Waitaki District Council Roading Procurement Strategy 2015 ... · In preparing the Procurement Strategy, Waitaki District Council has considered its planning framework, principles

Waitaki District Council

Roading

Procurement Strategy

2015-2018

Quality Record Sheet

Waitaki District Council

Roading

Draft Procurement Strategy

Issue Information

Issue Purpose 2015 Final for NZTA Endorsement

Issue Date 2 March 2016

Version Number 2.4

Approvals

Waitaki District Council 2015 Final

Adopted by Council subject to NZTA Endorsement

August 2016

New Zealand

Transport Agency

Endorsed for activities funded through the NLTP by the Regional Manager

31 October 2016

Authorisation

Waitaki District Council Michael Voss, Roading Manager

Prepared By Grant Holland, Waugh Infrastructure Management Ltd

Gary Woock, Waitaki District Council

Reviewed By Michael Voss, Waitaki District Council and

Ross Waugh, Waugh Infrastructure Management Ltd

Date 23 March 2017

Report Number 64-077-1126

Waitaki District Council Final Procurement Strategy

March 2016 201 Final Page 3 of 24

TABLE OF CONTENTS

PREFACE 4

PART ONE: THE PROCUREMENT STRATEGY 5

PART TWO: 7

PROCUREMENT AT WAITAKI DISTRICT COUNCIL – AN OVERVIEW 7

1.0 PROCUREMENT IN THE WAITAKI DISTRICT COUNCIL CONTEXT 8

2.0 PROCUREMENT ENVIRONMENT 12

3.0 PROCUREMENT PROGRAMME 15

4.0 DELIVERING THE WORK PROGRAMME 18

5.0 IMPLEMENTATION & ADMINISTRATION 21

6.0 APPENDICES 23


Page 4 of 24 2016 Final March 2016

PREFACE

This is the second version of Waitaki District Council’s Procurement Strategy for Roading activities. Council is aware of the requirements to update the strategy at least three-yearly intervals (NZTA Procurement Manual 10.4 Rule 4). This edition is the result of a limited review in late 2013 and a more detailed review in 2015/16. The detailed review includes reference to Council’s 2015-25 Long Term Plan and collaboration opportunities which are currently being explored through ‘Road Efficiency Group’ initiatives. In this version of the Procurement Strategy, Council has not sought any changes to the service delivery or supplier selection method detailed as approved in version 1 but rather highlights initiatives for collaboration and shared services. An overview of this document’s development follows.

2009/10 Draft Procurement Strategy developed

6 September 2010 Procurement Strategy endorsed by NZTA

22 September 2010 Procurement Strategy Adopted By Waitaki District Council

2013/14 Review

August 2013 NZTA advised of pending review

November 2013

Stakeholders invited to comment on current Procurement Strategy Draft Strategy provided to NZTA for comment Final Strategy submitted to NZTA for endorsement 18 month extension approved by NZTA Strategy withdrawn with future review in mind

November 2015 Review undertaken

December 2015/ February 2016

Public Consultation

March 2016 Amendments made following submissions Final Strategy submitted to NZTA for endorsement and adoption by Waitaki District Council



PART ONE: THE PROCUREMENT STRATEGY

Affordability is a key issue across Waitaki District, with Council providing a high standard of services across an extensive District. Council is committed to finding a sustainable balance in meeting the needs of current and future generations for their economic, environmental, cultural and social well-being. Council is also committed to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. Good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are:

a) efficient; and b) effective; and c) appropriate to present and anticipated future circumstances d) safety (not specifically included in the LGA but is a significant factor to Health and

Safety for Council and the Community)

(Local Government Act 2002 clause 10, as amended in 2012)

Expenditure includes a combination of:

Operations and maintenance of assets

Renewal of assets

Construction of new infrastructure to improve the level of service

Professional and general services to support Council functions

Council’s approach to procurement is focussed on seeking suppliers that contribute to the achievement of the outcomes identified by the community and provide goods and services that represent value for money.

