Procurement Strategy Transport Assets - Wellington City Council
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Procurement Strategy
Transport Assets – Wellington City Council
March 2010Table of Contents
1 Executive Summary ............................................................................................4
1.1 Statement of Goals/Objectives .....................................................................4
1.2 Summary of Work Programme .....................................................................4
1.3 Summary of Procurement Environment .......................................................4
1.4 Summary of Approach to Work Programme.................................................5
1.5 Endorsement and Approval of Strategy........................................................5
1.6 Strategy Status/Ownership...........................................................................6
2 Context .................................................................................................................7
2.1 Goals and Objectives ...................................................................................7
2.1.1 Council requirements................................................................................7
2.1.2 Legislative framework...............................................................................9
2.2 Procurement Goals and Outcomes ..............................................................9
2.2.1 Subsidy Qualifying Outcomes ................................................................10
3 Procurement Environment ...............................................................................11
3.1 Programme.................................................................................................11
3.1.1 Segmentation .........................................................................................11
3.1.2 Term Maintenance Service Contracts ....................................................11
3.2 Supplier Market ..........................................................................................12
3.2.1 Physical works........................................................................................12
3.3 Current Spend ............................................................................................13
3.3.1 One-off Projects......................................................................................14
4 Delivering the Work Programme ......................................................................14
4.1 Introduction.................................................................................................14
4.1.1 General...................................................................................................14
4.1.2 Management...........................................................................................15
4.2 Programme Implementation .......................................................................15
4.2.1 Introduction.............................................................................................15
4.2.2 Professional Services .............................................................................15
4.2.3 Term Maintenance Contracts .................................................................15
4.2.4 Summary – Delivery Models and Supplier Selection..............................19
4.3 Communication Strategy ............................................................................20
4.3.1 Internal Stakeholders..............................................................................20
4.3.2 Other Approved Organisations ...............................................................20
4.3.3 Supplier Market ......................................................................................21
4.3.4 NZTA ......................................................................................................22
4.4 Performance Management and Success Measures...................................22
4.4.1 Physical Works Contracts - Maintenance...............................................22
4.4.2 Physical Works Contracts - Other ..........................................................22
4.4.3 Market.....................................................................................................23
4.4.4 Professional Services .............................................................................23
5 Internal Capability and Approval of the Procurement Strategy ....................23
5.1 Description of Current State and Desired State .........................................23
5.1.1 Structure Roles and Responsibilities of Procurement Team ..................23
5.2 Plan to Fill Capability Gap ..........................................................................24
5.3 Process to Approve Procurement Strategy ................................................25
5.3.1 Internally .................................................................................................25
5.3.2 NZTA Endorsement................................................................................25
5.3.3 Procurement Strategy Review................................................................25
6 Implementation Plan .........................................................................................25
7 Appendices ........................................................................................................26
7.1 Council Procurement Standard (Pre-tender extract) ..................................31
Scoping the Procurement ....................................................................................35
Wellington City Council Procurement Strategy – Transport Assets Page 2 of 67Planning the Procurement ...................................................................................39 7.2 Section 25 LTMA 2003 ...............................................................................45 7.3 3 Year Capex Transport Programme (2010/11, 2011/12, 2012/13) ...........46 7.4 3 Year Opex Transport Programme (2010/11, 2011/12, 2012/13).............56 7.5 Project Procurement Summaries................................................................64 Wellington City Council Procurement Strategy – Transport Assets Page 3 of 67
1 Executive Summary
1.1 Statement of Goals/Objectives
The Council’s procurement standard, and s25 of the Land Transport Act 2003
provide the basis on which this strategy is written; least whole-of-life asset cost,
best value for money spent.
This includes:-
• Robust asset management planning and sound maintenance strategies
leading to least whole of life asset costs
• Effective and efficient asset management processes
• Retention of adequate in-house skills, experience and expertise to enable
staff to knowledgably and authoritatively communicate with both contractors
and professionals
• Competent, competitive and enduring supplier market
• Long term constructive relationships with high performance suppliers
• Environmentally responsible and sustainable decision making
• Contract documentation appropriate, complete/thorough, unambiguous,
professional, comprehensible, and legally enforceable.
This Procurement Strategy sets out how the Council intends to achieve value for
money in purchasing services for its roading infrastructure assets.
1.2 Summary of Work Programme
The current programme of works is setout in the 2009-2012 Land Transport
Programme.
Maintenance and renewal works for the Land Transport Programme through to July
2013 have been procured under 3 term service contracts. Some upgrade works are
also included in the scope of these contracts. Road asset works that do not fall within
the scope of these contracts will be procured under separate contracts.
1.3 Summary of Procurement Environment
The procurement environment includes the Council, its suppliers (physical works and
professional service providers), funding agencies and other Approved Organisations.
The Council has retained its in-house professional services capability to undertake
routine engineering services. For non-routine, non-repetitive engineering services,
the Council engages external professional service providers.
The Council has also retained stand alone physical works business units, principally
for the maintenance and care of the Council’s assets such as parks and gardens,
open space maintenance, and landfill operations. The physical works business units
may bid for works within their capability (such as street cleaning), offered by the
Council on the open market.
