How the Ministry of Education is managing its forward construction programme

The Ministry of Education’s Infrastructure Service (EIS) is responsible for managing the Crown’s investment in school property, school transport, ICT infrastructure and the schools’ payroll system. Our $28.7 billion property portfolio includes more than 15,000 school buildings across more than 8,000 hectares. As at December 2018, we had $1.5 billion in active design or construction projects. We execute around $350 million of new major works construction contracts every year.

The ministry is one of New Zealand’s largest asset managers and buyers of construction services. We balance our obligations to taxpayers and the Crown by providing safe, well-designed, fit for purpose learning environments to house the 790,000 children and 70,000 teachers who use them every day. We have to make investment decisions that will be long lasting for future generations of children.

While we need to get good value for taxpayers’ money and manage risks appropriately on behalf of school communities and taxpayers, the ministry is also committed to engaging fairly with the construction industry.

We are an active participant in the sector and in response to the current market, have embarked on a number of initiatives to engage with the industry and streamline our procurement processes and construction contract documentation. We have tried to be innovative in this, aiming to:

• Establish long-term, mutually beneficial relationships with the construction sector;
• Increase the transparency of our future construction work programme;
• Make it easier to do business with us; and
• Ensure dealing with us is a high quality and consistent experience for construction contractors, our consultant partners and schools.

Construction Directory

In 2018 the ministry launched a Construction Directory of preferred suppliers and a Construction Pipeline of the high-value projects we are planning.

The Construction Directory is a panel of over 100 pre-qualified construction suppliers for major infrastructure projects. We aim to make the tender process easier for suppliers using the directory. They supply company information just once, during their appointment to the Construction Directory, instead of having to repeat the same information in each tender response. It will also substantially reduce the time ministry staff spend assessing contractors’ tenders, while giving us the confidence of having a pool of high performing suppliers. We expect to procure an estimated $250 million of construction through the directory on an annual basis.

The Construction Pipeline describes the future capital works projects above $500,000 the ministry is planning. It allows suppliers to identify early their preferred tender opportunities and helps them plan their future resourcing.

We are committed to open and transparent engagement with the industry. All ministry standard construction contracts and explanatory guidance notes are publically available on our website. Suppliers can familiarise themselves with terms in advance of submitting a tender, with concerns addressed at the earliest stage of the procurement process.

Annual contract review

The ministry reviews construction contracts annually in consultation with construction suppliers. Briefings are held nationally enabling suppliers to discuss issues directly with our staff.

Our Infrastructure Services’ procurement team also meets regularly with construction industry groups for open discussion and reciprocal feedback. These groups include the New Zealand Institute of Architects (NZIA) and the Association of Chartered Engineers NZ (ACENZ). Senior ministry officials also met with executives from Registered Master Builders to discuss industry concerns and possible solutions. Feedback received during the development of the Construction Directory led to us implementing immediate changes to the standard ministry ‘major works’ contract, including reducing payment times. We are currently reviewing the warranties for workmanship and materials to ensure our contract requirements better align with the current market.

We are also gaining efficiencies in our contracting process by looking outside the box for solutions. Internally, we recently introduced Contract Express, a new automated construction contract software system designed for more efficient and consistent documentation processes. As a result our procurement and legal teams spend significantly less time drafting, reviewing and approving construction contracts, while ensuring consistent terms across the projects.

With automation the ministry is able to release better quality requests for tender. This enables suppliers to submit more precise assessments of the required resources and the risks involved with a particular project.

We are also focusing on design, engineering and consultancy projects. The ministry chairs the Crown Construction Clients Group (CCCG) which is made up of the ministry and six other of the largest government construction clients: the Ministry of Business, Innovation and Employment, Housing New Zealand, New Zealand Defence Force, NZ Transport Agency, Ministry of Health and Auckland Council. The CCCG works in collaboration with NZIA, ACENZ and other industry bodies to standardise conditions of contracts for consultancy services. We intend for both the Crown and suppliers to benefit from reducing the time spent negotiating standard terms and providing a significantly more consistent experience for consultants working with Crown agencies.

Given the size of the ministry’s property portfolio and future project pipeline, it’s in our interest to support a thriving and sustainable construction sector which can build and maintain our properties. For more information on the Construction Directory, Construction Pipeline and upcoming engagement opportunities visit www.education.govt.nz/suppliers and www.gets.govt.nz

Rebecca Robertshawe eis.legal@education.govt.nz is the Legal Director of the Ministry of Education’s Infrastructure Service.