Suppliers are encouraged to understand the drivers of Council’s planned approach and the commitment made to deliver the agreed Levels of Service. Suppliers are an important part of Waitaki’s communities and Council recognises the wider contribution made to those communities through employment and supporting local initiatives.

The key components of value for money are regarded as:

Robust planning to identify an effective work plan

Appropriate and efficient supplier selection procedures

Successful delivery of works and services (the right outcome on time and within budget)

Optimising asset life with Level of Service delivered within a balanced risk environment

The objectives for this Strategy are to:

1. Enable the provision of good-quality local infrastructure, local public services, and performance of regulatory functions to meet the current and future needs of communities in a cost-effective way

2. Support the achievement of the Waitaki Long Term Plan through efficient procurement processes

3. Integrate Procurement with Council’s broader organisational goals

4. Deliver affordable services that represent value for money to the community

5. Encourage appropriate levels of competition across suppliers

6. Ensure procurement is fair and transparent with effective accountability measures

Value for money means using resources effectively, economically, and without waste, with due regard for the total costs and benefits of an arrangement, and its contribution to the outcomes the entity is trying to achieve. (Office of The Auditor General)



7. Ensure local businesses are considered as an elemental part of this strategy

Council expects to utilise a similar mix of contractors to that currently in place but has expanded its in-house professional services capability to reduce reliance on external professional providers other than for specialist services. The effectiveness of these combinations and the options available will be considered in line with the objectives of this strategy.

For New Zealand Transport Agency (NZTA) financially assisted activities, Council intends to follow the NZTA Procurement Manual with the dollar limits listed in rule 10.9 modified as detailed in part 2 – clause 4.3 of this strategy. Council has identified flexibility as a key to obtaining efficiencies and value for money.

While the thresholds stated in rule 10.9 are considered as the default position, Council sees advantages in being able to apply different supplier selection thresholds where circumstances warrant. The higher thresholds listed are regarded as providing flexibility for those circumstances.

For other roading activities which do not receive NZTA financial assistance, Council has a draft Procurement Policy (2015) in place. Until it has been formally adopted by Council, the NZTA Procurement Manual will be regarded as guidance. For non-financially assisted activities, rule 10.9 of the NZTA Procurement Manual (Direct appointment and closed contest for low dollar value contracts) shall not apply. The method used will be determined having due regard to the circumstances of each case.

The success of this approach will be measured against the objectives listed.



PART TWO: PROCUREMENT AT WAITAKI DISTRICT COUNCIL – AN OVERVIEW

This Procurement Strategy has been prepared to outline Waitaki District Council’s approach to the procurement of goods and services. The Strategy has been prepared in response to the requirements of the New Zealand Transport Agency (NZTA) and is intended to provide guidance for Council staff and information to suppliers about Council’s preferred approach. Part Two provides a greater level of detail demonstrating alignment with Council’s overall objectives as well as compliance with the requirements of a Procurement Strategy as defined in the NZTA Procurement Manual. At the time of updating this strategy, Council has partially prepared a draft WDC Procurement Policy (2015). While the policy has not yet been finalised and adopted, the documents will be aligned to ensure that conflicts are minimised.



1.0 PROCUREMENT IN THE WAITAKI DISTRICT COUNCIL CONTEXT

We try to keep our district as affordable as possible. We want every dollar from rates to provide the best possible services and best value for money and we are constantly working to improve how we can deliver them in an affordable way. Our district is a large geographical area with a small population so maintaining our assets, particularly roads, has to be met by a small group of ratepayers.

(Waitaki District Council Long Term Plan 2015-25)

Introduction

Affordability is the key issue across Waitaki District, with Council providing a high standard of services across an extensive District. Council is committed to finding a sustainable balance between meeting the needs of current and future generations while providing infrastructure services in an effective and efficient manner. Accordingly, Council’s approach to procurement is broad, seeking suppliers that contribute to the achievement of the outcomes identified by the community and represent value for money. Expenditure includes a combination of:

Operations and maintenance of assets

Renewal of assets

Construction of new infrastructure to improve the level of service

Professional and general services to support Council functions

In preparing the Procurement Strategy, Waitaki District Council has considered its planning framework, principles and expectations in procurement. Given that the driver for the development of the strategy is compliance with the New Zealand Transport Agency (NZTA) Procurement Manual, Council acknowledges that financially assisted roading activity is the priority for this strategy. Council’s draft WDC Procurement Policy will be used for unsubsidised projects as well as other assets and activities to achieve the desire for consistency.

