Outcome 3

In legislation, Infracom is required to promote a strategic and coordinated approach and provide support services for the delivery of current and proposed infrastructure projects. In central government and state service agencies, this mandate relates specifically to infrastructure projects worth more than $50 million.

In 2019/20, the output of this outcome was Procurement Capability and Project Delivery Support through Project Support Agreements (PSAs).

Outcome: The infrastructure procurement capability of government agencies and the construction sector is improved.

Indicator 1
The projects/matters Infracom supports are delivered to the satisfaction of all parties and the delivery market counterparties.
Indicator 2
Infracom is regarded as a trusted advisor.
Indicator 3
Project governance best practices are in place on the projects Infracom supports.
Indicator 4
Infracom is driving innovation in procurement.

Infracom has taken the following actions:

Project and Agency Support Agreements

Infracom has developed two template agreements to formalise the ways it works with procuring agencies: PSA’s and Agency Support Agreements (ASA’s).  PSA’s have been signed with the New Zealand Defence Force and the Ministry for Primary Industries.

Infracom has prepared research and best-practice guidance on major infrastructure procurement and provided guidance on specific issues. We have an oversight role alongside the Treasury for coordinating the New Zealand PPP Programme and for maintaining and developing the New Zealand PPP model.

PPP events

Infracom presented at the October 2019 Australia National PPP Contract Managers Forum in Sydney. We convened two New Zealand PPP Contract Management events.

Infracom also engaged with agencies on key life-of-project transactions, such as refinancing and changes of ownership.

PPP documentation

We republished the ‘Standard Form Public Private Partnership (PPP) Project Agreement’ guidance suite and developed and consulted on a PPP Practice Note outlining Infracom’s expectations regarding its involvement in PPP contract-management activities.

PPP procurement support

We supported the New Zealand Defence Force with an informal market engagement for its Accommodation, Messing and Dining Modernisation Programme, which explored the possibility of using PPP procurement. Our Project Support Agreement with the New Zealand Defence Force also includes a consideration of PPP procurement. 

PPP COVID-19 support

Infracom, working with the Treasury, coordinated the Crown’s response to the COVID-19-related negotiations in relation to the in-construction PPP projects i.e. the Puhoi to Warkworth and Transmission Gully motorway projects and the Waikeria Prison construction project.

New Zealand PPP model review

Infracom progressed a review of the New Zealand PPP model, which began in the Treasury’s ITU in mid-2019. We concluded an extensive series of workshops with key industry participants and completed an advanced draft report outlining our findings.  However, given that COVID-19 has subsequently materially affected the PPP projects in construction and led to complex negotiations between procuring agencies and contractors, in the 2020/21 financial year Infracom will be considering the outcomes of the negotiations and will integrate the lessons learned in the report before concluding the New Zealand PPP model review.

Additional information

Additional Major Projects and Advisory work that support the indicators of outcome 3 are listed below:

Indicator 1 - The projects/matters Infracom supports are delivered to the satisfaction of all parties and the delivery market counterparties 

  • As this is Infracom’s first (part) year of establishment, our involvement with agencies and projects is in its infancy and as such we have yet to formally survey those agencies with which we engage on our performance. It is notable, however, that we experienced positive anecdotal feedback to the end of 2019/20 and are continuing to receive this feedback in the 2020/21 financial year.  This is translating to an increase in demand for our services.
  • The Pipeline’s success is self-evident through the continued rise in contributing agencies and subscribers, as documented in our response to outcome 2.
  • Infracom will develop a more formal process for surveying our collaborators and thus assessing our performance in the 2020/21 financial year, as we develop a more mature portfolio of engagement that starts to show results that can be measured.

