Is cheap real value? - 2016 Hynds Best Paper (IPWEA NZ) by Carey Morris

Abstract

After less than desirable contract delivery for many years and the premature end of the latest contract caused by unsustainable pricing on their network maintenance contract, Central Hawke’s Bay District Council (CHBDC) decided to take a fresh look at how they procured this major component of their business. The contract developed needed to be flexible enough to deal with changes that would likely come about with the One Network Road Classification coming into effect and the need to balance contractual requirements with shifting level of service delivery.GHD worked closely with CHBDC to develop the request for tender, a robust evaluation and negotiation process. The recommended and adopted procurement method was Quality Based with a pricing model that separated out profit and overhead payment. In a world where cheaper is often considered better it was a bold move to move to 100% quality on a $4m p.a. maintenance contract. This presentation will provide and insight into the reasons behind this change, the process of procurement and negotiation with the successful contractor and how in the quality based procurement process CHBDC are satisfied they received a competitive price that is reflecting a value for money outcome.