Large Scale Projects Programme Governance Board
Paper no:
7.1
Meeting date:
16 September 2022
Director:
s 9(2)(a)
@kaingaora.govt.nz
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Director – Infrastructure and Civil Construction
s 9(2)(a)
Paper author:
s 9(2)(a)
@kaingaora.govt.nz
Owner Interface Manager - Piritahi
s 9(2)(a)
Business Group:
Urban Development and Delivery
Title:
PIRITAHI – ALLIANCE CIVIL ALLIANCE PROGRAMME AGREEMENT
INFORMATION
EXTENSION RELEASED UNDER THE
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Piritahi – ACAPA Extension
Purpose
1. This paper seeks endorsement to progress with the recommended approach of sole source extension of the Alliance Civil Alliance Programme
Agreement (ACAPA), which has a completion date of 6 December 2023.
Recommendations
2. It is recommended that the Large Scale Projects Programme Governance Board:
a)
note that Kāinga
Ora needs to consider the procurement approach at this early stage to provide certainty to the Piritahi Al iance Participants;
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b)
note that a plan to improve the al iance performance has commenced. Performance results wil be required to justify the extension;
c)
note the new Key Result Area (KRA) and Key Performance Indicator (KPI) Framework is designed to emphasise the required focus areas, align
Piritahi with its Owner Participant, and improve the performance of the Alliance to the desired levels;
d)
note there are three options that have been considered for this package of work;
e)
endorse the sole source approach to extend the Alliance Civil Alliance Programme Agreement (ACAPA) for a further term of 3 years; and
f)
note that the Sole Source Plan will be presented for endorsement by the PGB at the October meeting.
Background / Context
3. On 7 December 2018, the ACAPA was entered into for the purpose of forming the Piritahi Alliance to design and deliver civil infrastructure required for
Kāinga Ora Large Scale Projects in Auckland.
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4. The ACAPA has a term of 5 years from the commencement date. Being the date that the ACAPA was executed. Its completion date is 6 December
RELEASED UNDER THE
2023.
5. In accordance with clause 18.1(b) ACAPA, Kainga Ora as the Owner Participant may at its sole and absolute discretion, extend the completion date of
the ACAPA.
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Piritahi – ACAPA Extension
6. The initial focus for the Alliance was “Scale and Pace’. To date the Alliance has delivered approximately $500m worth of infrastructure and has enabled
over 2000 homes.
7. While a significant amount of infrastructure has been delivered over the last 4 years, little focus has been spent on embedding the alliance principles
and developing effective processes and systems.
8. As a result, programme and cost performance has not been at a level that meet Kāinga Ora’s expectations.
9. Late 2021, BRS Consulting was engaged by the Al iance to assist with providing Al iance 101 training for the team, help develop a high performance
plan and provide leadership coaching for the AMT.
10. Further to the above the fol owing items have been undertaken:
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Appointment of a new Chair for the Programme Alliance Board (PAB).
Establishment of the Owner Interface Management Team.
Independent Health Check Report of the Al iance Leadership and structure.
Development of a new Al iance Charter.
Introduction of the KRA and KPI Framework.
11. The above is expected to be the catalyst to improve performance of the Al iance and deliver on Kāinga Ora’s expectations.
12. The BRS Health Check Report provided a number of recommendations, one being that with the significant investment made to the Al iance and the
participants’ willingness to improve its performance, the Non-Owner Participants (NOPs) be given the opportunity to provide a proposal for the
contract extension through a sole source approach.
INFORMATION
13. The UDD team agree with the recommendation and therefore seek approval from the PGB to undertake a process to extend the ACAPA completion
date for a further term of 3 years should the sole source approach give sufficient confidence to Kainga Ora representatives.
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Discussion
14. The recent LSP approvals allow us to plan more holistically which has improved our ability to brief and provide certainty of forward work.
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Piritahi – ACAPA Extension
15. The fol owing three options have been considered to move forward with:
Option
Benefits
Risk
Extend the ACAPA through
Alliance Participants are well
No price tension.
sole source procurement
established.
Current performance issues have the
Continues risk sharing model
potential to continue.
Cost effective procurement approach.
Alliance participants do not have the
Provides opportunity to implement
capability and systems that a Tier 1
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lessons learned.
contractor would provide.
Continues development of tier two
Kāinga Ora enters obligations under the
contractors in the industry
contract, such as supplying particular
resources
Procure new Alliance
Competitive price range
Delay to continuing delivery as a result of
Participants
Opportunity to utilise tier 1 contractors
having to go to market and undertake an
with greater Alliance experience
Interim Al iance Phase with new partners.
Establishment of new efficient systems.
Loss of motivation by existing team.
Increase in cost to establish new alliance.
Programme of work may not be attractive
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to Tier 1 contractors.
