Case Study: Supplier diversity contracting for broader outcomes

Summary

In 2020 Icon was appointed by Kāinga Ora as the Main Contractor on the 139 Greys Ave project. Located in central Auckland, the development will provide 276 new homes with at least 200 being state homes. It will also offer 24/7 on-site support services, a concierge service; and around 3,000 sqm of shared space including retail and commercial space, communal areas for community building and medical spaces for health-related services.

A key requirement for the 139 Greys Ave project, was the inclusion of broader outcomes in the tender process and contract. The introduction of Broader Outcomes recognises that through procurement, Government agencies have the opportunity to achieve better cultural, economic, environmental, and social outcomes when procuring goods, services or works.

Integral to Icon's appointment as Main Contractor, was its commitment to six targeted broader outcomes initiatives. This Beacon case study focuses on one of Icon's key commitments: 'Supplier Diversity'.

Supplier diversity supports and enables targeted businesses to increase their participation in the supply chain and share in Aotearoa’s economic wealth. Barriers to entry for targeted businesses have been identified and supplier diversity ensures that targeted businesses have an opportunity to be considered for work. It's essentially about providing a level playing field. Initial 'targeted groups' for supplier diversity for 139 Greys Ave were Māori and Pasifika-owned businesses and social enterprises.

The Construction Contract included a target of 5% -7.5% of the total 'construction spend' going to the targeted groups. The project team also wanted to support women owned businesses, and achieved the following overall results:

• Māori and Pasifika owned businesses = 7.66%
• Social enterprises = 2.46%
• Women owned businesses = 2.8%

Supplier diversity contracting for broader outcomes case study video

Approach

Icon had established processes, strategies, and experience delivering broader outcomes in the Australian market; but needed to translate this to an 'Aotearoa-centric' approach. Kāinga Ora's commitment to broader outcomes for the 139 Greys Ave project was the catalyst for Icon NZ to embark on this journey.

To deliver its supplier diversity commitments, Icon partnered with not-for-profit organisations Amotai and Ākina. Amotai specialise in connecting main contractors with Māori and Pasifika owned businesses and provide end to end support from the RFP stage to construction delivery.

Amotai's role on 139 Greys Ave included:

• RFP / Main Contractor Tender Phase
  • Project assessment
  • Procurement strategy development assistance
• Trade Procurement
  • Trade packaging input
  • Matching of potential businesses with appropriate trade packages
  • Businesses due diligence
  • Trade tendering support for Amotai registered businesses
  • Relationship building
  • Post tender Q&A and feedback.
• Construction Delivery
  • Relationship management
  • Check-in's and ad hoc support

This was all rounded up in monthly meetings between Amotai and Icon NZ to monitor progress and share feedback.

See more about Amotai(external link) - amotai.nz

See more about Ākina(external link) - akina.org.nz

Outcomes and benefits

A key requirement

Broader outcomes, including supplier diversity, are increasingly expected from both public and institutional private sector clients on large scale projects. Public sector clients in particular are obliged to deliver public value as per the New Zealand Government procurement rules. It was fundamental for Icon NZ to develop its systems and processes not just for the 139 Greys Ave project, but also for other upcoming large-scale projects.

New Zealand Government's broader outcomes(external link) - procurement.govt.nz

Supplier diversity is also a key element of Icon's own Environmental, Social, and Governance (ESG) key performance indicators.

Increasing options in value chain

The supplier diversity objectives for 139 Greys Ave helped Icon forge relationships with new people and suppliers. In an industry with ongoing skills shortages, developing new relationships with trusted Subcontractors strengthened Icon’s value chain for current and future projects.

Supporting communities and whanau

Supplier diversity can result in more employment and development opportunities for Māori and Pasifika workers, as Māori and Pasifika businesses are more likely to employ staff from their own communities, start workers on higher wages, and offer training and career progression. Additionally, profit created by Māori and Pasifika businesses is more likely to remain in the local community.

Kāinga Ora had an existing relationship with Ngāti Whātua Ōrākei. Before construction began, they collaborated on opportunities like commissioning local artists to create cultural design features throughout the development. The art also depicted the narrative of the development gifted by Ngāti Whātua Ōrākei. Ngāti Whātua Ōrākei was the nominated provider of plants for the landscaping of the project.

This tangible direct benefit to the community was deeply meaningful to and provided a great sense of pride for the project delivery team.

Support the diverse businesses grow

Supplier diversity isn't only about giving diverse suppliers opportunities to compete. It's also about removing the barriers they face and supporting them to uplift their capability, so they are equipped to pursue more opportunities.

Icon’s commercial team supported diverse suppliers through helping them understand contractual arrangements, administration, and financial management skills.

Lessons learned

See lessons learned in the how-to guide

Read more about the Greys Avenue project(external link) – icon.co

Read more about the Greys Avenue project(external link) - kaingaora.govt.nz