Organisation's Strategic Goals and Objectives

Waitaki District Council’s regime for asset management planning and delivery of quality services to the community reflects the community’s desires and national drivers; including:

The Purpose of Local Government

Community Outcomes

Activity Goals and Objectives

1.2.1 The Purpose of Local Government

In 2002, amendments to the Local Government Act 2002 refocused the Purpose of Local Government. The amendments represent a similar focus to the Land Transport Management Act 2003. Purpose of local government

1. The purpose of local government is: a) to enable democratic local decision-making and action by, and on behalf of,

communities; and b) to meet the current and future needs of communities for good-quality local

infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.



2. In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are:

a) efficient; and b) effective; and c) appropriate to present and anticipated future circumstances d) safe (not specifically included in the LGA but is a significant factor to Health and

Safety for Council and the Community)

1.2.2 Waitaki District Council - Community Outcomes

The Waitaki Long Term Plan 2015-2025 (LTP) discusses the establishment of the vision and community outcomes sought. In December 2013, Council listed its priorities and started discussing the vision for the district: Growing Waitaki – the best place to live, work and play.

The following six community outcomes would help us achieve our vision:

1. We keep our district affordable 2. We enable opportunities for new and existing businesses 3. We provide and enable services and facilities so people want to stay and move here 4. We understand the diverse needs of our community 5. Waitaki’s distinctive environment is valued and protected 6. We maintain the safest community we can. 1.2.3 Waitaki District Council - Activity Goals and Objectives

In preparing the 2015-25 Waitaki Long Term, each activity has stated their respective Activity Goals, visions or objectives. These goals/objectives are an important component in the procurement frameworks and are listed below. Roads and Footpaths Waitaki District Council’s goal for the Roads and Footpaths activity is described in the 2015-25 Long Term Plan (LTP) as being:

A Fit for Purpose Roading Network for Waitaki

1.2.4 Relevance of Goals and Objectives to the Procurement Strategy

These goals and objectives are relevant to Council’s approach to procuring goods and services and have been incorporated into this procurement strategy. Roading has a direct and indirect relationship with Council’s community outcomes. Roading has a primary relationship with the following community outcomes:

Community outcome How the activity contributes to the outcome

We enable opportunities for new and existing businesses

By providing roads and footpaths that are safe, effective, efficient, accessible and fit for purpose for people and goods.

We provide and enable services and facilities so people want to stay and move here

By providing roads and footpaths that are safe, effective, efficient, accessible and fit for purpose for people and goods

We maintain the safest community we can

By providing transport networks and services that are safe.

We keep our district affordable By ensuring roading activities are managed efficiently and effectively.



Over the last decade, Council has recognised the importance of effective principal-supplier relationships and the appropriate allocation of risk as it seeks greater flexibility and innovation. The importance of a supplier understanding of, and possible contribution towards the achievement of community outcomes should be included in the selection of suppliers.

Procurement Policy 2015

At the time of this review, Waitaki District Council was part way through the development of a comprehensive WDC Procurement Policy. While the Policy is draft, it is appropriate to achieve alignment. It follows the same Ministry of Business, Innovation, and Employment guidance integrated into this strategy. The definition for value for money is similar in that it focusses on the best outcome for the long term, rather than the cheapest price. The procurement principles that the policy identifies are: 1. Plan and manage for great results 2. Be fair to all suppliers 3. Get the right supplier 4. Get the best deal for everyone 5. Play by the rules

Objectives and Outcomes for the Procurement Strategy

Successful procurement involves recognising the perspective of the stakeholders involved. The stakeholders identified are:

The Waitaki District Community – residents and ratepayers

The Waitaki District Council – elected representatives, management team and staff

The Wider Community – visitors, businesses and organisations that associate with the District

