By JEREMY SOLE, chief executive, NZ Contractors’ Federation

There have been debates over the years with regard to pre-qualification systems to ensure a pool of appropriately qualified contractors is available to undertake works in local authority areas.

The New Zealand Transport Agency and some territorial local authorities have implemented various forms of pre-qualification systems which ensure a pool of quality contractors is available to tender for and carry out their maintenance and construction works; achieve an appropriate number of competitive tenders; and allow for innovation.

Prequalification should also assist in reducing tendering costs through limiting the number of submitters without closing the door to opportunities for those who wish to lift their firm to the next level.

The Federation believes there are a number of additional benefits, in that pre-qualification encourages high-quality work as contractors strive to maintain their prequalification status in a competitive market; deployment of contractor resources will become more visible, thus enabling better work-flow planning for the contractors’ resources and enabling the council to better regulate work flows to prevent upward pricing pressures from an over-committed local supplier market.

In some instances we have seen generic pre-qualification systems that have enabled contractors to win contracts for works which they have no capability or experience to deliver – in one case we are aware of, one of the largest firms in the country ended up subcontracting to one of the smallest to fix things up. And so a prerequisite for such a system is that it is stratified according to the scale of the work with distinctions made as to the type of work a firm is pre-qualified to perform.

Our assessment is that some systems have been designed around safety and environmental risk reductions which, while essential elements of a pre-qualification system, represent only two of the dimensions that should be addressed in a well-designed pre-qualification system. The Federation has developed a discussion paper on this topic and we are happy to share and discuss it with any local authorities who are interested in exploring such a system.

As alluded to above, Health and Safety and Environment management systems are core to a modern contracting company’s ability to demonstrate its competency to meet compliance and contractual requirements and to carry out the work. Interestingly we observe that the successful integration and management of such systems and processes speaks not only of a contractor’s performance in these dimensions but equally significantly, it is a strong indication of the culture and professionalism of the business.

This professionalism and dedication to effective management of projects and the business as a whole, is the primary reason the federation adopted its Quality Environment Safety and Training (QEST) management system for its members to use. Installing QEST and getting it to the stage where is can pass external audit to the federation’s standards often requires a significant culture change in a contracting business and represents a step change in their ability to tender for and deliver on projects.

The Federation is currently putting significant resources into updating the QEST system and beefing up our support networks to service it, so that we are able to bring it into the Local Government procurement space in the same way it has been sanctioned and supported by other clients such as the NZ Transport Agency. For some time now it has been a key component to the NZTA pre-qualification of many contracting firms. You will be hearing a lot more about QUEST over the coming months and we are looking forward to speaking to you about it.

On a completely different yet related note, the Federation has been conducting research on productivity in the civil construction industry. Our researcher has canvassed local and international literature and a wide range of industry experts in different roles within the industry from governance, management, clients, consultants, and operational people to academics. We feel this report will stimulate a lot of discussion and look forward to releasing it and embarking on a path of increased productivity across the whole civil construction industry

The paper raises issues we believe the industry needs to address that may result in greater value for money and efficient use of resources. The Federation will work with clients, consultants and contractors on the issues raised in the paper and will collaboratively seek solutions that will deliver greater efficiencies.

The paper considers how productivity is measured, how work is procured suggesting the adoption of a robust prequalification system, the influences of the legal environment and how the skill base can be developed and maintained.
The issues raised, we believe, may also support some aspects of the work currently being done by the NZTA Task Force to deliver increased productivity and greater returns on operational and maintenance expenditure.