Specialist agencies key to delivering public infrastructure on time and on budget

11 Apr 2016 10:28 AM | Anonymous

These agencies demonstrate that significant value can be created when government departments and city and district councils that dont have dedicated capability in house are provided access to specialist support in major project delivery.

In New Zealand it is not unusual to find public agencies like government departments, health boards, councils and other public agencies suddenly thrust into having to invest tens and sometimes hundreds of millions of dollars replacing or constructing new buildings, plant or facilities with little or no experience in major project delivery.

Having access to the support provided by a specialist dedicated group of experts enables public agencies to focus on delivering core services (like teaching kids and providing healthcare for example) rather than refining procurement models and managing tender processes.

Meanwhile the specialist support agency is able to transfer knowledge across sectors from one project to the next and become a centre of excellence for the purchase and delivery of major public assets.

The time, cost and efficiency of infrastructure delivery improves as more sophisticated and fit-for-purpose procurement models evolve from a team of career experts.

Canadas results speak for themselves. Specialist procurement agencies are consistently delivering projects on time and on budget across the public sector and achieving added value or savings of 10% or more over traditional public sector delivery methods.

If New Zealand was able to cut whole of life asset costs on planned projects above $30 million by half that amount, savings would total almost $4 billion over the next decade.

That is money which could either go into projects which we cannot currently fund or into delivering a new level of service to businesses, residents and communities.

NZCID recommends that a special purpose public agency focused on major project procurement as a standalone activity should be investigated by the Government.

If modelled on Canadian exemplars, the agency would operate independently, with its own CEO reporting to an experienced Board responsible to the Finance Minister.

The Minister would determine whether or not procurement could be delivered in house or whether the guidance of the procurement agency would be needed, using Cabinets existing Investment Management and Asset Performance framework.

The agency would pursue a partnership approach to procurement, operating alongside central and local service providers, helping to guide departments through complex procurement processes. It would then undertake a monitoring function to ensure business case expectations are being met.

The scale of this opportunity combined with the likelihood that it can deliver significant value makes centralising and specialising procurement a priority public policy initiative and one which should be investigated with urgency, Selwood says.

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