Indicator 2 - Infracom is regarded as a trusted advisor

Our Crown advisory work:

  • Prepared a submission on the Infrastructure Funding and Financing Bill
  • Supported the Crown sponsors (the Treasury and Ministry of Transport) in relation to the City Rail Link project decision-making and monitoring
  • Provided independent advice to the Crown in relation to the Auckland Light Rail project
  • Supported the Ministry of Transport-led process for the Upper North Island Supply Chain Strategy
  • Supported Waka Kotahi NZ Transport Agency in its review of KiwiRail business cases.  Engaged with KiwiRail on the next generation ferry project, the Inter-island Resilience Connection project (iReX)
  • Supported the Treasury capital intentions budget prioritisation process
  • Member of New Zealand Upgrade Programme Oversight Group for transport project (managed by Ministry of Transport)
  • Drafted Cabinet Office Circular (19) 6 ‘Investment Management and Asset Performance in the State Services’, to supersede Cabinet Office Circular (15) 5
  • Reviewed the use of institutional equity vs sovereign funds for major projects is almost complete
  • Prepared Ministerial advice on the establishment of the Health Infrastructure Unit within the Ministry of Health.

Agency and other support work:

  • PSA with the New Zealand Defence Force for Accommodation, Messing and Dining Modernisation Programme
  • PSA with the Ministry for Primary Industries for the Plant Health and Environment Capability Programme
  • Let's Get Wellington Moving – member of the Funding and Finance Committee
  • Supported the Drury Transport Infrastructure Programme through to conclusion of the Ministerial Report
  • Gave ad hoc Ministerial advice on shovel-ready roading projects in the pre-COVID-19 environment
  • Review of the Business Case for Christchurch Multi-Use Arena advisory work
  • Review of the Business Case for Dunedin Hospital for the Ministry of Health
  • Review of the Business Case for the Defence Estate Regeneration Programme
  • The Treasury – system leadership in the investment management system. We were involved in supporting business case assurance processes, including reviews of business cases and business case clinics with central agencies, and participation in Gateway processes. These included:
    • New Zealand Defence Force (on the Ōhakea Infrastructure Programme and the Defence Housing Programme)
    • Ministry for Primary Industries (for the Plant Health and Environment Laboratory)
    • Antarctica New Zealand (Scott Base Redevelopment).

Support in the development of the Construction Sector Accord:

  • Infracom is a Steering Group member of the Construction Sector Accord and co-leads the Procurement and Risk workstream within the Transformation Delivery Group.

Other:

  • Membership of the Infrastructure Industry Reference Group assessing shovel-ready projects for stimulus funding
  • Membership of the public sector Construction Collaborative Forum and engagement with a range of central government and local government organisations regarding major projects’ intentions, including the Ministry of Education, the Department of Corrections, Waka Kotahi NZ Transport Agency, the Ministries of Transport, Health, Justice and Defence, universities and high-growth councils and their council-controlled organisations.

Indicator 3 – Project governance best practices are in place on the projects Infracom supports 

This indicator has been met through the following actions:

  • Infracom has built on the ITU’s ‘Major Infrastructure Project Governance Guidance’ document through the investigation of themes and criteria required to develop a governance ‘tool kit’ (the details of which will evolve under the leadership of the Senior Advisor National Project Governance from July 2020).

Indicator 4 – Infracom is driving innovation in procurement

PPP Programme:

  • The Major Projects and Advisory team participate in governance groups for major projects – Puhoi to Warkworth state highway PPP, Transmission Gully PPP, Waikeria Prison PPP, new Dunedin Hospital
  • The Major Project and Advisory team, together with Treasury, advised the Crown in relation to the successful negotiation of COVID-19 related settlements on the three construction-phase PPPs: Puhoi to Warkworth, Transmission Gully and Waikeria prison
  • In 2019/20 we engaged with the Ministry of Education regarding the expansion of its New Zealand Schools PPP programme and this will continue into the 2020/21 financial year
  • A workstream for developing PPP refinancing guidance for agencies is ongoing
  • Performance ‘stock take’ of the New Zealand PPP portfolio
  • Commenced a comprehensive review of the New Zealand PPP Model that is ongoing for completion in the first quarter of the 2020/21 financial year. (This review is separate from the stock take mentioned above)
  • Re-establishment of the PPP Contract Managers Forum and input to Infrastructure Partnerships Australia’s work examining whether PPPs in New Zealand and Australia have delivered on their service promise.

