New Zealand’s association of civil contractors welcomes commitment to better management and leadership for Wellington’s water networks, but cautions little will change without a less combative approach.

Civil Contractors New Zealand Chief Executive Alan Pollard said reports released this week highlight systematic governance and operational failures, with a lack of direction, oversight, funding and checks and balances to keep the region’s water networks on track.

“At a time when New Zealand needs a shared and intensive focus to solve our infrastructure deficit, governance failures have meant to Wellington Water has not developed the competency and frameworks required to effectively manage its significant asset portfolio.”

Mr Pollard said Wellington Water and councils had become mired in blaming others and trying to create scapegoats for poor organisational structure and performance, rather than fulfilling the core purpose of delivering and maintaining water assets for the community.

“What we need, now more than ever, is a coherent programme of work to construct and maintain Wellington’s water networks. And that won’t wait until finger pointing and debate on organisations structure has resolved.”

He said what was needed was a sophisticated water services provider, set up to deliver water services in a way that improved long-term regional capability and ensured the region’s needs were well served.

A lot of factors that could improve value for money were within council control, such as temporary traffic management and waste management requirements.

Mr Pollard said a key example was the lack of waste disposal sites that had led to massive inflation in tipping costs for excavated material, while temporary traffic management costs had also massively inflated in recent times.

“Councils are looking for someone to blame, but in reality, contractors already operate on slim margins. Instead, councils should be looking at regional efficiencies and what is inflating cost, such as materials supply, traffic management and waste management.”

Lack of understanding at a governance level had led to poor decision making, such as a focus on leak fixes as opposed to pipe replacement, which, while politically palatable, was not a cost-effective approach.

He said attempts to pass blame on to others should be seen for what they are.

“Contractors are an easy target as they are not allowed to speak publicly under their contract terms but are bound by client requirements and project design specification. But what’s clear is that under the current arrangements, Wellington Water has not been able to function as an effective Council Controlled Organisation.”

While reports suggested the cost of delivery has been much higher than other so called benchmarked regions, no robust analysis had presented to show this, with no analysis of what the key cost drivers for project delivery were had been provided.

He said the report’s peer review had provided additional context, noting Wellington’s unique challenges and project complexity, including differing design standards, differing temporary traffic management requirements, differing customer expectations, differing waste management arrangements, differing geography and differing geology. Other important factors included the poor overall condition of the network and higher regional wage and salary rates.

Mr Pollard also noted the AECOM report was based on a limited dataset, focused on asset valuation, not construction cost, with no comparative data on construction cost provided for other regions. Because of this, it was not possible to draw accurate conclusions from the information provided.

“Some of the numbers presented are totally out of context. Take maintenance cost per kilometre. If three times the amount of work is taking place for leak fixes because the network has degraded to that extent, then of course the cost will inevitably be higher.”

Despite the structural and financial issues within Wellington Water, contractors had continued to deliver high-quality projects across the region, but an urgent fix was needed for Wellington’s water entity, Mr Pollard said.

“There’s a real danger here that Wellington’s water delivery entity remains crippled and unable to fulfil its purpose. That is not a good outcome for anyone, and we all need to get behind a healthy outcome – decision makers, contractors and ratepayers included.”

ABOUT CIVIL CONTRACTORS NEW ZEALAND
Founded in 1944, Civil Contractors New Zealand is an incorporated society representing the interests and aspirations of more than 800 organisations – including more than 500 large, medium-sized and small businesses that work in civil engineering, construction and general contracting, working to construct and maintain the country’s water, transport, energy and other vital infrastructure networks.

It also has more than 300 associate member businesses, which provide valuable products, support and services to contractor members.

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