035         2040      2045        2050
         transport from 2040, significantly
                                                Price carbon – Waka           21         37           48       60            75        90       102         115
         reducing demand later in the peri-
         od and impacting diesel consump-       Price carbon – Kayak           7          9           12       18            26        37         49         60
         tion from (0.8) per cent CAGR
         under Kayak to (2.0) per cent
         CAGR under the Waka scenario.
           Several input assumptions
         underpin the EV uptake numbers,
                                                Battery cost curve (NZ$/kWh)
         representing signposts to monitor
         in determining what scenario could                                    2015       2020        2025     2030          2035    2040      2045       2050
         eventuate.
                                                Battery cost curve – Waka          365        310      270       240          215      195       175        160
           The price of carbon has risen
         from under $10 to around $18 per       Battery cost curve – Kayak         330        270      235       210          195      180       170        160
         T CO2, following the government’s
         May 2016 budget announcement
         on changes to the Emissions            in 2015 estimated to be around        tious cost estimates of $160 per        Autonomous vehicles
         Trading Scheme (ETS) that will see     $400 per kWh.                         kWh in the 2020s.                       Adoption of autonomous vehicles
         the phasing out of the one-for-two       It’s not possible to determine a      The difference in price between       could reduce transportation
         subsidy by January 2019.               completely reliable projection of     a conventional ICE and an EV is pri-    energy demand through lower light
           However, the $25 price cap           future battery cost – though some     marily due to the cost of batteries     duty vehicle ownership and re-
         remains in place, meaning the          manufacturers such as General         – as lithium-ion battery technology     duced vehicle kilometres travelled.
         impact of the ETS on the price         Motors and Tesla have more ambi-      advances and battery cost comes           The intersection of EV
         of petrol is approximately 6.6cpl,                                           down the price premium barrier to       uptake with future acceptance
         and 7.7cpl for diesel – levels that                                          consumers in purchasing EVs will        of self-driving technology
         on their own are unlikely to drive                                           also likely reduce.                     could unlock an evolution of
         mass adoption of alternative pow-                                              Correlated with reducing battery      transportation-as-a-service
         ertrains for transportation.                                                 cost trends is an increase in           through car sharing.
           Regulation is a critical uncer-      Both hydrogen                         battery energy density (kWh/ kg),         EV technology is available today,
         tainty as to the future price of                                             which in turn improves EV range         but the development and accep-
         carbon and the uptake of EVs;
                                                and biofuels                          capability – a key consumer con-        tance of autonomous vehicles
         will successive governments err        become viable                         cern with EVs.                          could have a greater long-term
         towards a more light-handed or a       for heavy vehicle                       Several other uncertainties could     horizon impact.
         more interventionist regime for        transport from                        stretch the boundaries of any future      Car manufacturers such as
         promoting uptake?                                                            scenario, including autonomous          Ford and Tesla have announced
           Both scenarios support a con-
                                                2040, significantly                   vehicles, heavy fleet technology, EV    plans for a future car-sharing
         tinuing trend of rapidly reducing      reducing demand                       availability and the electricity and    service built around their self-
         battery costs, with actual cost        later in the period                   charging infrastructure.                driving vehicles.

         10   YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
Electric vehicle scenarios                                                                PHEV scenarios

 Z Energy  House View: Electric vehicles
    1,300,000                                                                                    1,300,000                                                                    11
       1,200,000                                                                                 1,200,000
       1,100,000                                                                                 1,100,000
       1,000,000                                                                                 1,000,000
         900,000                                                                                   900,000

 Appendix B
         800,000                                                                                   800,000
No’s

                                                                                          No’s
         700,000                                                                                   700,000
         600,000                                                                                   600,000
         500,000                                                                                   500,000
         400,000                                                                                   400,000
         300,000                                                                                   300,000
         200,000                                                                                   200,000

 Charts for petroleum demand impact
         100,000                                                                                   100,000
               0                                                                                         0

               2010       2015    2020    2025     2030    2035    2040    2045    2050                    2010   2015     2020    2025    2030     2035     2040     2045      2050
                                                  Year                                                                                    Year