Construction Sector Accord workstreams:

  • Engagement in a number of projects in relation to the procurement and risk workstreams of the Construction Sector Accord
  • The Major Projects and Advisory team is a member of the Construction Sector Accord workstream established to scope out and progress the proposed review of the NZS 3910:2013. This largely fell out of the ITU’s commissioned review released in August last year
  • Publication of COVID-19 construction contract management guidance, reviewing the ‘excepted risks’ provisions of NZS 3910:2013 and their interpretation in the face of COVID-19, resulting in formal guidance offered to agencies on the interpretation and administration of the contracts. The work flowing from this for the 2020/21 financial year includes an investigation of a future force majeure provision that provides greater clarity
  • We began to look at the role of ‘Early contractor involvement (ECI)’ in the project design and development process, and the establishment of guidelines on appropriate behaviours in the areas of collaboration, obligations of the parties, risk allocation and associated build contract implications.

Other procurement-focused actions:

  • Publication of ‘Lifting Our Gaze’ – a think piece on seeking broader outcomes in procurement
  • A review of lessons from the establishment of Special Purpose Vehicles for major projects is almost complete
  • Input to revised ‘Government Procurement Rules’ 4th Edition and revised ‘Construction Procurement Guidelines’ prepared by MBIE
  • A procurement strategy guidance document is under development
  • Input into the development of a construction firm supplier financial tool and associated framework of vetted suppliers, in conjunction with the Ministry of Education, the Department of Corrections, Kāinga Ora and Waka Kotahi NZ Transport Agency
  • The preparation (with MBIE) of guidance on rapid mobilisation models for recovery post COVID-19.

The impact of COVID-19

Due to the COVID-19 lockdown, we were limited in the number of PSAs we were able to formalise.

Measuring performance

Measure Activity  Target 2019/20 Outcome 2019/20

Infracom is a trusted advisor, and the project support delivered by Infracom is to the satisfaction of all parties involved.

PSA engagement survey.

Develop the engagement survey.

Engagement under PSA arrangements remains preliminary.

Both projects supported are in early phases of development and no formal advice has been provided.

PSA engagement survey to be developed in the 2020/21 financial year.

Engagement with central and local government agencies.

Number of projects supported through PSAs and Value of projects supported through PSAs.

New measure to establish baseline.

PSAs have been signed with the New Zealand Defence Force and the Ministry for Primary Industries (approximate value $600 million).

Infracom supported the New Zealand Defence Force with a Trans-Tasman market engagement for the proposed Accommodation, Messing and Dining Linton pilot in December 2019, including attendance at all market interviews and reviews of market engagement material.

Ongoing discussions for new PSAs are underway.

Local and regional consultation process is underway with a report anticipated in September 2020.

The New Zealand Public Private Partnership Programme is coordinated by Infracom.

Hold contract managers’ group quarterly forums and have closer integration with Australian contract managers.

Organise forums and have closer integration with Australian contract managers.

Two New Zealand PPP Contract Managers Forums were facilitated in 2019/20.

Presented at the October 2019 Australia National PPP Contract Managers Forum in Sydney.

PPP policy development progressed, including substantial progress on the PPP Review and republishing of Standard Form PPP Project Agreement.

PPP procurement support provided to the New Zealand Defence Force.

While international engagement is currently limited by border restrictions due to COVID- 19, Infracom has maintained regular dialogue with Australian ‘iBodies’ and Treasury PPP units.

 

Costs to deliver the output to achieve Outcome 3

Updated forecast 2019/20 ($000)

 Actual 2019/20 ($000)

Revenue from the Crown 3,242 3,242
Interest 3 2
Total output revenue 3,245 3,244
Total output expenditure 2,179 2,158
Net surplus/(deficit) 1,066 1,086

Infracom forecast a net surplus for 2019/20 anticipating it would not be spending all Revenue from the Crown in its first 10 months of establishment. The actual net surplus for Outcome 3 was higher than forecast mainly due to the impact of COVID-19 delaying workstreams, and reprioritising Major Projects and Advisory work to support agencies during lockdown and the Government’s economic recovery plan. The delayed workstreams will continue to be progressed in 2020/21.