Workstream 6: Procurement and risk

Central government makes up around a fifth of the construction spend in New Zealand, and it can take a lead in setting procurement standards in the industry. Good procurement practices are essential to high performance in the sector.

This workstream focuses on building procurement skills, promoting clearer contracts, and achieving a better deal for subcontractors.

Review of NZS 3910

In November 2021, the Accord and New Zealand Infrastructure Commission, Te Waihanga commissioned a formal review of NZS 3910:2013 (NZS 3910), a standard form construction contract used for the majority of contracts in the construction and infrastructure sector. It is expected that the full review will take up to 21 months with an interim review on some non-contentious issues completed within seven months.

A scoping exercise led by Standards New Zealand earlier this year established an overwhelming consensus from the construction sector that NZS 3910 requires a comprehensive review. NZS 3910 has not been updated since 2013 and hasn’t kept pace with legislative and other changes in the construction sector. That has resulted in a proliferation of special conditions to the standard form for individual infrastructure projects.

A review of NZS 3910 has been jointly commissioned by the Accord and the New Zealand Infrastructure Commission, Te Waihanga, with support from a number of other industry organisations representing a cross section of the industry. 

Revision of NZS 3910 project(external link) — Standards New Zealand

The review will be led by Standards New Zealand and aims to deliver a standard industry construction contract that:

• is widely accepted and fit for purpose
• improves understanding of contracts due to fewer special conditions
• allocates risk fairly
• results in more contracts that embody the Accord principles
• allows the industry to document contracts quickly and easily, improving productivity and addressing common issues.

Engineer to the Contract

The Accord is supporting Engineering New Zealand in establishing an 'Engineer to the Contract' panel. The Engineer to the Contract’s role is to ensure that the contract between the client and supplier is administered fairly, impartially and in an orderly and timely manner. This panel will identify industry professionals as having the professional skills, experience and mana to be highly effective in the role of Engineer to the Contract

• Engineer to the Contract Steering Group Established by Engineering NZ January 2021
• Operational Framework agreed November 2021
• Request for expressions of interest to be appointed to the panel to be issued by Engineering NZ to the market by January 2022.

Construction Broader Outcomes Guidance

In November 2021 the Accord published new guidance to help government buyers and industry suppliers consistently apply broader outcomes in construction procurement. The guidance helps buyers and suppliers better understand broader outcomes, by explaining:

• what they are
• why they are important
• how to embed them into government procurement
• their impact on tender evaluation.

Various events to communicate and educate agencies and suppliers on the application of broader outcomes in construction projects are planned for early 2022. 

Read more about the broader outcomes guidance

Other guidance and publications

• Nearly 3,000 downloads of the Rapid Mobilisation Playbook(external link)
• Carbon Guidelines - Procurement guide to Reducing carbon emissions in building and construction(external link) (published June 2021)
• COVID-19 Construction Risk Management guidelines [PDF 672KB] [PDF, 671 KB] (published July 2021).

Improving Construction Data

Data or information relating to activities conducted during the procurement phase of a construction project will allow opportunities for improvement to be identified and any change measured.

• Construction Data Changes made to GETS – published July 2021
• Retrospective Project Reviews – external consultant TSA appointed October 2021 to develop framework.
• Price vs Value Initiative – led by Te Waihanga completed in October 2021

Construction Procurement Leadership Programme

The Accord is working with the New Zealand Government Procurement team within MBIE and other stakeholders to develop a capability framework for construction procurement. The capability framework will provide a gap analysis against a range of skills and capabilities which can be mapped against existing training available in order to identify where additional training opportunities and programmes need to be developed for construction procurers.

• Construction Procurement capability framework workshop held Aug 2021
• Assessment Framework released late December 2021.