NZTA – Roading’s investment partner and associated network provider

Other Partner Agencies – including neighbouring authorities

Suppliers of products and services

The objectives for this Strategy are:

1. Enable the provision of good-quality local infrastructure, local public services, and performance of regulatory functions to meet the current and future needs of communities in a safe and cost-effective way

2. Supporting the achievement of Council’s Community Outcomes and the Waitaki Long Term Plan Programme through efficient procurement processes

3. Integration with Council’s broader organisational goals 4. Delivery of affordable services that represent value for money 5. Encouraging appropriate levels of competition across suppliers 6. Ensuring procurement is fair and transparent with effective accountability measures 7. Ensure local businesses are considered as an elemental part of this strategy.



Definitions

There are a number of terms that are central to procurement and agreement on the definition of these works which will benefit all involved. Many of these terms are addressed in Appendix G of the NZTA Procurement Manual, the terms where a clear definition is advantageous follows along with a suggested definition. Procurement Procurement is all the business processes associated with

purchasing, spanning the whole cycle from the identification of needs to the end of a service contract or the end of the useful life and subsequent disposal of an asset.

This definition is as outlined by the Office of The Auditor General - Procurement Guidance for Public Entities - Good Practice Guide, June 2008; and reinforced in the NZ Transport Agency’s Procurement Manual, first edition effective from July 2009). Value for Money Value for money means using resources effectively,

economically, and without waste, with due regard for the total costs and benefits of an arrangement, and its contribution to the outcomes the entity is trying to achieve

This definition is as outlined by the Office of The Auditor General in June 2008 published ‘Procurement guidance for public entities - Good practice guide’.



2.0 PROCUREMENT ENVIRONMENT

Analysis of Supplier Market

2.1.1 Overview

Waitaki District covers a large geographic area from the coast south of Palmerston to the Waitaki River in the north, and extended inland to the alpine areas surrounding the Upper Waitaki catchment. Oamaru as a provincial centre serves the agricultural, industrial and tourism sectors well, but the local range of services required by Council is limited. Oamaru is close to the Otago/Canterbury boundary and specialist services can be sourced from Timaru (85km), Dunedin (115km) or Christchurch (250km). Many of the large national/international organisations have bases in Oamaru, Dunedin and Timaru, and there are numerous small-medium enterprises based in the District. Generally there is a sufficient level of interest in tenders and competition between suppliers. 2.1.2 Physical Works Suppliers

The following table provides an indication of current or potential suppliers and their current roles.

Roading

Downer NZ EA Networks Fulton Hogan Isaac Construction Sicon Contracting Southroads (the incumbent maintenance contractor) The Roading Company Whitestone Contracting (Council’s CCO) Network Waitaki Plus smaller local providers

2.1.3 Professional Services Suppliers

Waitaki District Council’s staff is complemented by a range of professional services providers, spread from Christchurch to Dunedin. The role of specialist professional service providers is typically to boost capacity or knowledge beyond what Council can achieve from its in-house resources. The following table provides an indication of current or potential suppliers.

Roading

Abercrombie and Associates Abley Transportation BECA RAMM Ltd DCL (Dave Charters) GHD MWH Ocel Opus Strata Rationale Waugh Infrastructure



2.1.4 Council Controlled Organisations

A special relationship exists between Waitaki District Council and Whitestone Contracting Ltd (Whitestone), its Council Controlled Trading Organisation. Council considers there are numerous benefits to the community through its ownership of Whitestone including:

Growing labour talent in the community

Ensuring there is adequate capacity and competency in emergencies

A commercial return on investment

Historically, Council has negotiated directly with Whitestone for the supply of some maintenance services; including Parks & Reserve and Water & Waste. Roading maintenance and capital projects have been tendered on the open market and Whitestone compete appropriately for such tenders. Whitestone operate throughout Otago and Canterbury undertaking maintenance and capital works contracts for a range of Local Authority and private clients. 2.1.5 Specialisation

Council has identified that specialised skills, resources and knowledge are necessary to support Council functions. In some cases, specialist services are provided at an organisation level, and in others cases at a staff level. 2.1.6 Relationship with Suppliers