Wellington City Council Procurement Strategy – Transport Assets Page 4 of 67The Council and other Approved Organisations in the region currently experience no shortages of external suppliers. There are no monopoly suppliers, and competition across both the physical works and professional service markets is strong. In the foreseeable future, the Council’s shrinking capital works and upgrade programmes may contribute to a reduction in the number of suppliers in the market, particularly in relation to professional engineering services. Oil prices will continue to fluctuate, which for the roading programme will have a direct bearing on the volume of work undertaken. 1.4 Summary of Approach to Work Programme The bulk of the city’s roading maintenance and renewal is undertaken under term service contracts. The city’s roading network has been divided into two areas. A roading maintenance and renewal contract has been let for each of these areas for the bulk of the road and footpath works. Each contract has an initial term of 3 years with a 2 year right of renewal. If the renewal options are exercised, the contracts will be next tendered to commence in July 2013. These contracts, with a collective annual value of $19M per year are managed by the in-house engineering business unit. Two smaller term service contracts have been let for cleaning and vegetation works within the city’s road reserves. The Council may rationalise the number of term service contracts so that on their renewal, the smaller contracts could be incorporated into the larger ones, or alternatively some of the conflicting elements in the larger contracts may be incorporated into the smaller contracts. This will remove some of the responsibility overlaps that currently exist, particularly in relation to drainage maintenance, and the clearing of carriageway slip debris and general detritus. The Council also calls term service tenders for street light maintenance and for traffic signals maintenance. Professional services for works on the Land Transport Programme outside the scope of these term service contracts are provided by a mix of internal and external resources. External professional suppliers are engaged for those specialist services beyond the capability or capacity of the in-house resource. For physical works beyond the scope of the term service contracts, separate contracts are let. Such works include construction of retaining structures, safer roads projects, minor structures etc. Some of these are below the NZTA threshold of $100,000 for direct appointment, and most are below the $200,000 threshold for closed tender. These are delivered as “staged” contracts (refer NZTA definition). These limits are higher than the Council’s standard limits, however the Council’s Management Board has granted prior approval to use the NZTA limits for work referred to within this Strategy. 1.5 Endorsement and Approval of Strategy This Strategy requires the approval of the Director Infrastructure and the Chief Executive Officer representing the Management Board. Following that approval, the Council will seek endorsement from NZTA. Wellington City Council Procurement Strategy – Transport Assets Page 5 of 67
At this stage the Council is not seeking any exemptions or variations to the NZTA procurement manual rules, or approvals of advanced or customised procedures or of customised supplier selection methods. At each review of this Strategy, the need for exemptions or variations will be reconsidered, and if market conditions or other such factors change, then the Council will consider whether best value for money can be achieved through the use of an advanced component. If so, a reviewed and amended Procurement Strategy will be submitted to NZTA for endorsement. 1.6 Strategy Status/Ownership This document applies to all Council purchasing relating to NZTA subsidised works – both physical and professional services. It complies with the Council’s Procurement Policy and Standard. Wellington City Council Procurement Strategy – Transport Assets Page 6 of 67
2 Context
2.1 Goals and Objectives
2.1.1 Council requirements
The Council’s vision is for Wellington to be a vibrant, internationally competitive and
affordable city1
The Council has developed both city and organisational strategies. For the city by
Strategy Area, the seven Strategies and Aims supporting the Council’s vision are:-
Strategy Area Council Aim
Urban Development A compact, vibrant, attractive city
Transport Providing quality connections
Governance Delivering trust and confidence in civic
decision-making
Environment Protecting and enhancing Wellington’s
environment
Economic Development Supporting growth to enhance quality of
life
Cultural Well-being Shaping Wellington’s unique cultural
identity
Social and Recreation Strong, safe, healthy communities
From these strategies, the Council expects the following 13 outcomes for the city:-
1. More liveable
2. Stronger sense of place
3. More compact
4. More eventful
5. More inclusive
6. More actively engaged
7. Better connected
8. More sustainable
9. Safer
10. Healthier
11. More prosperous
12. More competitive
13. More entrepreneurial and innovative
In consultation with the communities, for the Transportation Strategy Area, the
community has expressed an expectation for the following outcomes2:-
1
LTCCP 2009-19 page 5
2
LTCCP 2009-19 Page 177
Wellington City Council Procurement Strategy – Transport Assets Page 7 of 67Community outcomes – Transportation Strategy Area:-
1. More sustainable - Wellington will minimise the environmental effects of
transport and support the environmental strategy
2. Wellington’s transport system will be designed to meet the needs of its
people efficiently and sustainably
3. Wellington’s public transport system will be accessible and affordable for
all
4. Wellington will be pedestrian and cyclist friendly
5. Wellington’s traffic will flow smoothly through and around the city and its
suburbs
6. Links by land, air and sea will meet the needs of people and enterprises
7. Wellington will have clear directional signage
The Council has expanded its transportation outcomes to meet the communities’
expectations as follows:-
Council Outcome Transportation related outcome
More Liveable Wellington will be a great place to be,
offering a variety of places to live, work
and play within a high- quality public
environment
Better Connected Wellington will have a highly
interconnected public transport, road and
street system that supports its urban
development and social strategies
More Sustainable Wellington will minimise the
environmental effects of transport and
support the environmental strategy
Safer Wellington will seek to improve the safety
and security of its citizens as they move
around the city and region
Healthier Wellington’s transport will contribute to
healthy communities and social
interaction
More Prosperous Wellington will have a coherent and
efficient transport system that aids
economic development
3
3
LTCCP 2009-19 page 177
Wellington City Council Procurement Strategy – Transport Assets Page 8 of 672.1.2 Legislative framework
The key legislation, regulations, authorities and national strategies relevant to the
management of the transportation activity are listed and briefly expanded upon in the
Council’s current Transport Asset Management Plan. These include:-
Land Transport Management Act 2003
Land Transport Management Amendment Act 2004
Local Government Act (LGA) 2002
Local Government (Rating) Act 2002
Resource Management Act 1991
Building Act 1991
Health and Safety in Employment Act 1992
Civil Defence Emergency Management Act 2002
Public Works Act 1981
New Zealand Transport Agency
(National Strategy) Road Safety to 2010
National Transport Strategy
Regional Land Transport Strategy
2.2 Procurement Goals and Outcomes
The Council has a comprehensive procurement policy and procurement standard,
copies of which are contained in the appendices to this procurement strategy. Both
are also available to Council staff via the Council’s intranet.
