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Investigation Into the Current State of Procurement Practices in New

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Investigation Into the Current State of Procurement Practices in New Investigation into the Current State of Procurement Practices in New Zealand Prepared by Ross Waugh, Purvi Pancholy (PhD), Theunis Henning (PhD), Larry Bellamy (PhD), and Greg Preston July 2020 Acknowledgements Ross Waugh Waugh Infrastructure Management Limited, Timaru, New Zealand Theunis Henning (PhD) Department of Civil and Environmental Engineering, University of Auckland Purvi Pancholy (PhD) Department of Civil & Natural Resources Engineering, University of Canterbury Larry Bellamy (PhD) Greg Preston Information contained in this report has been obtained from sources believed to be reliable. However, neither the Quake Centre, its supporting partner organisations or the authors guarantee the accuracy or completeness of information published herein and neither the organisations or the authors shall be held responsible for any errors, omissions or damages arising out of use of this information. This report is published on the understanding that the authors are suppling information but are not attempting to render engineering or other professional services. If such services are required, the assistance of an appropriate professional should be sought. BUILDING INNOVATION PARTNERSHIP bipnz.org.nz | [email protected] Table of Contents Executive Summary ................................................................ 1 Background ..................................................................................................... 1 Study scope ..................................................................................................... 1 Gaps and opportunities .................................................................................... 2 Industry opportunities ............................................................................. 2 Research gaps ....................................................................................... 2 Conclusions ..................................................................................................... 3 Lagging practice ..................................................................................... 3 Service delivery models are changing .................................................... 3 Manuals, guidelines, policies and strategies ........................................... 3 Alliance contract development ................................................................ 4 Performance-based contracts ................................................................. 4 Circular and broader outcome procurement ............................................ 4 Total supply chain management ............................................................. 4 Skills shortage ........................................................................................ 4 Research gap ......................................................................................... 4 1 Introduction ....................................................................... 5 1.1 Background ............................................................................................ 5 1.2 Scope of research .................................................................................. 5 1.3 Process of research ................................................................................ 6 2 International Three Waters Practice Review .................... 7 2.1 Europe and the United Kingdom ............................................................. 7 2.1.1 European Union standards ....................................................... 7 2.1.2 Scottish water ........................................................................... 8 2.1.3 European use of public-private partnerships ............................. 8 2.1.4 Sweden public water and sanitation service .............................. 8 2.2 Australia ................................................................................................. 9 2.3 Africa, World Bank ................................................................................ 11 2.3.1 Summary of alternative service delivery mechanisms ............. 11 2.3.2 Performance-based contracts ................................................. 11 2.3.3 New Zealand’s adoption of PBCs ............................................ 12 2.4 Circular (sustainable) procurement ....................................................... 12 BUILDING INNOVATION PARTNERSHIP bipnz.org.nz | [email protected] 2.4.1 European Framework for the Circular Economy ...................... 12 2.4.2 New Zealand circular procurement .......................................... 13 2.5 Case study: comparisons with Finland .................................................. 13 2.5.1 Finland and New Zealand country comparison........................ 13 2.5.2 Finland water services discussion ........................................... 16 2.5.3 Observations for New Zealand ................................................ 17 3 New Zealand Procurement Practice Review .................. 18 3.1 New Zealand procurement development .............................................. 18 3.1.1 Initial infrastructure build, Public Works Department ............... 20 3.1.2 Nation building and the Ministry of Works ............................... 20 3.1.3 Recession and outsourcing ..................................................... 20 3.1.4 Outsourcing and external resources ........................................ 21 3.1.5 Increasing capital, service level changes and alliances ........... 21 3.1.6 2020+ Major capital, alliances and skills shortage ................... 21 3.2 Transportation procurement practice .................................................... 22 3.2.1 Transportation national procurement manual .......................... 22 3.2.2 Procurement strategy for transportation activities .................... 22 3.2.3 Standardised service levels..................................................... 23 3.2.4 National data evidence base, data quality ............................... 23 3.2.5 Research integration with decision making ............................. 23 3.2.6 Performance-based contracts ................................................. 23 3.3 Three waters practices ......................................................................... 24 3.3.1 Sector coordination ................................................................. 24 3.3.2 Analysis of local authority survey results ................................. 24 3.3.3 Conclusion – procurement practices ....................................... 36 4 Procurement in Three Waters ......................................... 37 4.1 Service delivery models ........................................................................ 37 4.2 Service delivery procurement ............................................................... 38 4.3 Alternative service delivery ................................................................... 39 5 Three Waters New Zealand Change, Models and Procurement Impacts ........................................................... 40 5.1 Sector change ...................................................................................... 40 5.2 Procurement manual and strategy ........................................................ 40 BUILDING INNOVATION PARTNERSHIP bipnz.org.nz | [email protected] 5.3 Service level standardisation ................................................................ 41 5.4 Evidence base and data quality ............................................................ 41 5.5 Integrating research with decision making ............................................ 41 5.6 Alliance procurement and inclusions ..................................................... 42 5.7 Performance-based contracts ............................................................... 42 5.8 Total supply chain management ........................................................... 43 6 Gaps and Opportunities .................................................. 44 6.1 Industry opportunities ........................................................................... 47 6.2 Research gaps ..................................................................................... 47 7 Conclusions ..................................................................... 49 7.1 Lagging practice ................................................................................... 49 7.2 Service delivery models are changing .................................................. 49 7.3 Manuals, guidelines, policies and strategies ......................................... 49 7.4 Alliance contract development .............................................................. 49 7.5 Performance-based contracts ............................................................... 49 7.6 Circular and broader outcome procurement .......................................... 50 7.7 Total supply chain management ........................................................... 50 7.8 Skills shortage ...................................................................................... 50 7.9 Research gap ....................................................................................... 50 Appendix A - Terms and Acronyms..................................... 51 Appendix B - NZ Procurement Survey ................................ 55 Appendix C - Stakeholder Consultation .............................. 71 Appendix D - References ...................................................... 72 Table of Figures Figure 3-1: New Zealand Procurement Development .......................................
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