Waitaki District Council benefits from working with a range of well-established suppliers. These suppliers range from small local organisations through to large multi-disciplinary companies. There are various relationships in place that are appropriate for the complexity of the works involved and reflect the trust established over time. Council is confident that an appropriate range of suppliers will continue to support Council’s functions in the future. Comments received from suppliers include:

There are benefits to Council in that it is able to have access to national and international best practice through acknowledging the role of specialist suppliers

Contracts based on ‘price only’ and of short term duration are not conducive to establishing enduring relationships and suppliers taking a wider and long term interest in the district and its community

Clear lines of safety through all supply chains

2.1.7 Bundling and Division of Works

Goods and services purchased relate to Physical Works and Professional Services. Physical works may be capital works (project based) or operations and maintenance (typically term contracts). The division of maintenance works has been across activities with large contracts covering the entire district favoured. The following diagram illustrates the current situation.

Jul-15 Jul-16 Jul-17 Jul-18

Roading Maintenance (c550) Two year rollover New contract or extension

Street light maintenance (c490) One year rollover New Contract Pavement Marking

(c562) Contract awarded to new supplier

Road Resurfacing (c573/3) One year rollover New contract

RAMM/Asset Data In-house professional services



Opportunities for splitting contracts and bundling activities in different ways are considered with regard to:

Value for money

Competition within the services sought

Efficiency in supply of services

Efficiencies in procurement and administration

Specialist activities

Alignment of organisational objectives

Communities of interest

2.1.8 Supplier Market Trends

No significant changes are foreseen in the future that will change the capacity and capability of the suppliers available to Waitaki District Council, and that Council’s current approach to managing suppliers will be appropriate. However, the implementation of the Network Outcome Contracts (NOC) by the NZ Transport Agency nationwide is likely to impose and influence supplier availability constraints which are yet to be tested.

Analysis of the impact of the procurement programmes on other approved organisations and other entities

Waitaki District Council works with neighbouring authorities where there is mutual benefit. In the Roading sector, Waitaki District has opted to undertake planning through the Otago Regional Council’s Regional Land Transport Plan, but also collaborates with other territorial authorities and NZTA in Canterbury as well. Council’s Roading network linkages with other organisations include:

NZTA – integrated network across and beyond Waitaki District

Central Otago District Council – connection via Danseys Pass and State Highway

Department of Conservation - numerous connections

Dunedin City Council – numerous connections

Mackenzie District Council – connection via State Highways

Waimate District Council – connection via the Waitaki dams and State Highways

Waitaki District Council is a large buyer of goods and services in the context of the North Otago area. Council acknowledges the impact of its decisions on the local economy, and the wellbeing of the District. Council encourages its suppliers to actively support the Waitaki Community and the achievement of the outcomes that have been jointly identified. The impact of Council’s procurement approach is not regarded as significant beyond the District, given the weighting of the larger metropolitan areas. There are however exceptions to this which include the advantages of bulk procurement of LED streetlights through either Auckland Transport or through an Otago-Southland Collective. After a period of considering options to share services with other local authorities, Council has opted to grow its in-house resources to meet the increasing workload and rely less on out-sourcing. This does not preclude Council reviewing its decision of continuing with shared services and collaboration opportunities should they arise. Any collaboration opportunities in financially assisted activities that arise will be subject to NZTA’s Procurement Manual, this updated Procurement Strategy and include the requirements of Section 17A of the Local Government Act 2002. In developing this strategy, Council will consult with neighbouring authorities, NZTA (Highway Network Operations), Contractors and Suppliers.



3.0 PROCUREMENT PROGRAMME

Growing our district and creating a place where people want to live means providing the right services at the right time and at the right cost. Council provides many things including roads, footpaths, drinking water, libraries and swimming pools. Getting the mix of services right …is important so everyone has the opportunity to play an active role in the community.


