Auditor-General's overview

New Zealand Transport Agency: Delivering maintenance and renewal work on the state highway network.

This is the second of two performance audit reports by my staff into how effectively the New Zealand Transport Agency (NZTA) is maintaining and renewing the state highway network. New Zealand's state highways run from the bottom of the South Island to the top of the North Island and include roads, bridges, tunnels, and many other structures. Our state highways carry about half of New Zealand's annual road traffic and are vital to the country's economic growth and productivity. As well as being a primary means for people to drive to work each day in many of our cities, state highways also connect communities throughout the country. So, it is important that they are effectively maintained.

State highways are valued at almost $29 billion, and the Government plans significant further investment. NZTA spends about $430 million a year on maintaining and renewing the state highway network, and employs a range of consultants and contractors to maintain and renew the network on its behalf. Through cost-effective maintenance and renewal, NZTA aims to improve road safety, the efficiency of freight movement, and the effectiveness of public transport.

Our second audit examined how well maintenance and renewal work is being delivered. It followed my first audit report on this subject, published in September 2010, which examined how well NZTA uses information and plans for maintenance and renewal work. For both audits, my staff examined how well NZTA delivered maintenance and renewal work in five areas – Northland, Auckland Harbour Bridge, Auckland Motorway, Wellington, and Southland.

Overall, NZTA effectively and efficiently maintains the state highway network to the required condition by ensuring that quality and timely maintenance and renewal is completed on the network.

NZTA seeks to achieve cost-effectiveness by using a range of different service delivery models to employ consultants and contractors. Different models are needed because each region of the network has unique characteristics, including size, geography, and traffic volumes. NZTA's service delivery models include traditional contracting and alliancing, where NZTA and the consultants and contractors work together to deliver maintenance work.

NZTA has a clear long-term approach, and detailed strategies and guidance for purchasing services. It has a good understanding of its supplier market and has been responsive to recent market conditions. For example, in December 2009, NZTA introduced a price measure for assessing the viability of professional services tenders to deter unsustainable tender prices, which it had been receiving at the time.

NZTA has strong relationships with its consultants and contractors, has detailed systems and processes to regularly monitor how well they are performing, and is very customer-focused. Although we identified some detailed issues relating to the performance of some of NZTA's consultants and contractors, they were generally performing well in the areas we visited. This means that most consultants and contractors delivered work to the required levels of service, within budget, and to the planned time frames.

The general condition of state highway roads and structures is good. NZTA is working to address issues with road condition that have been identified in recent years. Specialist consultants regularly inspect state highway bridges, tunnels, and other structures, and NZTA has a detailed upgrade and replacement programme to address any safety concerns for those structures. NZTA's surveys of road users show that overall satisfaction with the state highway network has improved in recent years, with most road users rating the network positively.

I have made five recommendations in this report to help NZTA get additional value from maintenance and renewal work. By better understanding the relative quality and cost-effectiveness it delivers through the different service delivery models, over time NZTA should be able to adjust the balance of the models it uses to secure ongoing value-for-money improvements. NZTA should also encourage more suppliers into maintenance and renewal work, where possible, and improve the consistency of its monitoring of consultants and contractors.

In Part 5, I have also brought together the findings of my two audits to present some observations on what NZTA could usefully focus on as it continues to improve how it uses information, and plans and delivers maintenance and renewal work.

NZTA has responded positively to both of my audits. In 2012, I will report on NZTA's progress in implementing the recommendations from the two audits as part of my annual review of how public entities are implementing my recommendations.

I thank NZTA staff for their help and co-operation during both audits.

Signature - LP

Lyn Provost
Controller and Auditor-General

13 September 2011

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