The Council’s Procurement Policy contains a number of the goals and outcomes
required of the procurement strategy. Specifically:-
“Sustainable business practice
Best value for money over whole of life
Open and effective market competition
Full and fair opportunity for domestic suppliers
Improving electronic business capabilities, including e-commerce
Demonstrating compliance with good practice and government guidelines”
The Procurement Policy objective areas are:-
“Sustainability
Best value
Preferred suppliers
Syndicated procurement
Fair and transparent
Local supply
Well planned and executed
Technology and best practice
Risk management
Delegations
Compliance”
The Procurement Policy included in the Appendices expands on each of these
objective areas.
The procurement standard is designed to support the Council achieve its strategic
objectives by delivering the following supply related benefits:-
Wellington City Council Procurement Strategy – Transport Assets Page 9 of 67Security of supply
Lower costs
Reduced risk
Improved quality
Greater added value
Increased efficiency
Innovation
This procurement strategy and the Council’s procurement standard complement
each other in addressing the Council’s purchasing requirements (including NZTA
subsidy-qualifying services).
2.2.1 Subsidy Qualifying Outcomes
Section 25 of the LTMA requires the following factors to be addressed in the
procurement strategy, all of which are inferred in the Council’s procurement policy:-
Best value for money spent
Desirability of enabling persons to compete fairly where 2 or more persons are
willing and able to provide the outputs
Desirability of encouraging competitive and efficient markets for the supply of
the outputs
NZTA has a number of procurement procedures, each with its own set of rules. The
following 2 procurement procedures apply to the purchasing of services within this
strategy:-
1. Infrastructure
2. Planning and advice
“The Infrastructure procurement procedure covers those activities involving the
purchase of:-
New infrastructure or additions or improvements to existing infrastructure
Renewal of infrastructure assets
The maintenance and repair of existing infrastructure assets to restore their
functionality to original levels
The operation of those assets in a way that optimises the benefits derived from
them.
Typical examples include:-
New roads and bridges
Additions or improvements to existing road infrastructure
Renewal of road pavements and resurfacing
Maintenance and repair of infrastructure assets, which are often routine in
nature and delivered under a term service contract”
“The Planning and Advice procurement procedure covers the selection and
engagement of suppliers to carry out professional services that are not directly
related to expenditure on physical infrastructure or public transport services. Typical
examples include:-
Wellington City Council Procurement Strategy – Transport Assets Page 10 of 67Travel behaviour change studies and strategies
Traffic count surveys
Initial investigations of infrastructure development proposals”
The Planning and Advice procurement procedure does not apply to the use of in-
house professional services that have NZTA’s prior approval.
3 Procurement Environment
3.1 Programme
3.1.1 Segmentation
All Council expenditure is managed under a system of Capex and Opex projects.
Each year the Council prepares project budgets for the Land Transport Programme
(LTP) and other works not related to the LTP. Contracts let by the Council may
include one or more projects. The road maintenance term service contracts include
many projects, both Capex and Opex.
Information on the Council’s works programmes is contained in various plans,
including the Annual Plan, the Council’s Long Term Council Community Plan
(LTCCP) and the Asset Management Plans. These documents are all publically
available from the Council.
Capex and Opex budgets for the next 3 years relating to this Procurement Strategy
are shown in the Appendices. Budgets are translated into contracts for works and
services once sufficient information and all clearances and approvals are to hand.
Budgets may translate into several contracts, and conversely contracts may relate to
a number of budgets. Apart from the term maintenance contracts, there is no firm
programme for calling tenders.
3.1.2 Term Maintenance Service Contracts
In July 2008, two 3 year contracts (each with rights of extension for a further 2 years)
were let. The scope of these contracts covered all road maintenance, renewals and
upgrades required to preserve the value of the roading asset. One of these contracts
covered the Southern area of the city, while the other covered the Northern and CBD
areas.
In October 2008, a further contract was let for 2yrs and 9 months also with a right of
extension for a further 2 years. The scope of this contract covered the vegetation
control and cleaning functions associated with road maintenance, for all but the CBD
area.
The existing contract for street and sump cleaning in the CBD will need to run its
initial term and rights of extension through to 30 June 2012 before a transitional
arrangement (such as a further extension, or contract renewal) can be entered into in
order to achieve alignment with the terms of the other maintenance contracts.