Overview

Council’s procurement programme for the range of Council Activities is outlined in the Waitaki Long Term Plan. Issues that affect the accuracy and validity of the programme as published in the Long Term Plan are:

The approval and finalisation of the Financially Assisted Roading programme through the Regional Land Transport programme and the National Land Transport Programme

Years two and three of the Long Term Plan may be modified by Council through the Annual Plan process; years four to ten are indicative and modification is likely through the subsequent Long Term Plan

Current Procurement Spend and Profile

Waitaki District procures goods and services through a range of means with the Assets Group representing over 50% of total expenditure. Roading is the single largest proportion of all activities at 27.8% of expenditure. The Roading Unit’s Delegations Manual sets outs levels of expenditure for each officer. 3.2.1 Goods and Services Purchased

The following pie chart indicates the forecast expenditure across Council and the assets deliver activities in particular. The data was sourced from the Waitaki District Council Annual Report for 2014/15 and gives approximate expenditure for the Waitaki Long Term Plan 2015-25.

Table 3.1: Council Expenditure by Activity 2014/15

27.8%

3.0%

0.2%10.9%

3.3%

6.9%10.0%2.1%

8.0%

2.9%

24.8%

WDC expenditure by groups of activities 2014/15(% of total operational and capital spend)

Roads & footpaths

Wastewater

Stormwater drainage

Water supply

Waste management &minimisationArts, heritage & community

Parks & recreation

Democracy, accountability &planningCommercial & developmentactivitiesRegulation & safety

Support Services



Values used in Table 3.1 are from taken from Forecast Roading Expenditure in Table 3.2 Further procurement details can be obtained from the Waitaki Long Term Plan 2015-25, NZTA’s website and the relevant Activity Management Plans.

Procurement Programme - Roading Activity

Across the Roading activity, Waitaki District Council undertakes the construction, maintenance and renewal of a range of roading assets including:

Sealed roads

Unsealed (gravel) roads

Footpaths and cycleways

Bridges and others structures that support the road

Signs, streetlights and markings

The roading network is extensive and is affected by changes in agriculture, industrial and tourism activities. Balancing the costs of maintenance and renewal of existing assets, meeting changes in demand with an emphasis on safety are an on-going challenge.

Council’s programmes are prepared in line with the purposes of the Land Transport Management Act 2003. These purposes are:

Consistency with any relevant strategies

Achieving an affordable, integrated, safe, responsive and sustainable land transport system

Contribution towards the objectives of:

− economic development − safety and personal security − access and mobility − public health − environmental sustainability

The Government Policy Statement on Land Transport Funding (GPS) is the main guiding document by which the government can ensure that the land transport funding system focuses on the priorities;

economic growth and productivity

value for money

road safety The Otago Regional Council’s Regional Land Transport Plan (RLTP) responds to the priorities of the GPS and provides a vision of transport into the future and how that is achieved by investment in transport services and infrastructure. Similarly, Council’s Activity Management Planning approach is well developed to assist with this challenge, with a resulting forecast of expenditure as shown in Council’s Long Term Plan which then feeds back into the RLTP. The key risks associated with the Roading procurement programme relate to investment levels; and the ability to complete this programme is subject to securing adequate investment through the National Land Transport programme. This reinforces the importance of effective asset management and planning. The variations in expenditure relate to new assets, with asset renewals being the most costly items.



The following chart illustrates the proportions of the roading spend proposed.

Table 3.2: Forecast Roading Expenditure 2015/16-2024/25

(Source: Waitaki District Council LTP 2015-25)

2015/16 2016/17 2017/18 2018/19 2019/2020 2020/21 2021/22 2022/23 2023/24 2024/25

Network & Asset Management $1,383,916 $1,403,647 $1,434,382 $1,468,587 $1,506,461 $1,548,257 $1,592,778 $1,641,650 $1,695,241 $1,750,331

Renewals Capex $4,900,921 $4,907,886 $4,987,906 $5,127,358 $4,996,525 $5,167,241 $5,452,389 $5,494,229 $5,651,677 $6,395,061

New Assets Capex $578,388 $367,294 $585,506 $582,290 $373,903 $375,004 $376,168 $377,425 $378,782 $380,195

Operations & Maintenance Opex $4,455,706 $4,527,346 $4,636,924 $4,733,845 $4,841,309 $5,013,146 $5,133,273 $5,267,062 $5,493,193 $5,647,457

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000



4.0 DELIVERING THE WORK PROGRAMME

The Roads and Footpaths Group of Activities includes 1,824km of sealed and unsealed roads, drainage systems, 160 bridges, signs and pavement markings, 161km of footpaths, street lighting and car parks. Roads and footpaths support our vision of Growing Waitaki – the best place to live, work and play and are fundamental to creating safe and reliable networks that connect communities and businesses.


