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Rule 7:
When the Rules apply - new construction works

Explains that the Rules apply to procurement processes for new construction works that meet or exceed the relevant value threshold.

  1. The Rules apply:
    1. to the procurement of goods or services or works for new construction works, when
    2. the maximum total estimated value (Rule 8) of the procurement meets or exceeds the value threshold of $9 million (excluding GST).
  2. To estimate the maximum total estimated value (Rule 8) for new construction works an agency must take into account all:
    1. related services (eg design, architecture, engineering, quantity surveying, and management consultancy services)
    2. types of goods (eg construction material, health and safety equipment)
    3. phases of the construction through to completion
    4. subcontracted goods, services and works.

Construction value thresholds

As of 1 October 2019, the threshold for construction works is $9 million (excluding GST). As the Rules represent good practice, agencies can apply the Rules for procurements under this threshold. New Zealand is party to a number of Free Trade Agreements that include government procurement and Te Tiriti o Waitangi Exceptions. To ensure alignment with obligations outlined in these agreements, the value thresholds in the Rules are reviewed on an annual basis and may be adjusted if there are significant changes in the value of the New Zealand dollar.

Planning for new construction works

As detailed in Rule 69 (planning for new construction works), when planning a new construction project, you must consider New Zealand Government Procurement’s Planning Construction Procurement guides. Agencies must be able to produce evidence that they have considered these guides as they provide standards of good practice for construction procurement processes.

Calculating the value of new construction works

When planning new construction works, you may decide to structure work into subcategories and award these to separate suppliers. Openly advertising smaller contracts can be helpful for smaller businesses that do not have the capacity to supply all the components of a large project.

If you decide to structure work into subcategories:

  • Each of the packages of work will count towards the maximum total estimated value Rule 8 of your procurement.
  • You must do so consistently with Rule 9 Non-avoidance.