This is the overall
conclusion from a new Infrastructure New Zealand-commissioned research report
by Entwine into major project procurement.
draws on in-depth feedback from leading infrastructure procurement
experts across the public and private sectors and is supported by the
Construction Strategy Group and Civil Contractors New Zealand.
invariably impacts on every aspect of a project and usually leads to poor
quality outcomes and increased whole of life costs. The absence of a strong
pipeline of work and the focus on lowest cost has had a massive negative impact
on construction industry skills and capability. Improved procurement is the key
to resolving these issues and needs to be addressed urgently,” says Civil
Contractors CEO Peter Silcock.
procurement agencies have specialised staff who manage a long and consistent
pipeline of work with transparent, standardised processes but carefully
selected models to optimise risk, maintain a competitive market and deliver
maximum value from public investment.
"It is clear we
need a whole-of-system response to the way public agencies procure services
from the private sector and incremental or one off changes to procurement
processes will not be sufficient,” says Construction Strategy Group Chair Geoff
"What is clear
from the research is that a huge amount of opportunity exists within the public
sector procurement space. Value is created for New Zealanders during both the
asset creation and the asset in use. Smart procurement is the key to
maximising this value. This is not a public vs private zero sum game. Instead
purposefully managed change can very much be a win-win for all parties,” says
report author Leah Singer.
"we've been guilty in New Zealand of forgetting that the purpose of public
investment is exactly that – to invest – and we've prioritised cost cutting to
the detriment of the bigger picture.
"Fit for purpose
has become less important than fit for budget, with the true price being higher
long term cost and under-performing public services.
through on its intention to establish an independent specialist procurement
agency – an "i-body" – the Government will be able to address the
major risks confronting its large infrastructure programme and the wider
"As the repository
for procurement expertise nationally, the i-body will harbour and develop
career professionals in procurement.
"They can then
provide advice and support to all public agencies, leading an immediate and
rapid improvement in procurement capability across the entire public service,
starting with our biggest, most complex and highest risk projects.
"Combining this technical
expertise with a national strategic function, including the preparation of a
national project pipeline, will spread the benefit of the i-body across the
"A key finding in
the report is that private sector procurement capability also needs some
support so that the industry can better assess risk and position itself
appropriately for the work ahead.
"Lifting procurement expertise
across New Zealand is an immediate priority given the huge investment required
in coming years. This will help us to both maximise benefits and enable
projects to be delivered more quickly and efficiently," Selwood says.
To read the full report, please click here. For further information and comment contact
Stephen Selwood on 021 791 209