                     Source: BEC NZ 2050 Scenarios and MOT data                                              Source: BEC NZ 2050 Scenarios and MOT data

                                 EV – Actual              EV – Waka                                                       PHEV – Actual                    PHEV – Waka
                                 EV – Kayak               EV – Range                                                      PHEV – Kayak                      PHEV – Range

 Transport fuel consumption scenarios – petrol                                            Transport fuel consumption scenarios – diesel

                                                                                                                                                                                             ENERGY
 HEV3,500
      Scenarios                                                                                    3,500

         3,000                                                                                     3,000
       1,300,000
       1,200,000
         2,500                                                                                     2,500
mlpa

                                                                                          mlpa

       1,100,000
       1,000,000
         2,000                                                                                     2,000
         900,000                                                                             EVERYDAY OCCURRENCE: charging an electric vehicle will soon be as familiar as
         1,500
         800,000                                                                             filing1,500
                                                                                                    up at a petrol pump for a third of Kiwi drivers if Z Energy’s projections pan out
No’s

        700,000
        1,000
        600,000                                                                                1,000
                                                                                           ments   to the goal of 20 million EV          with its recent public announce-
        500,000                                                                            cars by 2020.                                 ment that “the future is electric”
          500
        400,000                                                                                  500vehicle importers con-
                                                                                             Motor                                       – a new strategy to roll out more
        300,000                                                                            sistently report that they could              electric cars and add self-driving
            0                                                                                      0
        200,000                                                                            respond quickly to increased                  features faster than their rivals.
        100,0002010       2015    2020    2025     2030    2035    2040    2045    2050    demand if2010
                                                                                                       New Zealand
                                                                                                              2015 2020  sales of
                                                                                                                               2025 2030   Z believe
                                                                                                                                                2035 it 2040
                                                                                                                                                        is “reasonable”
                                                                                                                                                                2045     to as-
                                                                                                                                                                        2050
              0                                   Year                                     EVs take off.                                 sume that growth in EV adoption in
                                                                                                                                      Year
                 Source: BEC NZ2020
                                2050 Scenarios
                                                                                             Under theSource:
                                                                                                         WakaBEC scenario
                                                                                                                    NZ 2050 Scenarios andNew
                                                                                                                                          MOT Zealand’s    key vehicle supply
               2010   2015             2025 and  MOT data
                                               2030  2035          2040    2045    2050                                                        data
                                                                                           ~500,000 additional HEV, PHEV                 markets of Japan and Europe will
                                                  Year                                     or EV vehicles enter the light duty           be sufficient to support exponen-
                   Petrol Consumption Actual                  Petrol – Waka (ml)                      Diesel Consumption Actual                   Diesel – Waka (ml)
                                                                                           vehicle fleet over the five-year              tial demand growth.
                   Petrol – Kayak
                     Source: BEC NZ(ml)
                                    2050 Scenarios andPetrol
                                                       MOT data
                                                             Consumption Range             period fromDiesel – Kayak
                                                                                                          2020        (ml)
                                                                                                                 to 2025.                 Diesel Consumption
                                                                                                                                           However,            Range
                                                                                                                                                      the current  rate of
                                                                                             On average ~100,000 or 35 per               turnover of the New Zealand light
                                                                                           cent of new or used imports per               duty vehicle fleet makes a more
                            HEV – Actual           HEV – Waka
  The opportunity isn’t limited  to      new and used   vehicles imported                  annum would have electric pow-                aggressive EV demand growth
traditional car  manufacturers,
                            HEV –with
                                  Kayak into New Zealand
 Transport fuel consumption scenarios –Range       HEV  –    in 2015.
                                                            petrol                         ertrains – a  significant   rise from
                                                                                          Transport fuel consumption scenarios    a      scenario than – Waka
                                                                                                                                                          dieselseem implau-
giants such as Google, Apple and           Japan is a member of the                        total of ~3,000 vehicles in 2015.             sible the company believes.
Uber all3,400
         prominent in this develop-      Electric Vehicles Initiatives (EVI),                Manufacturers’
                                                                                               3,400            research and de-           The volume and number of EV
ment space.                              a multi-government policy forum                   velopment focus is now predom-                models coming to market will
        3,200                            representing the majority of global                   3,200
                                                                                           inantly electric powertrains, with            increase significantly, making
Heavy3,000
         vehicle fleet                   EV car stock, which has a goal                    some   manufacturers
                                                                                               3,000                 intending  to       them cheaper and thus more
technology                               of achieving 20 million EV cars                   stop any further internal combus-             attractive to consumers by
The uncertainty
        2,800      is over what alter-   by 2020.                                          tion2,800
                                                                                                engine R&D by 2025.                      increasing the number of vehicle
nate technology to fossil fuels will       Japan currently has 16 per cent                   Leading Japanese manufactur-                segments and brands.
mlpa

