Page 8 - HW October 2019

hard news
Government dumps “unsustainable” procurement practices
AS PREVIOUSLY SIGNALLED and confirming a move away from an increasingly vilified model, at the end of last month the Government confirmed that new procurement rules for Government departments would come into effect on 1 October.
“The new rules move away from
a ‘lowest price model’ to a ‘broader outcome model’ which has to take into account the financial health of the construction company, the health and safety of its workers and the environmental health of the building,” says Economic Development Minister, Phil Twyford.
The new Construction Procurement Guidelines “require government departments to consider factors including skills development and training undertaken by construction companies and their subcontractors, whether there
is strong governance over the project and sustainable building practices such as using sustainable materials and minimising waste.”
Building & Construction Minister, Jenny Salesa, adds: “We are helping boost the resilience of construction companies by being more transparent in contracting about what risks exist and who is liable for managing them.
“This allows for fairer pricing,
fairer margins, and less likelihood of unexpected financial shocks. It considers the whole of life value to the public of construction, not just the initial costs.”
The Construction Strategy Group and Registered Master Builders have both welcomed the new rules, with Registered Master Builders Chief Executive, David Kelly, saying: “We strongly support the release of the Guidelines, which have
the potential to significantly improve
the quality and consistency of how Government construction projects are delivered.
“It’s unsustainable for Government agencies to drive contract prices down and pass an unfair amount of risk onto the contractor. All this does is create an adversarial relationship and a culture
of mistrust between parties, as well as leaving contractors potentially financially vulnerable.
“These Guidelines provide an opportunity to reset this culture by having agencies and contractors working more collaboratively to achieve fairer contract and risk allocations when delivering projects.”
The Construction Procurement Guidelines are available here: www.procurement.govt.nz/
procurement/specialised-procurement/ construction-procurement/
6 NZHJ | OCTOBER 2019
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