The terms of the 3 contracts let in 2008 were designed to be coincident, in order to
provide options for scope improvement in the future. Currently a number of similar
functions are shared between contracts and between different contractors. This leads
Wellington City Council Procurement Strategy – Transport Assets Page 11 of 67to issues of accountability which will be addressed by aligning the scopes of the
renewed or re-tendered contracts.
The following table sets out the programme over the next 3 to 5 years for retendering
the term service works under this procurement procedure.
Contract Number Description Expected Renewal Date
RS414 CBD Cleaning July 2012 (unless
extended a further 12
months)
RS500 Road Maintenance North July 2013
and CBD
RS501 Road Maintenance South July 2013
RS494 Outer City Cleaning and July 2013
Vegetation Control
477N Traffic Signal Maintenance July 2011
(WCC and NZTA)
RS453 Street Lighting August 2012
Maintenance
3.2 Supplier Market
3.2.1 Physical works
The contractor market in Wellington comprises large national and multi-national, multi
disciplined companies, through to small contractors providing either single or a small
range of civil contracting services. The Council has retained a couple of business
units for carrying out parks and reserves operations, graffiti removal, landfill
operations and pavement and sump cleaning. Some of the work carried out by these
business units is on the Council’s roads and streets, however the bulk of their work is
not.
All of the larger civil engineering maintenance contractors in Wellington have
contracted to the Council at various stages over the years. In spite of losing contracts
in the past, none has elected to disestablish and vacate the local market. The mix of
work available from the various Local Councils and for work on the State Highways
and from within the private sector, has been a major factor influencing contractors to
remain in Wellington.
In 2008, a large multi-national civil engineering company bid for the Wellington
maintenance contracts for the first time and secured one of the contracts. That
contractor is now established in Wellington, adding capacity, competition and depth
to the market.
Wellington City Council Procurement Strategy – Transport Assets Page 12 of 67All of the major road maintenance contractors in Wellington to some extent trade with
their competitors – either providing services or purchasing services from each other.
Such services include chip sealing, asphaltic concrete supply, temporary traffic
management services etc. Each of the major contractors rely to some extent on the
subcontractor market for delivery of services such as kerb and channel construction,
line marking, vegetation control, plant hire etc.
This mix of contractors is healthy for the local market as it allows sufficient depth of
experienced resource to address the city’s routine and special needs. Special needs
include:-
Emergency response capacity – Wellington is earthquake prone, hilly and
subject to high winds and periods of heavy rain giving rise to frequent road
blockages from fallen trees, slips and dropouts.
CBD – The CBD is typical of most CBDs in that it is confined, with an aged
infrastructure, streets congested with underground services, very busy, offering
limited opportunity for conducting works which impact on traffic flows, and now
compounded by an increasing residential population requiring restrictions on
night work within the CBD.
The market currently satisfies the Council’s special needs in that it can provide
experienced contractors familiar with the Council processes, offering a wide range of
specialist skills suitable for Wellington (particularly slope stability works) and each
with a wider network of experienced sub-suppliers that can be called on at short
notice – both for work in the CBD and in response to emergency situations
throughout the city.
The market offers a number of suppliers of critical product or service such as
bitumen, aggregates, asphalt, chip sealing, concrete, line marking, and temporary
traffic management. There are 3 major aggregate suppliers in the Wellington market.
The Council owns one of these, the Kiwi Point quarry, which supplies aggregate to
the whole market on a non preferential basis.
There are no monopoly contractors in the Wellington roading market, though in highly
specialist areas such as traffic signal maintenance, there is limited competition. The
market response to the 2008 road maintenance tenders strongly suggests that the
market is efficient and effective. Apart from recent announcements by Shell regarding
their investment in roading contractors, there is nothing else significant to suggest
that in 3-5 years time when tenders for the road maintenance contracts will again be
called (or the contracts renewed), that this position will have deteriorated.
3.3 Current Spend
The following table outlines the tendered annual value of the contracts in place for
the Council’s road maintenance and renewal physical works programmes (2008/09):-
Contract Contract Description Annual Contractor
Number Value
RS500 Roading and Traffic $11.4M Downer EDI Works
Maintenance Contract – North
and CBD
Wellington City Council Procurement Strategy – Transport Assets Page 13 of 67Contract Contract Description Annual Contractor
Number Value
RS501 Roading and Traffic $7.6M Transfield Services
Maintenance Contract – South Ltd
RS494 Outer City Cleaning and $2.5M CitiOps and Parks
Vegetation Control
RS414 CBD Cleaning $0.6M Transpacific
Holdings Ltd
477N Traffic Signal Maintenance $0.45M CSL Traffic Ltd
RS453 Street Lighting Maintenance $0.5M Power Construction
and Lighting
All of the above term maintenance service contracts are output based with a mixture
of lump sum and measure and value items.
3.3.1 One-off Projects
One-off projects include:-
• Slope stability works
• Street lighting upgrade works
• Safer roads projects
• Bus priority laning
• Capacity Improvement projects
• Urban Development projects
• Structural upgrades (tunnels, bridges etc)
All projects are “staged” and for projects valued over the $200,000 NZTA threshold,
suppliers will be selected by an open tender process.
For more information on the projects, refer Capex and Opex Programmes included in
the Appendices.