                                                                                            mlpa

        2,600                                                                                  2,600
prevail, and to what extent, in the      of the global car stock of EVs at                 ers Toyota, Nissan, Honda, Suzuki,
heavy vehicle
        2,400 sector – trucking.         0.13 million, with a committed tar-               Mazda   and Mitsubishi all have
                                                                                               2,400                                     Can the electricity sector
  The impact of this uncertainty         get to get to one million by 2020.                expansive targets and plans to                meet the demand?
        2,200
will occur over a longer-term hori-        The Japanese government                             2,200 production capacity of EV
                                                                                           increase                                      New Zealand is one of the most
zon than for plausible EV uptake in      provides financial incentives for                 car models.                                   EV-ready countries in the world,
        2,000                                                                                  2,000
the light vehicle fleet.                 EV cars, including purchase price                   Similarly, the main European                with a high base of renewable
        1,800                            subsidies and tax exemptions.                     manufacturers
                                                                                               1,800         that supply                 electricity and the necessary
Can new and used                           France, Germany, Italy, Nether-                 the New Zealand car market                    network infrastructure to support
imports meet    13 demand?               lands, Norway, Portugal, Spain,                   (Volkswagen, 13 BMW, Mercedes-                PHEV uptake – if only because of
                    20 4

                                                                                                             20 4
                       20

                                                                                                                20
                       15

                                                                                                                15
                    20 7

                                                                                                             20 7
                       18

                                                                                                                18
                       16

                                                                                                                16
                    20 9

                                                                                                             20 9
                       21

                    20 2
                    20 3
                    20 4
                    20 5
                    20 6
                       27

                    20 8
                       29
                       30

                                                                                                                21

                                                                                                             20 2
                                                                                                             20 3
                                                                                                             20 4
                                                                                                             20 5
                                                                                                             20 6
                                                                                                                27

                                                                                                             20 8
                                                                                                                29
                                                                                                                30

               0                                                                                       0
                       1

                                                                                                                1
                       1

                                                                                                                1
                       1

                                                                                                                1
                       2

                                                                                                                2
                       2
                       2
                       2

                       2

                                                                                                                2
                                                                                                                2
                                                                                                                2

                                                                                                                2
                       2

                                                                                                                2

              2                                                                                      2
                    20

                                                                                                             20
                    20

                                                                                                             20
                    20

                                                                                                             20
                    20

                                                                                                             20
                    20

                                                                                                             20
                    20

                                                                                                             20
                    20

                                                                                                             20
                    20

                                                                                                             20

Asia (primarily Japan) and Europe        Sweden and the UK are also                        Benz, Audi and Renault) have                  all the suburban garages with an
accounted for 77 per cent and 20          Year
                                         members    of EVI, with most having               consistent plans.                          Year
                                                                                                                                         ordinary three-pin socket.
per cent of the record 285,000           announced aspirational commit-                      The most prominent is BMW,                    Although there is some uncer-
                    Source: BEC NZ 2050 Scenarios and MBIE data                                              Source: BEC NZ 2050 Scenarios and MBIE data

