Supply chain leadership in practice
Craig Stevenson, CEO, NPDC
Getting rid of a 'lowest price conforming' model
Like many organisations, New Plymouth District Council relied on the Lowest Price Conforming model when tendering for work. But it knew something was broken and a new approach to procurement was needed. The Council had a vision to become a supply chain leader, where its role was to coach, mentor, lead and inspire its contractors.
The Council's Head of Infrastructure David Langford and his team spent time with the Council’s suppliers, working to develop trust. “We engaged early, and held our hands up to own our poor results and behaviour in the past. We were really clear about why we wanted to behave differently in the future and the outcomes we were hoping to achieve".
Incoming CEO Craig Stevenson was hugely supportive, and helped pave the way for David and his team. “It took courage from all those involved to stay the course. Once you are convinced it’s the right thing to do then as a leader it was my job to run defence for staff while they get on with it, allowing them to do some experimenting, and also evaluate and monitor."
Trialling a different approach
In 2019 the Council implemented a new approach to procurement when tendering for its annual maintenance contract – doing things very differently.
- A weighted-attribute system was used, putting the biggest weighting on how the contractor would invest in its current and future workforce within the civil construction industry.
- The Council moved the contract from three years, to ten years. This would enable those tendering to have certainty over their work for a significantly longer period and make long-term investments in equipment and people.
- The process also required those tendering to factor out the cost of traffic management, such as stop-go signs, to remove the risk to workers.
- They also capped the number of hours that contractors could work for per week.
Downer won the contract.
What they've learnt
After six months into the ten-year maintenance contract, the Council was already seeing major benefits. Because of the certainty of work, Downer has made major investments into the region, including:
- Purchasing machinery to eliminate the need for reversing trucks while building roads – the leading cause of worker deaths in New Zealand.
- Development of a facility at Port Taranaki so it can import bitumen directly into New Plymouth. “Not only is that giving us good health and safety outcomes, it’s also a lower carbon footprint and will generate employment for the economy,” says David Langford.
The decision to remove traffic management has already seen a 15% cost reduction – and a 39% increase in productivity on some projects. A Talent Pipeline network has been established between all civil contractors involved in the region to work together on developing the skills of the current workforce and attracting people into the industry.