4 Delivering the Work Programme
4.1 Introduction
4.1.1 General
Within the 3 year horizon to 2013, the majority of the Council’s road maintenance and
renewal work (and some upgrade works) is covered by the existing competitively bid
term service contracts referred to in section 3.1.2 above.
Wellington City Council Procurement Strategy – Transport Assets Page 14 of 674.1.2 Management
The works addressed in this document are managed within 2 of the Council’s 7
Directorates. These are:-
• Infrastructure Directorate, and
• Strategy Planning and Urban Directorate
Each Directorate is responsible for purchasing its own services. The Council does
not have a centralised engineering services procurement unit, nor is it required as
each contract generally requires specialist input from within the Directorate, and the
Directorates are governed by the Council’s Procurement Standard. However, where
work is required by one Directorate and applicable contract rates exist in another
Directorate, consideration is always given to using the existing contractors at the
established contract rates.
4.2 Programme Implementation
4.2.1 Introduction
The programme involves technical consultancy professional services, and physical
works. The technical consultancy services are carried out either by the Council
through its professional services business unit, or by engagement of external
suppliers from the open market. Physical works are carried out under either term
maintenance contracts or site specific contracts.
4.2.2 Professional Services
Professional services external consultants are managed under the Council’s pre-
qualification system. Details of the pre-qualification system can be found on the
Council’s website.
4.2.3 Term Maintenance Contracts
Prior to preparing tender documentation for the 2008 maintenance and renewal
contracts, the Council openly invited contractors and other interested parties to
contribute towards the development of the contract.
At the meetings convened for these discussions, all parties were given the
opportunity to comment on their preferences. The CEO outlined the Council’s political
vision, the Infrastructure Director outlined the Council’s objectives and outcomes
expected of the contracts, and the Council engineering staff outlined contractual
matters the contractors might wish to consider and comment on.
While there was no overall agreement by the participants, of those with the capability
to carry out the work, there was a clear preference for a measure and value type of
contract administered under NZS 3910 2003 General Conditions of Contract. These
participants preferred a contract that separated asset management functions from
asset maintenance and renewal activities. They saw the Council as the asset
manager, and the contractor as the maintenance/renewal provider.
Various contract options including alliancing, NEC Conditions of Contract etc were all
given serious consideration by the Council prior to engaging with the market. The
Council visited sites where alliancing was in place and discussed matters with the
Wellington City Council Procurement Strategy – Transport Assets Page 15 of 67alliancing parties. In the end, the preference both from the market and within the
Council was to a more conservative approach, as referred to above.
The previous contracts were performance based contracts requiring the contractors
to progressively assume responsibility for the roading assets. It was generally agreed
by the contractors and the Council that such an initiative was not working. The
general consensus was that the Council should retain responsibility for the assets,
determining where treatments should be undertaken, and what the treatments should
be.
The form of the 2008 contracts was then developed along more traditional lines, with
the contractors given the responsibility for fault finding, programming approved works
and carrying out physical works, and the Council conducting condition surveys and
performing the asset management functions. Contractor payment was based on a
schedule of rates, for work completed to specification.
4.2.3.1 Risks and opportunities – Term Maintenance Contracts
Based on the consultation and outcomes described above, the Council has returned
to a traditional and more conservative approach for the delivery of road maintenance
and renewals.
In NZTA terms, the contracts are defined as “staged”, and are managed and
supervised by the Council’s in-house engineering staff.
The risks with this approach are:-
• Job intensive – each job to be uniquely identified, and tracked
• Limited opportunity for contractors to upskill in asset management
The opportunities with this approach are:-
• Facilitates new entrants into the market
• Places responsibility under the contract with the most appropriate party
• Incentivises the contractor to programme the work, and complete it to
specification
• Incentivises contractor to find innovative ways to aggregate various
tasks at a worksite, in order to achieve operational efficiency, and
minimum disruption for residents
• Council is better able to manage its records
• Fewer disagreements on treatment lengths and treatment selections
• Full contractor accountability for performance of completed physical
works
• Contractor programming of approved works, with Council approval of
the programme
• More focus on cost effective work outputs through proven processes
The Council is mindful of encouraging competition in the city, and the need to retain
contractors with the equipment and management expertise to assist in times of
emergency. To this end the Council has offered the city maintenance and renewal
works as 2 packages of work, and required that unless there are no acceptable
alternatives, no contractor can perform both contracts simultaneously. The market
feedback from the major contractors supported this division.
The complexity and interdependence of road maintenance and renewal jobs within
the city requires job programming and responsibility for outcome to be carried by the
Wellington City Council Procurement Strategy – Transport Assets Page 16 of 67contractor. While it is an option for some activities to be unbundled, and separately
let, the need to have one entity in control of contract jobs is paramount. For this
reason the preferred option is for the contractors to take full responsibility for
programming and completing every job to specification and on time, irrespective of
whether the job is carried out by the contractor’s own resources, or subcontracted.
The Council recognises the special attention required and the difficulties associated
with working in the CBD. In order to obtain competitive prices for working in the CBD,
the Council has required tenderers to price 2 schedules per tender. One schedule for
conducting work in the CBD, while the other for the non CBD (ie North/South) areas.
This allowed the tenderers to price for the difficulties of working in the CBD, without
loading additional costs against the work in the non CBD areas. The Council could
then be assured of the CBD and outer areas being priced, and priced competitively.