                                                                                                                                      INFRASTRUCTUREBUILD.COM YEARBOOK 2017             11
COMMON SIGHT: there are currently more than 100 EV fast-
                             charging stations strategically located throughout the country,
                             mainly in the main centres where traffic density is highest

         tainty over how smart charging             This backbone could then
         could manage electricity distri-         encourage further charging infra-
         bution flexibility, New Zealand is       structure by other businesses,
         uniquely placed in having planning       including airports, retailers, super-
         consent for enough wind farms,           markets, tourist destinations and
         hydro and geothermal power sta-          other places where people park
         tions to cover about a 25 per cent       their vehicles.
         increase in demand for electricity.        Auckland-based private compa-
                                                  ny, Charge.Net.NZ is also rolling
         Will EV charging                         out a national network of fast-
         infrastructure support                   charging stations, with over 100
         EV uptake?                               sites already in place.
         International trends show charging         A fast charger can fully charge
         infrastructure availability is posi-     a car in 10-25 minutes, but while
         tively correlated to growth in EVs.      many public AC chargers are free
           The Electricity Networks Associ-       a fast DC charger can cost up to
         ation [ENA] working group of lines       $40,000 to install.
         companies along with Contact               Z concludes that charging infra-
         Energy, Mercury and Drive Electric       structure development is “relatively
         are looking at a coordinated             low cost” and underway to support
ENERGY

         approach to putting in place a ‘re-      future EV uptake, thereby alleviating
         newables highway’ that provides          consumer anxiety over short range
         public access to charging.               and long charging times.
           The renewables highway would             Whatever the scenario, whether
         potentially see a network of             Waka or Kayak, the electric vehicle
         charging locations at key stopping       looks destined to become a com-
         points and tourism locations along       mon sight on New Zealand roads –
         State Highway 1, expanding to            and within a very, very short period
         regional routes over time.               of time.

         Thrifty backs a winner
         in road safety
         An online interactive driver training programme, Fleetcoach, picked up the
         Thrifty Car Rental sponsored Fleet Safety Product Award at the recent 2016            Backing
                                                                                               Safety!
         Brake Australasian Fleet Safety Awards.
           The training programme coaches drivers through multimedia modules in skills
         such as hazard perception and situation awareness.
           Fleetcoach was created by Dr Robert Isler, who also won the Outstanding Com-
         mitment Award for his 25 years service at the forefront of road safety research.
           General Manager of Thrifty Rental Emma Gardiner joined Brake’s New Zealand
         Director Caroline Perry in congratulating the winning awards and highly com-
         mended entries in a range of areas
           Dr Isler’s research, and his knowledge of other research worldwide, was
                                                                                               We value your safety when
         used to develop the programs and ensure they use the latest behavioural                you’re behind the wheel,
         interventions.
           He pioneered work on a head-mounted eye-tracker, which showed that eye
                                                                                                 that’s why we’re proud
         movements control to a large degree how drivers move their steering wheels.           charity partners of Brake.
           It also showed that effective eye-scanning behaviour and hazard perception
         skills can be trained in both laboratory and real driving situations.
           The research findings lead to the development of several interactive multime-
         dia training programs.
           He founded e-Drive in 2010, an online driver training program that focuses on
         visual search, situation awareness, hazard perception and risk management
         driving skills for all drivers.
           Fleetcoach was created through the need for a similar driving programme for
         at work drivers.
           There is also a risk assessment element, so that managers can identify wheth-
         er their drivers are low-risk or high-risk and require specific training modules on
         various topics such as speed and distractions.
            “We’re proud to sponsor the Fleet Safety Product Award,” Thrifty’s Emma
         Gardiner says.

         12   YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
Welcome to a low-carbon world
The next global energy transition is already under way, posing risks for some of the world’s

                                                                                                                                                                             ENERGY
largest energy companies says global natural resources analyst company Wood MacKenzie