Introduction

The objectives for this Strategy are:

1. Supporting the achievement of Council’s Community Outcomes and the Waitaki Long Term Plan Programme through efficient procurement processes

2. Integration with Council’s broader organisational goals 3. Delivery of affordable services to the community that represent value for money 4. Encouraging appropriate levels of competition across suppliers 5. Ensuring procurement is fair and transparent with effective accountability measures. Council’s intended procurement approach and objectives are discussed in terms of each activity below.

Key Attributes and Value for Money Strategy

Council has identified the need to plan effectively and deliver quality in a sustainable manner; keeping the community outcomes and four well-beings in mind. A robust strategic and activity management planning regime provides the basis for an effective local work programme to be developed. Taking a whole-of-life approach relies on asset management planning including lifecycle management planning and modelling. Waitaki District Council is the sole owner of Whitestone Contracting Ltd which exists as a Council Controlled Organisation (CCO). Council’s relationship with Whitestone Contracting Limited reflects the mutual benefit to Council, the Community and Contractor; and the partnership is regarded as the most effective and efficient model for maintenance works which do not receive financial assistance from NZTA, such as water and parks services. Council will be assessing this position in line with the community’s goals for Whitestone Contracting Limited and good business practice. Council also acknowledges the role of local suppliers as direct appointments for smaller tasks, as well as those acting as sub-contractors. The regional work programme for roading is prepared collaboratively with NZTA and neighbouring authorities through the Otago Regional Council’s Regional Land Transport Plan. Services are then delivered through a suite of contracts which Council staff are actively involved in managing. Within the Roading Section, Council is mindful of the Land Transport Management Act 2003 requirements, particularly consistency with sections 20 and 25. Suppliers are expected to understand the drivers of Council’s planned approach and the commitment made to deliver the agreed Levels of Service. The key components of value for money are regarded as:

Robust planning to identify an effective work plan

Appropriate and efficient supplier selection procedures

Successful delivery of works and services (the right outcome on time and within budget)

Optimising asset life with Level of Service delivered



Proposed Delivery Models and Supplier Selection Methods

For activities eligible for financial assistance from NZTA, Council intends to follow the NZTA Procurement Manual with the dollar limits listed in rule 10.9 modified as detailed in part 2 – clause 4.3 of this strategy. Council has identified flexibility as a key to obtaining efficiencies and value for money. While the thresholds stated in rule 10.9 are considered as the default position, Council sees advantages in being able to apply different supplier selection thresholds where circumstances warrant. The higher thresholds listed are regarded as providing flexibility for those circumstances and may be used where Council notifies the use of the higher limits. Bundling options will be considered in line with the criteria listed in 2.1.7.

*Higher Thresholds conditional use from NZTA – is only for use where there are clear value for money benefits from using the higher limits and only if Council publishes its decision to use the higher limits on its website.

For other non-financially assisted activities, Council will regard the NZTA Procurement Manual as guidance, and rule 10.9 shall not apply. A range of Supplier Selection Methods are considered favourable by Council and will be incorporated into the draft WDC Procurement Policy (2015) . The method used will be determined having due regard to the circumstances of each case.

Impact of the preferred approach on value for money, fair competition, and competitive and efficient markets

There is a range of suppliers able to serve Waitaki District Council effectively. The approach proposed is not expected to have any significant impact on the market or Council’s ability to procure services that represent value for money.

Risk Identification and Management

The key risk identified relates to the allocation and timing of investment decisions in relation to Council’s LTP and Regional and Central Government processes (e.g. RLTP/NLTP). These processes aren’t well aligned and the risk is minimised through comprehensive planning along with collaboration of partners and professional services providers.