The Council through the tender process could then choose the contractor who could
offer best value for money for the CBD and for one of the non CBD areas. The
second contract was awarded for the remaining non-CBD area, thereby assuring the
Council of at least 2 fully resourced contractors.
The roading maintenance and renewal contracts are terms of 3+2 years. The
contract terms of the 2008 contracts were considered in depth in the period leading
up to tendering. The conclusion drawn was that this format would be of sufficient
length to be attractive to, and warrant investment by, the contractors. The term also
allowed sufficient time for systems to be bedded-in, particularly if there is a change of
contractor. The 2 year term extension is considered both an incentive for excellent
performance, and a safety net in the event that either party is dissatisfied and wishes
to exit on expiry of the original term.
The content of the maintenance contracts may change over time. At each renewal,
each activity in a contract will be reassessed, and decisions made as to which
contract is best placed to handle that activity.
4.2.3.2 Value for money and sustainable competition
For road maintenance and renewal works, the greatest value for money in the city is
considered to be in:-
• Establishing acceptable levels of service for the roading network
• Identifying the network needs in terms of these levels of service
• Sourcing internal and external funds to satisfy these needs
• Prioritising and prudently spending available funds on the necessary physical
works
The procurement strategy addresses these through:-
• The choice of 2 principal suppliers for road pavement maintenance and
renewal
• The choice of contract form which encourages new contractors into the
market
• The responsibility for the programming of activities residing with the main
contractors
• The choice of contract term, and the bundling of activities to reduce the
overall tendering workload, for both the Council and for the market
• The choice of supplier selection (price/quality), which facilitates selection
based on whole of life costs as opposed to lowest price.
Wellington City Council Procurement Strategy – Transport Assets Page 17 of 67While in some situations there may be benefit in collaborating with neighbouring
RCAs and combining workload into a single contract, the Council considers the main
term contracts it offers are of sufficient size ($8M plus per year each) to secure any
potential economies of scale. The geography of the Wellington region does not lend
itself to TLA collaboration for road maintenance. Similarly, while collaboration with
NZTA over combining the State Highway maintenance work and the Wellington city
maintenance work into a joint contract is possible, except for traffic signal
maintenance, it is very unlikely that any additional economies of scale will accrue.
More importantly, a number of road maintenance contracts of this size spread
amongst a number of different contractors are required to sustain the competitive
market.
4.2.3.3 Contract Management
The management of the maintenance and renewals contracts is provided by the
Council’s in-house engineering resources. The contracts are written requiring the
Council and the Contractor to collaborate in the interests of contract improvement.
The contract requires attendance by both parties at regular meetings to monitor
programmes and resolve issues. This process proved very effective in the 2002-2008
contracts and has been retained for the 2008-2013 contracts.
4.2.3.4 Delivery Models and Supplier Selection Methods – Physical
Works
On completion of the original term of the road maintenance contracts, plus any
agreed extensions, the works will be retendered. For the 2008-2013 contracts, the
Council used the Price Quality Method for Physical Works contained in Transfund
General Circular No. 02/09, and amended for PQM evaluation.
This system worked well and the Council received good value for money. Both the
Council and contractors now have established tender processes to follow, which
should save time and money during the tender and tender letting stages.
Price weighting for the maintenance contracts is currently 70%. This will need to be
reviewed closer to retendering in light of experience gained in the interim by other
Approved Authorities.
For road construction and upgrade work not included in the maintenance contracts,
price weighting will be considered within the allowable range of the procurement
rules depending on the need to select a higher quality supplier. Attribute selection
and weighting will be appropriate to the work to hand, and attributes with a pass/fail
criteria will have that criteria defined within the tender documentation (typically 35%
has been used on any non-price attribute to date).
Where repeated construction work of a similar nature is frequently undertaken, the
Council is preparing a pre-qualification system for capable contractors. This system
will be opened each year to new entrants, and for pre-qualified contractors to update
their registration attributes if they wish to do so. The market will be consulted prior to
issuing requests for pre-qualification. This system will streamline the tendering
process for these works. Details will be posted on the Council’s website.
Initially this pre-qualification system will focus on walls and related structures. All
contracts within this system will be staged, and those up to $100,000 will be
managed either as direct appointments or as closed tenders (between a minimum of
Wellington City Council Procurement Strategy – Transport Assets Page 18 of 673 selected contractors on the register). Contracts valued above $100,000 will be let
either on a closed tender basis or under an open, price quality, tender process.
Those over $200,000 will be openly tendered.
4.2.3.5 Summary
The delivery of the road maintenance, renewal and minor construction works
programme will:-
• See the existing contracts through to the end of their original terms plus any
agreed extensions (to 2013 max)
• Look to rationalise contracts/scope of contracts to minimise responsibility
overlaps –may involve contract extensions of up to 1 year beyond those
contained in original agreements (eg contract RS-414) in order to achieve co-
incident renewals
• Consult with contractors before retendering road maintenance and renewal
contracts. The Council’s current preferences for road maintenance contracts
are for 2 contract areas one of which includes the CBD, and with no
contractor able to simultaneously hold both maintenance contracts. Preferred
contract terms are 3+2. The preferred style of contract is collaborative, using
NZS3910 as the General Conditions of Contract, and tenders evaluated
under a price quality method, with weightings to be determined closer to the
time.
