Watercare inks $2.4b 10-year contract with Fulton Hogan

By Jenny Ruth

Sept. 27 (BusinessDesk) - Auckland Council-owned Watercare has signed a $2.4 billion contract with Fulton Hogan and Fletcher Building's construction arm to provide water and wastewater infrastructure in Auckland for the next 10 years.

The long-term and collaborative nature of the contract is a first for New Zealand, the utility says.

Watercare "is seeking to address many of the challenges faced by the construction industry while also achieving our ambitious sustainability, cost-efficiency and safety targets," Watercare chief infrastructure officer Steve Webster says.

"Our company is about delivering water and wastewater services to a growing Auckland. To do this, we must continue upgrading and expanding our network of pipes, pump stations and treatment plants," he says in a statement.

"Historically, we've done this on a project-by-project basis. This has been working well from our perspective, but it doesn't help the infrastructure industry, which finds it hard to invest in people, plant and equipment when it has no long-term security or forward works programme."

The new contract will support the development of a high-performing construction sector and enhance the resilience of Watercare's partners, Webster says.

"We will have a mature and collaborative way of working to ensure our customers, company and partners are looked after."

Watercare is aiming to reduce carbon in infrastructure by 40 percent by 2024, to reduce the cost of its infrastructure programme by 20 percent by 2024 and to "improve the health, safety and well-being of all people involved in delivering our infrastructure by 20 percent year-on-year."

Webster says these targets can't be achieved if Watercare continues to deliver projects in traditional ways.

"We will work collaboratively with Fulton Hogan and Fletcher Construction to plan and deliver a programme of work, rather than discrete projects, in order to drive greater cost-efficiency and innovation. We're calling this way of working the enterprise model," he says.

Fulton Hogan New Zealand chief executive Graeme Johnson says this way of working will transform the way his company delivers water infrastructure.

"We see the enterprise model as a great opportunity to increase the productivity and capabilities of everyone involved and a model that enables us to provide our people with job security and to grow and develop talent. It's a win-win for everyone involved," Johnson says.

His company is looking at ways to apply what it learns from the Watercare contract elsewhere.

Fletcher Construction chief executive Peter Reidy says the contract "champions collaboration and will benefit Aucklanders and generations to come."

Fletcher is already working on a number of Watercare projects including the Northern Interceptor and treatment plants in Clevedon, Mangere, Ardmore and Waikato.

Watercare's current design partners BECA, Stantec and GHD will also be involved in delivering the new contract.

Infrastructure New Zealand, which represents the industry, says the contract is a positive development for the wider sector.

"By committing to a long-term programme of work, rather than one-off projects, Watercare is giving the certainty that construction companies like Fulton Hogan and Fletcher Construction need to be able to invest in skills, drive efficiencies and innovate," says the organisation's chief executive Paul Blair.

It is also consistent with the Construction Sector Accord the government signed in April.

"With a national infrastructure pipeline of $129 billion over the next 10 years, we call on all public sector entities to closely examine this model. Watercare is aiming for 20 percent cost savings but, if our country saved even 10 percent, we could deliver at least 20,000 new social homes or pay for 15 transport projects the size of Transmission Gully," Blair says.

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