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Piritahi – ACAPA Extension
Return to traditional
Al ows a potential return to the CCCS /
Loss of progress over the last three years.
delivery model
3910 traditional contracting model
Capacity of the existing market is
Kāinga Ora will have higher control of
constrained.
delivery and scope outcomes
Reputational fall out
Lower Management / P & G Costs
Loss of non-financial benefits and wider
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Potential cost savings in the long term
potential “value” outcomes (such as
growth of future tier 1 contractors)
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Potential loss of current suppliers and
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established relationships
Likely overall increased procurement costs
Unable to deliver on SPE targets.
Increased direct resource requirements for
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16. Due to the investment that has been made by Kāinga Ora and the effort that is being made by the Piritahi team to shift its direction to meet Kāinga
Ora’s expectations, the opportunity of the wider “value” proposition, the preferred approach is to provide the opportunity to the existing participants
to extend the ACAPA through a sole source approach.
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Proposal
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17. If the decision is made to progress with a sole source approach the following will be addressed with the existing participants:
• Adopt the recommendations from the BRS Health Check Report.
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Piritahi – ACAPA Extension
• Improve cost management and programme performance.
• Develop a Programme Total Outturn Cost (PTOC) that is considered reasonable in line with the value of forward workload.
• Review all Alliance Management Plans
• Review all Alliance Policies - Reference the National Alliancing Guidelines -
National Guidelines for Infrastructure Project Delivery | Department of
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Infrastructure, Transport, Regional Development, Communications and the Arts
• Coaching support for new alliance management team members – 1:1
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• Al iance culture building
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• OIM/SME interface with Alliance – workshop – what good looks like
• Financial establishment audit – Limb 1, 2 and 3 – re-establish what you expect from NOPs – systems and processes, home organisation support
• Consideration of being able to leverage from a Tier 1 Contractor.
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• Collaborative approach to developing a Proposal for the Alliance.
• Programme v Project costs – PTOC4 – further reset as part of the renewal.
• Risk Management including how risk is allocated between the Alliance and the Owner Participant.
• Review of the ACAPA
18. To provide the Alliance Participants with certainty within a reasonable timeframe, the following timeline will be set:
INFORMATION
September 2022
Sole Source Approach Approved
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Engagement of BRS to assist with developing procurement plan
October 2022
Procurement plan Approved by PGB and endorsed by IDC
November 2022
Request for Proposal released to NOPs
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Piritahi – ACAPA Extension
January 2023
Contract negotiations commence with Alliance participants.
June 2023
Agreement on extension of ACAP
June 2023
New contract commences.
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Operating Principles
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19. This approach wil be undertaken in accordance with Kāinga Ora operating principles as wel as the industry standard Al iance Principles.
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Risks and Mitigation
20. Key risks associated with this paper are that the NOPs may not wish to extend the ACAPA. To mitigate this risk Kāinga Ora will work collaboratively to
develop the proposal for approval. Further risks are detailed in the Discussion section above.
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Consultation
21. Consultation has been undertaken with UDD including the Infrastructure and Civil Construction, Commerical and Large Scale Project Team.
Consultation was also undertaken as part of the Health Check Review of the Alliance which informed aspects of this paper.
Implications
Legal Implications
INFORMATION
22. Legal advice and costs associated with reviewing the ACAPA and review of employment implications.
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Financial Implications
23. Financial Implications of the preferred option are outlined below:
• BRS - Consulting advice on Alliance Sole Source Plan
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Piritahi – ACAPA Extension
• Legal Costs - contract extension agreement
• Internal UDD time and effort
• PAB & AMT time and effort
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People and Resource Implication
24. Resourcing levels are not directly affected if the preferred approach is approved. However, if the ACAPA is not extended with the existing participants,
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Kāinga Ora resources wil be affected as per the table in the Discussion section above.
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Health and Safety
25. There are no health and safety implications to this paper
Communication and Engagement
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26. No communication or engagement was required for this paper.
Treaty of Waitangi and Māori Outcomes Obligations
27. The Piritahi Alliance operates under the Te Haumi Manu Whenua Engagement Plan.
28. Other key Maori interests to note are the interest of the Piritahi Marae located in Waiheke. It has been brought to the attention of the Alliance
Participants that no consultation was undertaken with senior leaders of the Piritahi Marae in relation to the use of 'Piritahi' as the name for the
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Alliance.
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29. Piritahi Marae invited members of the Alliance to a Marae visit. The visit allowed Piritahi Marae to express their disappointment at the lack of
consultation.
30. In response, the Al iance gave an apology and requested guidance on how the situation can be rectified. We are stil awaiting a response.
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Piritahi – ACAPA Extension
Next Steps
31. Following endorsement by the PGB, the next steps wil be undertaken:
Request IDC approval of the decision.
Engage BRS to assist with development of procurement plan.
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Complete review of ACAPA.
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Develop Sole Source Plan for endorsement by the PGB, and approval by IDC.
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Referenced documents
32. The fol owing documents are referrenced with the drafting of this paper:
BRS Health Check Review – 2022
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Piritahi Alliance Charter – 2022
Piritahi KRA & KPI Framework 2022/23
Owner Interface Management Plan.
Signature
s 9(2)(a)
INFORMATION
RELEASED
Director – Infrastructure and Civil Construction
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Document Outline