Natural gas and zero-carbon           a price on carbon.                                      “As costs for renewables and            money on the table from the ma-
fuels will satisfy at least 60          The vast majority of the majors’                    energy storage continue to fall,          jors’ fossil fuels business. But too
per cent of the rise in global        upstream operations are not                           ‘subscription’-type services could        slowly, and they could miss their
energy demand to 2035, and            yet directly impacted, with most                      open up new low-carbon growth             window of opportunity.
under some scenarios renewable        policies primarily focused on the                     markets. For example, electric              “The biggest risk for oil and gas
energy could grow nearly 500 per      power and industrial sectors.                         car sharing.”                             companies is to do nothing, and be
cent in the next 20 years. Coal         Up to 50 per cent of majors’ pro-                     According to the study the global       left exposed to investors making
and oil demand could peak well        duction could be hit with carbon                      major oil companies are under             their own minds up.
before 2035.                          costs over the next decade – but                      pressure to de-risk their existing          “There is notably an emergence
  As demand for oil slows and en-     only if the countries and regions                     business models and diversify into        of three different strategies by
ergy growth shifts to lower carbon    that currently price carbon extend                    low-carbon energies.                      the major oil companies – decarbo-
fuels, renewables will grow rapidly   their policies to the extractives                       However, diversification into           nise, capitalise or grow.
across all regions.                                                                                                                     “The majors are testing different
  The three main risks for global                                                                                                     strategies to decarbonise and mit-
oil majors identified in Wood           Global demand shifting to lower-carbon                                                        igate risks, to capitalise by using
Mackenzie’s study: Fossil fuels                              5.0%                                                                     existing capabilities to explore
to low-carbon: The Majors’ energy                                           Forecast
                                                                                                                                      opportunities in renewables and to
                                                                              Historic data (1995-2015)
transition are:                                                               Wood Mac base case*
                                                                                                                                      grow a profitable and substantial
• the growth in renewable energy                                              WM carbon-constrained scenario                          renewables business.
• intensifying carbon policy                                                  IEA 450 scenario**                                        “Regardless of the diverging
                                      Average % YoY Growth

• and increasing low-                                        2.5%                                                                     strategies, the majors are all
  carbon competition.                                                                                                                 increasing their share in gas while
  The study investigates how                                                                                                          also aiming to push down the cost
the major oil companies are                                                                                                           curve,” says McConnell.
responding to growing pressure                                                                                                          “Global carbon risks could
                                                             0.0%
to move to a low carbon-energy                                                                                                        depress oil prices for the long
environment.                                                                                                                          term with slowing demand and an
  Paul McConnell, research                                                                                                            increase in costs, making it crucial
director of global trends for                                                                                                         for the majors to push break-
Wood Mackenzie, says: “As carbon                                     Coal             Oil             Gas        Zero-carbon fuels    evens down further.
                                                             -2.5%
policy intensifies, the oil and gas                                                                                                     “To facilitate the move to
majors will face more regulatory                                                                                                      low-carbon energy policies, new
burden and are likely to face         sectors. These are commonly out-                      renewables will be challenging.           skills will be needed through joint
increasing costs.                     side the scope of emissions-limit-                    It will be difficult to both justify      ventures or acquisitions.”
  “Green financing could also mean    ing schemes.                                          allocating already scarce capital to        While there is strong rhetoric on
higher cost of capital for more         “While all the major oil companies                  low-returning projects and trans-         diversification into renewables, a
carbon-intensive oil assets such      put a price on carbon in their long-                  form existing business models.            much greater proportion of capital
as oil sands, as investors shift to   term planning, the big question                         “The timing of a transition to          will be needed to deliver a material
alternative fuels and lower-carbon    is how much risk each has taken                       low-carbon energy will be critical,”      shift Woods MacKenzie maintains.
technologies.”                        into account,” says McConnell.                        says McConnell. “Diversifying
  Wood Mackenzie’s study shows        Assumptions vary greatly by geog-                     to renewable energy will be a
that only 13 per cent of global       raphy, timeline and on price from                     balancing act.
emissions are currently covered by    between US$6 to US$80 a tonne.                          “Moving too quickly could leave

                                                                                                                                INFRASTRUCTUREBUILD.COM YEARBOOK 2017   13
The art of procurement
                  prophecy: promises and pitfalls
                       There’s plenty of good news in procurement in 2017 and it’s only going to get better
MANAGEMENT

