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A shift in thinking - case study

A shift in thinking creates better public value for New Plymouth District Council.

A focus on creating public value rather than cutting costs has resulted in New Plymouth District Council taking a leadership role in their supply chain. This case study shows how broader outcomes can work in practice.

Building trust with suppliers to achieve better public value

New Plymouth District Council Infrastructure Manager, David Langford, understands transactional contracting models create a boom-and-bust cycle with low profit margins, poor skills development, inefficiencies and waste. He also believes moving from a prescriptive cost-focused contract, to one built on trust and mutual benefit, has helped achieve better public value for the council and the community, and deliver against their strategic plan.

Supply chain leadership versus management

In supply chain management we use transactions to induce performance out of people. In supply chain leadership we get people to share our vision so we can motivate and inspire them to achieve outcomes that go beyond their own self-interests.

David Langford  New Plymouth District Council Infrastructure Manager

“Providing leadership to align the strategic goals of clients, suppliers and stakeholders is a powerful and flexible management tool that allows everyone to bring their strengths to the table. The team started seeing themselves as the first link in the supply chain, with New Plymouth ratepayers as their customer.”

Rethink contracts to achieve strategic goals and broader outcomes

As supply chain leaders, the team communicated a clear vision and designed contracts to include strategic goals for improving health and safety, upskilling the workforce, and developing more sustainable practices. “We focus on a culture of what value we can create rather than what costs we can save. This goes hand-in-hand with what the council does to support our regional economy and make sure we have a prosperous community,” says David.

To meet these strategic goals contractors needed stability. The council used the NEC contract principles of working in a spirit of mutual trust and collaboration to rebuild their contracts. They combined smaller contracts into larger ones with a ten-year time frame. Performance issues are managed by shrinking the length of the contract, with the ability to grow it back by addressing issues. “This makes the contract theirs to lose, not ours to win,” says David.

These changes brought the supply chain together to implement the strategic vision. “We are a single team. We come together to solve problems, share the risks and opportunities, and look for the added value we can provide to our community,” says David.

Blurring the lines with the New Plymouth District Council professional services collaborative contract [PDF, 181KB] — Constructing Excellence in New Zealand

Higher costs but better public value

Each procurement activity must address at least one of the council’s ten strategic responses. For example, the recent shift from using bitumen to bitumen-emulsion in roading contracts means less energy is used and the carbon footprint is cut in half (reducing emissions). Another good example is how bitumen is no longer cutback with kerosene so the risk of fire and explosions is eliminated (improving health and safety).

As part of the deal the contractor will construct a new bitumen import facility at Port Taranaki (creating opportunities for local businesses). This will also avoid the current practice of trucking bitumen from Port Tauranga (reducing emissions). Although the cost is slightly higher, the procurement offers better public value because of the:

  • health and safety improvements
  • opportunities for local businesses, and
  • reduced emissions.
Road improvements in New Plymouth
A recent road improvement project. Photo: New Plymouth District Council

Building skills training into contracts

David is bringing together education providers and contractors to analyse local labour needs and implement pre-work training programmes to bring work-ready recruits into the contracting industry. “In training they can learn from mistakes rather than on the job where it can be more expensive,” says David. The team is supporting the project by including training opportunities in some of their contracts. In the long term, David believes this approach will minimise the amount of construction defects and cut the costs associated with fixing them.

Growing local business capability

Suppliers are working with local sub-contractors to increase their business-readiness for winning contracts. The benefits for the community include growth in quality employment opportunities for local businesses, improved health and safety, and more sustainable outcomes. The wins are not one-sided with this way of working. “Suppliers actually prefer it because they get better business results and they see the value they create for communities and clients,” says David.

Learn more about the council’s work

For more information about New Plymouth District Council’s broader outcomes work, email David Langford.

What are broader outcomes?

Government procurement can be used to support wider cultural, social, economic and environmental outcomes that go beyond the immediate purchase of goods and services. Together these outcomes are called broader outcomes. The Government’s new policy on achieving them is set out in the recently revised Government Procurement Rules.

This case study has been published to encourage and inspire government agencies, as they begin to implement the new broader outcomes Rules, with a particular focus on the government’s priority outcomes.

The priority outcomes this case study focuses on include:

  • Increasing access for New Zealand businesses
  • Construction skills and training
  • Improving conditions for New Zealand workers
  • Transitioning to a net-zero emissions economy and designing waste out of the system