Auckland Council Procurement focuses on innovation
By: Barry Potter
As the largest council in Australasia with an annual revenue stream of around $5 Billion, Auckland Council is a major player in the procurement market. We are also very much accountable to the ratepayers of Auckland who demand value for money from all aspects of the business.
There’s a lot of misconception out there in the industry about the council’s procurement process – that it isn’t innovative or smart, and that it is laboured and slow. That’s not the case at all and I’d suggest it is a really out of date way of thinking about our procurement.
In fact, Auckland Council has some really smart, innovative ways of going to the market. Here’s just a few examples of things that we are doing to make that process better.
Early Contractor Involvement
One of the more successful approaches is the Early Contractor Involvement (ECI) process.
That basically means that you get the construction contractor involved early via a parallel process to the design procurement.
In the first instance, this saves us time in the procurement timeline, but practically it works well with the design and construction team coming together through the design process.
We often find that once the design for a project is done and the construction company get involved, we come up against issues that they must figure out on the job, which isn’t ideal.
Having both parties in the room during that design process means they can help iron out problems ahead of time and build solutions into the design work, so when the design is complete it is effectively shovel-ready. We’ve already used this approach around 10 times, all with very positive results.
We are increasingly using the direct award model for projects up to $300,000, where we negotiate directly with suppliers who we know can deliver a project based on previous work done. It’s a quick process to speed things up.
We are also using more Panels to award work. Panels came about in response to the industry feedback we received, and suppliers are selected and normally contracted for around three years. Each panel comprises companies who are already pre-qualified and able to deliver projects. There will be comparable size companies on panels so you can go to a panel of large companies for big projects, and smaller size companies for smaller ones.
To get on a panel there is a pre-qualification process around skills, experience, and track record and on that basis you get on a panel for a particular type of work. That means when a job comes up we just need price and methodology which expedites the process to make the selection.
On a larger scale, for complex projects over $100m, we have begun to use the Alliance Model, which brings together a number of organisations with shared interest in a project to get it done.
The Alliance for the America’s Cup Infrastructure is a good example of a complex procurement done at pace which delivered a great outcome.
We brought together an Alliance comprising council, Panuku Development Auckland and the Crown which was part funding the project.
The selection of Alliance partners from the industry for the $200m project was done in five weeks – including a multi-stage open market approach.
Initial shortlisting came with tight pre-conditions, including that companies needed to demonstrate experience of delivering $100m plus projects previously at scale.
We also had delegation to the Council Chief Executive from the Governing Body (Mayor and all Councillors) to approve key decisions and procurement approvals to set up the Alliance. This was key to speeding up procurement processes.
We quickly narrowed down the suppliers from five to two and the final selection was based on two full day workshops – very similar to council’s lean agile procurement model – a new and frequently more common way of procurement.
In the end, we got the desired outcome within budget, with better quality and with clear legacy outcomes such as the use of marine piling and casing to extend the life of the structures.
There was also whole of life benefit, which meant that we achieved a reduced operational cost, and the fact that it was legacy infrastructure means it will be used as public space in the future.
The project is also being delivered within programme and event timelines with no safety incidents.
We leveraged the Americas Cup Alliance as an SPV to deliver a few other related projects such as the Daldy St stormwater outfall project and the Sealink ferry terminal relocation, with combined values in excess of $50m.
The model could be key to leverage existing Alliance arrangements across the government sector such as Kainga Ora, Watercare, NZTA and others to deliver on projects at pace and scale – the procurement and contracting model is already in place with proven delivery partners allowing activity to start after direct negotiations.
Lean and agile procurement
We have also started “lean agile procurement” pilots for construction contracts based on what we have learned from our ICT area.
We have three projects identified to pilot this. The plan is to use our current supplier panel and shortlist to two suppliers to participate in a presentation and workshop session on non-price attributes to select one supplier.
This takes away lot of process involved, which would usually require an enormous amount of paperwork to be submitted and evaluated. The session enables evaluation and negotiations to happen at the same time – speeding up the selection and identification of the most preferred supplier.
We also use procurement enabling technology like Ariba to speed up sourcing processes and approvals internally and allow us to interact digitally with suppliers. This makes for easy communication and better record keeping digitally and reduces paper forms.
Overall, it’s fair to say that we continue to develop streamlined procurement processes that meet the required audit standards for public sector procurement.
The council is also progressing the work we started doing with MBIE, the Construction Accord, Infrastructure Commission and other key government agencies to have an all ‘of’ government leadership approach to leveraging agile, flexible procurement to achieve better public value outcomes for NZ.
Barry Potter is Director Infrastructure & Environmental Services at Auckland Council www.aucklandcouncil.govt.nz