• Continue letting construction contracts, on a project by project basis, in the
first instance, using pre-qualification where this method provides benefits both
for the Council and the contractors
• Consult with contractors in the development of pre-qualification systems for
physical works
• Retain the services of the Council Business Units for critical/specialised
services which have a high impact on the city’s image (eg graffiti
management, horticultural/vegetation control, cleaning etc).
4.2.4 Summary – Delivery Models and Supplier Selection
Procurement Expected Delivery Model Supplier
Procedure Release or Selection
Renewal Date
Infrastructure
RS500 and RS501 July 2013 See Note 1 Price Quality
RS494 July 2013 See Note 1 Price Quality
RS414 July 2012 tba Extend existing
contract to 2013 –
see Note 2.
RS453 August 2012 See Note 1 Price Quality
477N July 2011 See Note 1 Price Quality
Walls and Minor The Council is establishing a Walls and Minor Structures Pre-
Structures qualification system, which will be open to new entrants each
Wellington City Council Procurement Strategy – Transport Assets Page 19 of 67Procurement Expected Delivery Model Supplier
Procedure Release or Selection
Renewal Date
Construction year. Information relating to this system will be posted on the
Council’s website
Planning and
Advice
Professional The Council has its own professional engineering services unit,
Services and for external consultants, operates a Technical Consultancy
Pre-qualification system, which is open to new entrants in June
each year. Information relating to this system is on the
Council’s website
Note 1
The Council’s preference at this stage is for traditional measure and value contracts
with some lump sum items, collaboratively managed, NZS3910 General Conditions
of Contract, with incentives for contractor performance. Asset management by
Principal (treatment length and treatment solution), and fault finding, job
programming and job delivery carried out by contractor. However, consultation with
the industry closer to the time of calling tenders may alter this preference.
Note 2
In situations where a term contract is to be re-tendered in the lead up to, or during a
high profile event in the city, the Council may extend the existing term contract for
such time as it sees fit to ensure the continuation of a high level of service throughout
the event.
4.3 Communication Strategy
4.3.1 Internal Stakeholders
This strategy affects the following internal stakeholders:-
• Infrastructure Directorate
• Strategy, Planning and Urban Directorate
• Management Board (strategy acceptance and sign off by Director
Infrastructure and Chief Executive Officer)
All stakeholders have access to this strategy and the opportunity to add value to it.
4.3.2 Other Approved Organisations
4.3.2.1 Neighbouring Territorial Local Authorities (TLAs)
The Council’s closest TLAs are:-
• Porirua City Council
• Hutt City Council
The Council maintains dialogue at CEO level with its neighbouring Councils. The
outcome of this dialogue may have a bearing on procurement arrangements carried
Wellington City Council Procurement Strategy – Transport Assets Page 20 of 67out by each of the TLAs, and in particular in light of the Auckland super-city developments. Irrespective of the outcome of this dialogue, to sustain the competitive market, it is important to ensure that capable contractors remain gainfully engaged in the region, on both long term and project specific works. In the Wellington City Council the two main maintenance contracts are of the order of $8-11M each per year. Experience suggests that maintenance contracts of this size have achieved the benefits of economies of scale which are not further increased in proportion to further increases in contract size. On the contrary, as the contracts increase in size beyond this, they appear to generate a new set of complexities and management issues, which affect both parties and detract from overall contract performance. The contractors consulted prior to the 2008 road maintenance tenders also expressed preference for contracts of this size for Wellington. Communication between the roading market principals to co-ordinate their tender and contract award programmes is considered to be of benefit to both the principal, and the tenderer. Tender submission and pricing can be influenced by the knowledge of success or otherwise of recently tendered contracts. Where tenderers know of the outcome of previous similar tenders at time of submitting each new tender, the factor of uncertainty is removed and tenderers are in a better position to price both realistically and strategically. 4.3.2.2 Wellington Regional Council The City Council’s maintenance contracts allow for a number of minor works to be carried out for the Regional Council. These in particular relate to bus shelter maintenance. The Wellington City Council will continue to maintain dialogue with the Regional Council over sharing such services. 4.3.2.3 NZTA (SH Maintenance) The Wellington City Council maintains dialogue with NZTA over sharing services, particularly along sections of the SH1 through the inner city. Currently the scope of works in the RS494 contract includes vegetation control, sweeping and cleaning works along the section of SH1 from the CBD limits to the airport. The Council also operates the traffic signal maintenance contracts for signals and for the CCTV cameras on both the State Highway and the local roads within the city. Comments in 4.3.2.1 above also apply to communication with NZTA. The Council and NZTA need to be aware of each other’s tender closing and award dates so that tenderers are able to submit tenders confident of the outcome of bids they may have already submitted. 4.3.3 Supplier Market 4.3.3.1 Contractors As with the 2008-2013 maintenance contracts, for future retendering of these major contracts, the Council will be inviting contractors to meet with the Council before tenders are to be called so that the Council can communicate its preferences and Wellington City Council Procurement Strategy – Transport Assets Page 21 of 67
