1. Reinventing the Works Department?Collaborative Contracting for Roading Maintenance & Operations Simon Gough November 2011

2. Reinventing the Works Department?Collaborative Contracting for Roading Maintenance & Operations

3. Reinventing the Works Department?Collaborative Contracting for Roading Maintenance & Operations

4. Ministry of Works Ministry of Works Touring Car 1918 NZs Ministry of Works Bad Tie Competition -1984 Nelson Photo News 1961 First Motorway Johnsonville Motorway 1950 Haast Road Construction c1959 Works Camp - North Island Main Trunk Line c.19081876 1988 (incl Public Works Dept)

5. A Looming Problem Statistics New Zealand

6. Impact of Ministry of Works1000009000080000 Kilometres of70000 Metal Roads6000050000400003000020000 Kilometres of Sealed Roads10000 0 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 Statistics New Zealand

7. So what Should we Reinvent?1. Training & Development Ground2. Variety of Experience3. Knowledge Continuity4. Closer working relationship between the contractors, consultants and clients Can collaborative contracting help to rediscover these lost elements?

8. Objectives1.Value for Money2.Healthy Industry3.Collaboration4.Outcome & Performance Focused5.Skills & Knowledge6.Innovation7.Middle & End

9. Why do we need Contractors& Consultants?1. Specialist skills and equipment2. On demand resources3. The ability to spread the costs of under-utilised resources.4. Access to a wider network of expertise, experience and knowledge sharing5. Creating a commercial tension and focus (the missing ingredient for the Ministry of Works)

10. Collaborative Procurement isAn umbrella term forclients, contractors and consultantsworking together in a seamless team tocommon objectives that deliverbenefits to all, but most importantlythe project outcome. Source: U.K. Constructing Excellence

11. Current Challenges withCollaborative Contracting

12. Who owns or controls theCollaboration?1. Perception exists that the Alliance is the contract2. We limit our selves by thinking in terms of the length of the contract1. The client should establish and own the collaborative framework2. The client will then procure partners to assist with delivery3. On this basis the client should provide the day to day business operations to reduce the end risk and cost

13. How do you Create Incentiveswith Fixed Budgets?1. In todays financial environment clients usually work to fixed and declining budgets2. Maintenance & Ops collaborative contracts very different to Projects1. Need to focus on cost productivity to calculate improved performance and create the bonus pool2. Performance metrics then used to determine how the bonus is shared

14. How do you Maintain HighPerformance?1. A new well performing collaborative team will take 5 to 8 years to optimise their operations2. The commercial model is only the catalyst for creating a high performing team1. The incentives need to be added to and updated to ensure they encourage the team to keep performing at a high level

15. Is the Clients Knowledge &Skills Enhanced?1. Significant long term risk is associated with the deteriation of knowledge and skills in the client organisation2. Current Alliances often dont have enough client staff in them to mitigate this risk1. Clients should aim to build their staffs skills & knowledge over the contract duration

16. What Should the End LookLike?1. A smooth transition and continuity of services2. No impact from knowledge loss3. No large costly tendering process to select the incumbent who has all the track record, experience and resources1. I suggest using two main contractors and staggering the retendering to create a perpetual service delivery

17. Two Main Contractorsin a Collaborative Contracting Arrangement

18. SummaryClient establishes and owns long termCollaborative FrameworkUse Cost Productivity to determineefficiency gains & focus behavioursContinuously monitor performance &modify incentivesInclude more client staff in yourcollaborative teamsUse 2 main contractors in yourcollaborative team

19. Kind of Have we reinvented Yes, but with a commercial the Works focus Department? Works Department Conclusion

20. Questions? More Information? Simon Gough simong@wdc.govt.nz Whangarei District Council