             Several main factors are               that they’ll continue to improve,      project and the long-term sustain-     they can plan and put in place the
             combining to shape and change          providing more certainty and en-       ability of the assets created.         partnerships, the resources, the
             the procurement environment            abling us to minimise investment         Standard sets of questions           staff and the plant they’ll need to
             for both clients and suppliers,        in wasted efforts on both sides of     that are used as a template for        deliver those projects efficiently
             according to the 15-strong Plan        procurement.                           every tender are now openly            and competitively.
             A team that works with suppliers         In 2015 and 2016, we’ve seen         acknowledged to fall short of best       No longer blind-sided by massive
             to write, review, manage and           publication of far more accurate       practice. The risks and opportuni-     tenders that spring on us on the
             edit bid responses in just about       and detailed infrastructure project    ties to add value are different for    23rd of December to be completed
             every sector                           pipelines from organisations such      every project.                         by the 10th of January, supply-side
               Their expert views are sup-          as the National Infrastructure Unit,     So the tender documentation, if      tenderers can put real time and
             ported by their experienced            Infrastructure New Zealand and         designed carefully to target risks     careful thought into developing
             colleagues within Clever Buying        the NZ Transport Agency.               and opportunities that will deter-     clever methodologies that will
             – the organisation that trains and       They’ve served two purposes.         mine project success, provides         deliver sustainable benefits over
             mentors hundreds of procurement        First, they have enabled clever        the tools that lead directly to the    the life of the asset.
             professionals and qualifies tender     clients to put serious time, exper-    right decisions. That’s good for         This is a huge advance over the
             evaluators.                            tise and planning into their tender    all of us, especially when it’s our    cheap and short-term, seat-of-
                                                    documents. The best tender doc-        money invested in public assets        the-pants bids that won the job
             Pipeline forecasts will                uments make it clear in objective      that’s at stake.                       but delivered a low quality flimsy
             drive better procurement               terms what they are looking for.         Secondly, and equally important-     asset that didn’t last the distance.
             planning on both sides                   They incorporate ‘gates’ which       ly, detailed pipelines of upcoming
             The forecasting tools for both         effectively make it impossible for     projects coming to market have         Winning on quality will
             clients and suppliers to the           an unsuitable supplier to get past     given suppliers an incredibly useful   demand more effort
             infrastructure sector have come        base one; then they zero in to the     forecasting tool to plan their         A consequence of this, however,
             a long way in the past couple of       factors that will make a tangible      tendering activity.                    is that suppliers need to put
             years; and there’s every indication    difference to the success of the         Armed with that intelligence,        significant effort into the

             14   YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
preparation of their tenders.           NZQA Procurement                                                             better than before. Since the early
Winning on quality is everyone’s        qualification to                                                             1990s that qualification has been
goal, but it doesn’t happen without     prove its worth                        “The NZQA                             the mainstay of councils and road
effort and time invested.               The new NZQA Procurement               Certificate in                        controlling authorities throughout
  Based on experience, those            qualification came online this year                                          New Zealand as the benchmark
suppliers who start planning            – strengthened, updated and ex-
                                                                               Infrastructure                        in competence in best practice
strategy and preparing their bids       tended to all of infrastructure. Its   Procurement                           procurement via tendering.
early, engage professional help         assessment tools were approved         is relevant and                         Traditionally, it relied heavily on
when needed, and are open to            in November; and the first few         focused, providing                    evidence of experience to provide
independent input into their            candidates are working through it.                                           the basis of achievement of the
                                                                               a practical
review are those who most often           As an alternative to the UK-de-                                            qualification. That proved a risky
score highest.                          veloped procurement qualification      qualification for                     tactic in some cases, since best
  Last-minute, rushed tender            suite available from CIPS (the         procurement                           practice in procurement was not
preparation is never anyone’s           Chartered Institute of Purchasing      professionals who                     well defined and acceptance of
ideal, but sometimes a massive          and Supply), the NZQA Certificate      are engaged in                        a variety of legacy practices was
effort is needed in a short space       in Infrastructure Procurement is                                             sufficient to gain the qualification.
of time. That’s why the Plan A          relevant and focused, providing
                                                                               tendering”                              It was difficult for assessors
team now incorporates northern          a practical qualification for pro-                                           of the old qualification to be
hemisphere bid writers, who             curement professionals who are                                               confident that an individual had
leverage time zone differences to       engaged in tendering.                                                        the skills and competence to
enable round-the-clock activity on        Assessment and learning is via         Progress on achieving compli-       prepare RFx documents or
tenders when needed.                    workplace activity rather than         ance with those sensible rules        evaluate tenders to the standard
  Suppliers who plan their tenders      exams and reading textbooks, so        has been agonisingly slow over        required, since the evidence was
effectively and are willing to invest   the knowledge and skills are imme-     the past three and a half years;      largely shown via documents that
in winning work will always be at       diately applicable to professionals    but this qualification has the        were jointly prepared by teams