expected outcomes to contractors, and contractors given the opportunity to respond with their feedback. 4.3.3.2 Professional Services Details of the Technical Consultancy Pre-qualification system are available on the Council’s website. Every 12 months, the register is open for new entrants to pre- qualify, and for existing pre-qualified consultants to update their pre-qualification information if they so wish. The process towards developing this system involved an open meeting with 15 of the Council’s larger consultancy services suppliers, at which the proposal to implement a Pre-qualification system was presented, and feedback invited. All attendees responded with positive and constructive comments. After processing this feedback, the final draft documentation was developed and distributed to the market for further comment. The final documentation was issued to the market, based on the Council’s needs, the feedback from the market, and the review comments from NZTA. Information relating to pre-qualification, and the consultants who have pre-qualified, is available on the Council’s website. 4.3.4 NZTA At the initiative of NZTA, regular meetings are held with the NZTA Regional Office staff. These cover the full range of business matters between our 2 organisations. 4.4 Performance Management and Success Measures 4.4.1 Physical Works Contracts - Maintenance Performance monitoring is embodied within the term service contracts. For superior performance (objectively measured) contractors are rewarded with “performance reward work”. For inferior performance, deductions are made to the lump sum management items. The measures are based on the original expectations of the contract, (based on the AMP and the LTCCP), which are reflected not only in the contract specifications, but also in the attribute marking criteria. 4.4.2 Physical Works Contracts - Other These contracts are almost always let using NZS3910 General Conditions of Contract, with a schedule of rates applicable to the project. During 2010, the Council plans to develop and implement a pre-qualification system for contractors supplying repetitive construction type works, such as retaining walls, and other slope stability mechanisms. The success measures for this will include the extent to which the tendering processes are simplified (attribute submission and evaluation etc). Wellington City Council Procurement Strategy – Transport Assets Page 22 of 67
4.4.3 Market
For term service contracts, the contractors of interest to the Council are those
capable of delivering the full range of services. Developments following recent
announcements by Shell regarding their part ownership of contracting companies will
be monitored. The Council needs to be sure that any developments do not reduce
competition in the local market, and if they do, then the next round of tenders may
see adjustments to the contract scope to match the capacity of those remaining in
the market. This could mean reducing both the size and scope of the contracts.
4.4.4 Professional Services
The major success factor for the professional services pre-qualification system
focuses on best value consultant for the consultancy. For this, the Council needs to
have a mix of consultants to call on with wide ranging skill sets to assist with the
diverse specialisations required by the Council.
For 2009/10, the Council has just over 100 pre-qualified consultants, ranging from
multi-disciplined international firms, through to single service, sole operators. The
pre-qualification system extends across all of the Council’s activities, including its
Council Controlled Organisations. It is not limited to roading services only.
An applicable standard form of engagement is used for each consultancy
engagement (eg ACENZ/IPENZ CCCS short and long form agreements)
The success measure will include:-
• The value add of selecting suppliers from a pre-qualified pool, some of whom
would have otherwise not been known to the Council
• The ease with which the Council selects its consultants
• The reduced workload (zero or minimal attribute submission and evaluation
prior to consultant selection)
• Retention of capability and capacity in the market
5 Internal Capability and Approval of the
Procurement Strategy
5.1 Description of Current State and Desired State
5.1.1 Structure Roles and Responsibilities of Procurement Team
The Council directorates each have sufficient in-house resource and capacity to
manage the procurement of their required services. This includes assessing whether
the procurement services should be provided from within the directorate, or by
engaging the services of external professionals, or sharing in-house resources
between directorates.
The Council interfaces with NZTA on a number of issues:-
Wellington City Council Procurement Strategy – Transport Assets Page 23 of 67Operative Responsibility
LTMA Procurement Strategy Sponsor Responsible for co-ordinating
(Stavros Michael – Director procurement strategy content, (involves
Infrastructure) affected directorates) strategy
amendments, issues updates, initiating
reviews, ensuring approval and
endorsement, etc
LTP Sponsor Responsible for completing LTP on line,
(Deven Singh – Manager Transport liaising or co-ordinating liaison with NZTA
Assets) on all LTMA procurement matters
Project Managers Proposed projects – Tender Sponsor,
champion tender procurement strategy
seek approval to tender, develop tender
documents, manage legal review,
prepare estimate, champion industry
consultation, consent consultation, risk
assessment and analysis etc, call
tenders, champion tender evaluation,
lead negotiations with tenderers,
recommend award of tender, prepare
letters of acceptance etc
Each procurement for roading activities is managed within the Directorate
responsible for the project. The appointment of a procurement team from within the
Council ranks is managed within the Directorate. Where the Directorate is considered
unable to manage the procurement, the Council engages the services of an
appropriate technical consultant, selected from the pre-qualification register.
Where the Council uses its own resources to manage procurement for LTMA
projects, at least one of the team members is a NZTA recognised Tender Evaluator.
The Manager Transport Assets (Deven Singh) holds this qualification.
The preparation of the 2008 road maintenance contracts was managed internally by
the Council, with assistance as required purchased from external technical
consultants. The evaluation was conducted by a mix of internal and external
evaluators. Typically this combination would be the approach where the Council has
an internal competent and qualified resource.
The Council employs tertiary qualified civil engineers across a number of its
Directorates. In addition to these qualifications, a number of senior engineering staff
each has in excess of 30 years of relevant experience.
5.2 Plan to Fill Capability Gap
Currently there are no identified gaps in the Wellington market (contractors for
physical works, and technical consultants for professional services). The Council’s
use of external professional services to complement its internal resources addresses
any gaps that may arise in managing projects.
Wellington City Council Procurement Strategy – Transport Assets Page 24 of 67You can also read
