Improving Procurement Performance

Unlocking value via a specialised procurement agency “critical”: Infrastructure NZ

The need to lift procurement performance by New Zealand’s public sector was highlighted at last week’s Procurement Forum in Auckland. Findings on how to drive better outcomes through improved procurement of public infrastructure will be recommended to the Minister for Infrastructure, Hon Steve Joyce.

Underpinning the need, in a recent media release Infrastructure NZ’s CEO Stephen Selwood points to an industry survey which identified that “many agencies are excessively focused on price over long term value. ... Contract law is being rewritten on almost every project and risk is being unfairly transferred to contractors resulting in poor outcomes and unnecessarily high costs to the client.”

Selwood also notes that "NZTA is held in high regard by the industry because its staff are experts at what they do. They understand how best to allocate risk. They focus on value rather than cost and match the procurement method with the job to be done. ... But with 20 District Health Boards, 78 councils, transport, education, housing and other public institutions all procuring major capital assets independently, skills are too widely distributed and processes too fragmented.”

And with a $125 billion infrastructure programme to be delivered, best practice procurement is at the heart of obtaining value-for-money for all New Zealanders.

“There is now broad agreement across the infrastructure industry that consolidating public procurement expertise in an arm’s-length specialist agency is critical to meeting New Zealand’s investment programme," says Selwood.  

In the lead-up to the inaugural GovProcure New Zealand 2017 conference later this month, procurement and tendering is under the spotlight. Clever Buying’s Caroline Boot is to present at the conference, and says, “In addition to improving strategic procurement capability, we also need to build capability from the ground up in order to make a real difference in procurement efficiency”. Boot added, “There’s a need to focus on the practical skills of procurement planning: RFT development, scoring systems and transparent evaluation.”

Tendering specialist Kerrie McEwen from Plan A sees an opportunity in greater procurement efficiency. “While the introduction of the government RFx template is a step forward, we still regularly see RFx processes which drive rushed decision-making, and recycled all-purpose tender documents which have irrelevant questions. The time spent on generic areas – from both respondent and evaluator perspective – would be better utilised on focused questions which will differentiate suppliers and deliver better overall value-for-money for taxpayers.”

The impact could be significant. Infrastructure NZ’s Selwood: "If we could achieve a modest 5-10 per cent improvement in delivering New Zealand’s $125 billion capital intentions plan, we could secure $6-12 billion of infrastructure value above and beyond what we’re planning. That’s five or six Waterview Connections or enough to address the entire backlog of water supply and wastewater investment nationwide.”


21 August 2017