                                                                                                                                                             MANAGEMENT
an advantage; so using those            who are working in procurement in      potential to create step change in    of evaluators.
forward work plans to plan your         New Zealand.                           compliance within those directly        The new version of the
bid programme through 2017                What’s more, the qualification is    responsible for government pro-       qualification requires assessment
is prudent.                             the only one to build in a working     curement activity, from ministries    via observation and interviewing
  Full marks to those government        knowledge of the New Zealand           and departments, right down to        to assure the assessor of that
organisations who are most              Government Rules of Sourcing,          councils and even, for example,       individual competence. Rolling
active in communicating their           which have been mandatory,             school boards.                        out standard templates prepared
forward work plans to tenderers         expected or encouraged as best           What this means for clients         originally by others – with minor
and using them to plan their ten-       practice for New Zealand govern-       is that the proven NZTA tender        tweaks or edits from the individual
dering activity.                        ment organisations since 2013.         evaluator qualification is now even   being assessed – will no longer

     WHO WON
     THAT TENDER?
     Was Plan A the wind
     beneath their wings?
    In 2016, the 15 – strong Plan A team wrote over 300 tenders across all sorts of sectors,
    including infrastructure, facilities management, technology, professional services and
    more. We helped clients respond to tenders for contracts in NZ, Australia, the Pacific,
    North America, the Middle East and Africa.

     We wrote, developed strategy, reviewed, edited, designed
                                                                                                ISN’T IT TIME
     and produced tenders that won billions of dollars’ worth
     of work for our clients. It’s our Day Job (and sometimes
                                                                                                YOU GOT
     our Night Job too!).                                                                       PLAN A TO
                                                                                                HELP WIN
     We know what it takes to win, and how best to support                                      YOUR NEXT
     you to grow your business.                                                                 TENDER?

     Find out more:
     www.planawriters.com               info@planawriters.com              NZ 0800 752 622          AUS 1800 661 377
be acceptable. They’ll need to           should not be overlooked.                                                           Stronger and deeper
             demonstrate their personal                 Clients argue that although this                                                  alignment between
             understanding and involvement            tips the market in favour of larger       A key point of                            procurement agencies
             in decision-making to conform            companies and potentially reduc-          debate prompted                           A key point of debate prompted
             with well-defined best practice          es the number of opportunities for                                                  by Infrastructure New Zealand
             standards.                               smaller companies, it is possible
                                                                                                by Infrastructure                         earlier this year was the proposal
               This is excellent news for anyone      to maintain a healthy market              New Zealand earlier                       to establish a central agency
             involved in tendering. Suppliers will    through requiring those head              this year was the                         that would provide a centre
             see that with additional discipline      contractors to engage a minimum           proposal to provide a                     of excellence in procurement
             in procurement planning and tailor-      quota or percentage of subcon-                                                      specifically targeted to assist with
                                                                                                centre of excellence
             ing the RFx documents to drivers         tractors for major projects.                                                        procurement of large projects. This
             for best value for money, there are        This is a simplistic approach           in procurement                            was widely supported, but – not
             more opportunities to win work           which unfortunately does not              specifically targeted                     surprisingly – the question of who
             based on the quality and sustain-        solve some worrying issues. When          to assist with large-                     and how are head-scratchers.
             ability of the solution offered.         smaller companies are presented           scale projects                              Clever Buying has been picking
               The price war mentality – which        with a glass ceiling that prevents                                                  the best from various procurement
             cut costs to the quick and result-       them from contracting direct, they                                                  models including NZTA and
             ed in so many cases with false           have few or no opportunities to                                                     MBIE (among other international
             economies – is reducing, with the        develop their own management                                                        examples) over the past five
             support of the requirements of           systems and expertise.                    tunities to grow and seized them,         years, and blending these into a
             this new version of the Infrastruc-        While they are under direction          with characteristic Kiwi and Aussie       best practice training programme
             ture Procurement Qualification.          from the head contractor, who is          ingenuity.                                for procurement professionals.
                                                      not bound to follow the principles          As we face a promising and                That’s been challenging at
             ‘Balanced, healthy market’               of fair procurement that applied          healthy pipeline of infrastructure        times, with misaligned practices
             debates will continue                    to their own engagement with              projects over the next five, 10 and       and no common language still
MANAGEMENT

