Image: Work taking place on a section of State Highway 1 between Tirau and Waiouru, where a risk based traffic management approach has been utilised.
Andrew Clark, the National Manager Maintenance and Operations at the Transport Agency explains changes to the state highway road maintenance landscape and the shift to a new contracting model.
Maintenance, when performed at its best, is something that magically appears to happen without many people noticing.
Yet, it feels like the spotlight has never been so focused on the way roads are maintained across the state highway network. At times like this it can pay to reflect on how we reached the current situation, while we embark on the implementation of the delivery model that will drive a change in approach moving forward.
Little over a decade ago there were approximately 200 individual contracts across the country contributing to the delivery of the required road maintenance services. At a time of significant investment in capital infrastructure (i.e. new roading projects) a new approach was required to manage costs while still delivering the full suite of services required.
This scenario gave birth to the Network Outcomes Contract (NOC), which was rolled out in batches across the country. However, with only 20-odd contracts on offer, compared to the previous scenario with 10 times as many, there was a lot more risk and reward on offer for prospective suppliers.
The procurement of the NOCs was coupled with a change in the use of the state highway network. Fuelled by economic and population growth, traffic volumes in some areas increased significantly. As we became more connected, unexpected delays in travel times became increasingly unacceptable. Ways of working were changing in an environment where any cost increases were hard to swallow on both sides of the contracting table.
Road maintenance is funded via the National Land Transport Fund (NLTF), which must reflect the priorities in the most recent Government Policy Statement on land transport (GPS). As such, with a priority on new roads, the funding to maintain and renew the existing state highway network was restricted. Therefore, increasing traffic volumes, decreasing road renewal volumes and changing expectations from customers created a tough environment for everyone involved.
The NOCs were designed to extend the life of our assets through strategic maintenance investment, with a focus on achieving outcome-based performance metrics. Payment mechanisms such as using lump sum for pavement maintenance were well intentioned but didn’t always hit the mark as overall network condition deteriorated.
The inconsistent investment levels, coupled with varying performance across the networks, led to inconsistency in delivery around the country. As a consequence of this lack of investment we have also lost a large knowledge base across the industry as we have not replenished our retiring workforce.
This has created a perfect storm where the most tangible and high-profile outcome of this situation has been the increased number of potholes we see. Naturally, if funding limits our ability to renew the network at a sustainable level, and we don’t have the appropriate skill sets to build and maintain high quality roads, potholes will start appearing, and frequently.
Over time the NZTA has looked at how to improve the NOC model, with each procurement round seeing a refreshed iteration of the contract documentation. However, this has potentially caused more harm than good, with differences in contracts leading to a lack of consistency across the country, which is a barrier to knowledge sharing and capability uplift.
In 2022 the NZTA, led by my predecessor Neil Walker, instigated a full review of the NOC model. Hundreds of people were engaged with, including Agency staff, incumbent suppliers, previous suppliers and sub-contractors, as well as other asset owners, both locally and overseas.
We heard a number of key themes: it was a hard contract, staff turnover was high, relationships were key to success, payment mechanisms weren’t geared correctly, the list goes on. We also heard a consistent trend from other asset owners – that they were moving back towards more traditional models, where the decisions about what and where to invest were made by the owner.
These themes have influenced our thinking regarding how we can evolve our operating and commercial models so that we tackle the issues and enable the Agency to respond to the emerging demands of the network over time. In essence, we need the ability to direct the market to deliver the outcomes required at any point in time, based on the GPS and NLTF.
Core to this is opening up the market.
Under the NOC the contract holder dictates delivery, while they are required to sub-contract a portion of their work scope, and there are often issues around availability of resource across the country to deliver programmes at a national level (particularly if local roads are considered as well).
Moving forward, we will package works for high volume or national-level activities and make these available via tender to a pre-qualified list of suppliers who are appropriately skilled for the work. We’re already trialling this concept in Northland and Taranaki this summer through packages of road rebuild sites, with some great learnings to take forward into the new model.
Contractors may have seen the recent ‘Invitation to qualify’ for the pre-qualification refresh project. The suppliers who pre-qualify through this project will be those who are able to tender for relevant packages of work.
For those who won’t be pre-qualified, fear not, there will be future opportunities to join the list.
Professional service providers will ride shotgun with the NZTA, supporting delivery through management, surveillance, and quality assurance (MSQA), along with other services as required. We expect they will also be partnering with contractors to deliver services within the scope of the main contract, as they do under the NOC.
The Transport Agency will sit at the centre of this activity, in the driver’s seat. With the role of integrating main contractor, packaged delivery and professional services, it was logical to arrive at a destination called the Integrated Delivery Model (IDM).
This model will be consistent across the country – outside our three alliance maintenance contracts in Auckland, Wellington and for the Milford Road.
Some slight alterations to previous network boundaries will see 17 Integrated Delivery Contracts (IDCs) alongside the alliances. This will simplify our operations, reporting and management functions, and will also help us in our efforts to improve the way we communicate and engage with our customers, stakeholders and partners.
Consistent journey times and efficient and effective communication of roadworks or any other causes of delays will enable road users to make better decisions about the best route to their destination.
There are lots of other improvements being packaged into the IDM, including consistent network data collection to drive our tactical planning approach, improvements in the digital space (particularly in terms of asset management and programme management), incorporating the guide to temporary traffic management (NZGTTM) as well as an improved performance management model to support delivery on the outcomes we are seeking.
We’ll also be open to thinking differently about how we deliver programmes. We’ve shown this over the past six months through the development of the State Highway 1 Tirau to Waiouru programme, accelerating a traditional four years’ worth of road renewals into less than two summers.
The methodology, which is seeing us consecutively close one or two sections of the state highway network at a time, is delivering high productivity within a safer environment, supported by a significant communication and engagement approach.
This is a really exciting opportunity, not just for the NZTA, but for the road maintenance industry and road users.
By opening up the market we will enable access to the level of resources we require, while building greater capability that will benefit the wider industry. We have seen this in action over the past 18 months through the Transport Rebuild East Coast alliance, which has utilised local contractors for 80 percent of the recovery work across Tairawhiti and Hawke’s Bay.
The Integrated Delivery Contracts will be live in April 2026, following a significant procurement effort that will take place throughout the majority of this calendar year.
My goal is that in 2036 we can look back with satisfaction on a contracting model that has delivered an improved state highway network condition, with a positive contracting environment that has benefited all parties.
I often talk to Agency staff and our contracting partners about having pride in the network. In a decade’s time I truly believe we will be proud of the work we have done, and that will continue into the distant future.