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Auditor-General's overview

New Zealand Transport Agency: Maintaining and renewing the state highway network – follow-up report.

In 2010 and 2011, my staff carried out two performance audits looking at how well the New Zealand Transport Agency (NZTA) planned and delivered maintenance and renewals services on the state highway network (the network).

In the first of those audits, we found that NZTA had incomplete information about the condition of the network (particularly for bridges, tunnels, and other structures). Our report also highlighted the importance of NZTA consistently monitoring supplier performance and regularly consulting road users on what they expect from the network.

Our second report highlighted the importance of NZTA having specific strategies to encourage more suppliers into the maintenance and renewals market, particularly the professional services market. It also stressed the importance of NZTA monitoring and benchmarking contractor performance.

In those reports, I said that my staff would follow up on NZTA’s progress with our recommendations, and we have now completed our follow-up work.

Since we published the two earlier reports, NZTA has significantly changed many features of its maintenance and renewals activities. NZTA’s intent is to make these activities more efficient, to get better value for money, and to provide its customers with better services. We acknowledge the progress that NZTA has made in developing and putting in place the new arrangements.

This follow-up report describes some of those changes where they are relevant to our earlier findings. On those matters, my staff concluded that it was too early to be able to tell whether the changes NZTA has made are delivering the intended effects.

NZTA has changed the way it procures maintenance and renewals services. It is gradually introducing a new contracting model (Network Outcomes Contracts) to 23 geographical areas. Compared with most existing contracts, the new contracts have a longer duration, cover larger areas, and include a wider range of services. NZTA considers that the new contracts will reduce the costs of tendering and administering contracts, and should improve contractor performance.

There is a risk that fewer, longer, and more extensive contracts could reduce competition in the maintenance and renewals market. This could have adverse long-term effects, such as fewer suppliers and increased costs. NZTA must continue to closely monitor the risks arising from implementing the new contracts, including changes in market behaviour and whether it is obtaining the anticipated benefits, and further adjust its procurement process if necessary.

NZTA told us that it is improving the quality of the data it uses for asset management as a priority. Good quality data is critical to NZTA’s success in making informed asset management decisions about spending priorities for assets across the entire network. For example, NZTA is changing its approach to pavement renewals to achieve savings. The new approach means that NZTA will leave renewals as long as possible and will aim to do them “just in time”. NZTA will require accurate and timely data to enable it to deliver this approach successfully.

We found that there are still gaps in NZTA’s asset data – for example, the information about the structural assets, such as bridges, that make up the highway network. NZTA is putting in place a new information system for collating and recording information about the network’s structural assets. NZTA hopes that the new system will help it to monitor its structural assets in a consistent manner and will support better planning and budgeting.

We have made two suggestions to assist NZTA in ensuring that Network Outcomes Contracts deliver the intended benefits and in making further improvements to its asset management information.

I thank NZTA staff for their help and co-operation during our follow-up work.

Signature - LP

Lyn Provost
Controller and Auditor-General

7 October 2014

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Report details

New Zealand Transport Agency: Maintaining and renewing the state highway network – follow-up report

ISBN 978-0-478-41095-2 (online)