             There has been much debate               a major government client,                20 years, prudent client organisa-        evident in the methods taught
             among major procurers about              subcontractors are often                  tions will provide a balance of large     by those entities. Both those
             the merits of aggregating or             squeezed on price to the point            and small projects to go to market        agencies provide good models
             bundling contracts to streamline         where business growth for them is         to encourage the best in every            and practices, however it is quite
             the number of suppliers that             difficult to achieve.                     tier of infrastructure providers to       difficult to blend them into a
             clients interact with and reduce           Let’s not forget that the giants        grow and prosper. That’s insurance        seamless model.
             administration and tendering             that dominate our infrastructure          for generations to come that our            The past year has seen growing
             costs. While on the surface this         landscape today grew from small           infrastructure market will continue       signs of increased cooperation
             sounds sensible, there are fish          enterprising companies several            to attract a range of competitive,        between these two agencies,
             hooks in this approach which             decades ago, who had real oppor-          high quality suppliers.                   which is welcomed. The NZTA

                                     Over 8 hours of Networking Opportunities with Leading Procurement & Contract Management
                                           Infrastructure Industry Leaders & Government Authorities from Across the Region

                    PROCUREMENT &                                                                     ↘ Main Summit:
                                                                                                           29 & 30 March 2017
                                                                                                                                                  EXCLUSIVELY!
                                                                                                                                                        Quote
                    CONTRACT MANAGEMENT of                                                            ↘ Workshops:
                                                                                                                                                 “AsiaPacific
                                                                                                                                              INFRASTRUCTURE”
                                                                                                           28 & 31 March 2017
                    Infrastructure Projects                                                                                                 to receive extra 10% discount
                                                                                                                                               when you book the event.
                                                                                                      ↘ Venue:
                    Summit 2017                                                                            Singapore

                       THE LEADING EVENT GLOBALLY THAT FULLY FOCUS ON Project Case Studies and Practical Solutions around the
                         successful delivery of PROCUREMENT AND CONTRACT MANAGEMENT OF INFRASTRUCTURE PROJECTS !

                          5 KEY BENEFITS IF ATTENDING THE SUMMIT

                                 Find out the latest updates and practical information on procurement & contract management of infrastructure projects in
                                 Asia & globally as well as the latest trends within the industry.

                                 Head/Directors of Procurement & Contract Management, Project Owners and Leading Industry Experts will be present at
                                 the summit – Grab the opportunity to share and gain new perspectives in developing effective procurement & contract man-
                                 agement that could deliver the project on time, cost and quality of the projects.

                                 Hear from 20+ renowned industry experts with profound procurement & contract management experience globally to learn
                                 from distinguished experts on the latest tools available to leads to better infrastructure project outcomes.

                                 Exclusive Panel Discussion among Procurement & Contract Management on Infrastructure Industry Experts – Hear key
                                 trends, winning strategies and effective solutions in every process involved in the procurement & contract management.

                                 Extensive Networking Experience – Meet up with not just procurement & contract management infrastructure industry
                                 leaders but also high-profile decision makers from the government authorities/ ministries and industry leaders within the
                                 world to broaden your business network and discuss future infrastructure development plans!
                                                                                                                                                  Researched &
                                                                                                                                                  Developed by:

                  PHONE: 65 6376.0908 EMAIL: enquiry@equip-global.com WEB: http://www.equip-global.com/procurement-amp-contracts-management-for-infrastructure-projects-2017
You can also read