Overview of Proposed Delivery Models and Supplier Selection Methodology for Land

Transport Activities

(NZTA’s Procurement Manual)

Delivery Models: Staged or Design and Build

Supplier Selection

Methods:

Normal

Thresholds

Higher Thresholds

(conditional use only)*

Direct Appointment up to $100,000 up to $200,000

Closed Contest/Selected Tender up to $200,000 up to $400,000

Open Contest /Public Tender over $200,000 over $400,000

Evaluation

Techniques

Lowest Price Conforming

Purchaser Nominated Price

Price Quality

Quality Based

Maximum Contract

Term

Five Years or longer if approved by NZTA



Contract Management Approach

All physical works are undertaken by Contractors as part of maintenance or capital works contracts. These works are managed by a combination of Council’s in-house Professional Services Unit and external specialists. Engineering and infrastructure planning services are managed by the in-house Professional Services Unit as well as external specialists where appropriate.



5.0 IMPLEMENTATION & ADMINISTRATION

The government has increased its emphasis on improved asset performance, economic growth, productivity, road safety and value for money through ‘investing for outcomes’ and ‘one network road classification’ programmes. The aim is to deliver improved performance by focusing on economic growth and productivity, road safety and value for money. The NZTA funding which we receive is expected to change over the life of the Long Term Plan and, As a result of this reduction we will need to fund the NZTA shortfall from rates if we are to maintain current levels of service.


Council’s Organisational Skills and Resources

Waitaki District Council is a small-medium sized local authority servicing an extensive rural area which is sparsely populated outside of Oamaru. Council currently uses a mix of its own staff and external resources (where appropriate) to deliver levels of service and achieve associated planning and programmes. This approach places Waitaki District in the ‘Core Plus’ range of asset management practice. Council has recently increased its staffing capabilities and levels within the Roading Professional Services Unit to resource routine works directly. Council functions are divided into the following groups:

Assets

Community Services

Customer Services

Interaction with Other Documentation

This Procurement Strategy will be linked to Council’s draft WDC Procurement Policy 2015 and the NZTA’s wider planning framework as well as the implementation of rules and guides. These links are illustrated in Figure 5.1 following.



Figure 5.1: Procurement Processes

PlanningPlanning Procurement ControlsProcurement Controls ImplementationImplementation

National Land Transport

Programme

Regional Land Transport Plan

Long Term Plan

National Land Transport Strategy

Regional Land Transport Strategy

ActivityManagement Plan

NZTA Rules Procureme

nt Manual Knowledge

Base

LGA 2002 OAG Guidelines

Contract Administration

Procedure/Manual

Purchasing Policy

Delegations

Audits – NZTA

Audits - OAG

Procurement Strategy

Services General Professional

Goods

Construction Contracts

Maintenance Contracts

Council’s Expenditure Delegations, NZTA’s Knowledge Base and Procurement Manual are vital links to the strategy and its implementation. Processes have been developed to assist with delegations, purchasing, project initiation and contract management.

Monitoring and Auditing

The appropriateness and effectiveness of this strategy will be evaluated on an on-going basis as works and services are procured; and reviewed regularly. Transparency and accountability checks occur through Council’s normal business practices including audits by Audit New Zealand and NZTA.

Communication and Endorsement

This second iteration is an update of the first NZTA endorsed strategy, outlines the changes that Council has made to the in-house Roading Unit and highlights Council’s collaboration and shared services initiatives. Comments from suppliers were sought in December 2015-February 2016, with the two submitters responses noted. Responsibility for the Strategy and its currency lies with the Assets Group Manager.



6.0 APPENDICES


Page 24 of 24 2015 Final December 2015

APPENDIX A: Current NZTA Endorsement

Copy of current NZTA Endorsement follows (Updated copy will be included once available)

Documents

Waitaki District Council Roading Procurement Strategy 2015 ... · In preparing the Procurement Strategy, Waitaki District Council has considered its planning framework, principles