Part 4: SCIRT as a delivery model

Effectiveness and efficiency of arrangements to repair pipes and roads in Christchurch.

4.1
In this Part, we describe whether SCIRT is operating effectively and efficiently.

4.2
We looked at SCIRT's project definition and delivery model, and how quality assurance is provided throughout the delivery chain. We looked at how work is allocated to the delivery teams and how commercial tension is maintained. We reviewed the major cost drivers (design standards and guidelines, target cost-setting, and KRA framework) to evaluate whether they are working and delivering the intended outcomes.

4.3
We also carried out a benchmarking study to measure SCIRT's construction costs against local government databases within Canterbury and throughout New Zealand. We wanted to see how costs compared and to examine the effect that environmental conditions and contracting arrangements had on price.

4.4
We expected that SCIRT would have a system to deliver projects of appropriate size and configuration to optimise resources and that there would be an effective prioritisation method. The system should enable managers to track and monitor progress and provide good stakeholder engagement.

4.5
We expected that commercial arrangements and performance measures would provide enough competitive tension to constrain cost inflation and encourage collaboration between participants in the manner intended.

Summary of this Part

4.6
At the time of our fieldwork, SCIRT's operational design created efficiencies that facilitated good oversight and reduced costs. SCIRT was capitalising on its resource of technical specialists and experts to carry out thorough scoping and develop practical solutions. It had good mechanisms to constrain cost inflation. Although these required continued testing to ensure the integrity of the system, they were generally working well.

4.7
There are two major controls that must operate effectively. The independent estimator's review of SCIRT's target costs for projects to check that they represent fair market pricing is critical to maintaining commercial tension and driving efficiencies. Also, the independent audit of delivery teams claims is critical to provide assurance that claims are properly validated. There are risks to the effective operation of these controls that need to be managed.

4.8
We commissioned an engineering expert to look at how construction rates for pricing SCIRT projects compare those for similar projects in Canterbury and throughout New Zealand. The wastewater network is the deepest, suffered the most damage, and represents the largest proportion of the overall costs (67% of the 2012/13 budget), so it proved to be the most useful reference. The benchmarking study found that wastewater construction rates vary significantly.

4.9
SCIRT rates are consistent with similar projects in Canterbury and between 30% and 50% higher than for similar projects elsewhere in New Zealand. This is because the ground conditions and the need to work around existing utilities has a significant effect on price. SCIRT's rates for water supply were similar to greater Canterbury rates and higher than New Zealand rates. SCIRT rates for stormwater were lower than both greater Canterbury and New Zealand rates. Our expert concluded that the ground conditions for SCIRT projects were among the worst in the country and, in this context, SCIRT's prices compared reasonably favourably.

4.10
SCIRT manages the effect of these factors through a consistent approach to pricing, sound risk management, and use of its collective experience and learning.

4.11
SCIRT is delivering more than construction work. It is aiming to lift the capability of the construction sector workforce, improve the resilience of infrastructure, and foster innovation.

4.12
An example of an innovation developed by SCIRT is the Pipe Damage Assessment Tool to provide a reliable and accurate desktop method for predicting the condition of earthquake-damaged pipes, saving time and money. Another example of efficiencies achieved is the customisation of the software SCIRT uses for computer-aided design and drafting.

Workstream planning

SCIRT's workstream planning is designed to streamline the progress of projects towards completion using integrated information technology systems to provide good oversight, monitoring, and control. There are long-term benefits to be gained by the three public entities when the intellectual property and technology is transferred at programme completion. Enough information is collected to support future asset management.

4.13
SCIRT is structured to manage and deliver projects all the way from project definition and prioritisation through to project completion (see Figure 3). Projects progress through a series of "gates" for each stage, similar to a production line. The process is supported by an integrated information technology system to ensure the correct level of oversight and that approvals are gained throughout.

Figure 3
SCIRT delivery model

Figure 3 SCIRT delivery model.

4.14
SCIRT uses a range of applications to manage specialist aspects of project delivery, such as geographic information, document archiving, estimating, financial management, schedule management, and business intelligence reporting tools. The applications have been selected to be user-friendly and are linked to create one data source.

4.15
SCIRT's business systems ensure that all relevant project information is easily accessible, can be managed centrally, and is capable of producing customised reports for individuals or for the SCIRT Board or the CGG to consider. All material information and data is archived for future use and to ensure that costs can be apportioned to the appropriate asset owner.

4.16
There are long-term benefits expected by the asset owners, CCC, and NZTA, who will inherit the information and technology at the end of the rebuild. The asset assessment being carried out for the rebuild is extensive, and CCC will have comprehensive asset condition information as a result. Software applications are being streamlined and customised for SCIRT's purpose, and the efficiencies created become the property of CCC.

4.17
The Chief Advisor for Engineering Assurance at NZTA reviewed the process for preparing estimates in October 2012. He found that SCIRT's database could record all asset data necessary for the rebuild and could easily be updated for use as an ongoing source document.

Project definition and prioritisation (Gate 0)

The method used to plan and prioritise projects is effective and efficient at the operational level. SCIRT depends on information from the three public entities to complete the prioritisation process, as discussed in Part 5.

4.18
SCIRT prepared a plan to outline its principles and methodology for scoping projects. Project boundaries are defined at two levels by looking at various relationships between assets. Network interdependencies are considered first to define hydraulic catchments boundaries, and then proximity interdependencies are used to define project boundaries within those catchments.

4.19
Hydraulic catchment areas are made up of network assets such as wastewater and stormwater pipes that have been grouped. Individual lengths of pipe cannot be replaced in isolation because of the widespread ground settlement caused by the earthquakes. Some gradients have changed and might no longer meet hydraulic capacity or velocity requirements. SCIRT refers to this grouping of network assets as "catchment areas".

4.20
A catchment area is broken into a series of projects to progress through to the design and delivery phases. The boundaries for projects are established after the catchment concept design is complete. Assets are grouped based on geographical proximity interdependencies to achieve, where possible, a target project value of $10 million (an optimum level), or a "one pass" approach. Structures such as bridges, reservoirs, and retaining walls are also grouped if there is an opportunity to do so. If there are no interdependencies, a standalone project is created.

4.21
The smaller project value of IRMO projects has reduced the average project value for SCIRT. At the time of our audit, SCIRT was increasing its work to reach peak production levels in June 2013. Over time, it is gradually increasing the value of defined projects and moving toward more optimum levels. When SCIRT was established, it took on 148 projects from IRMO in September 2011 that were in the design, construction, and handover phases. These projects had a total value of $77 million and an average project value of around $0.52 million. SCIRT also took over 125 IRMO projects that were in early design phases and were carried over into SCIRT processes. These projects had a combined value of $275 million and an average value of $2.2 million.

4.22
More than a year into the rebuild programme, the average target cost value for a SCIRT project was $4.1 million in December 2012 and $5.4 million in January 2013. In February 2013, the average target cost value for SCIRT projects dropped to $2.6 million, although this was in part because two projects, with a combined value of about $35 million, were carried over into March. At the time of our audit, most projects were not defined to meet the $10 million optimum size, but the value of defined projects was steadily increasing.

4.23
The definition of a project is contained within a scope report. Once the catchment or project has been defined, the prioritisation process is applied. This process applies four criteria. (SCIRT depends on information from the three public entities for the fourth criteria, which we discuss in Part 5.) The four criteria are:

  • calculating an operational priority score based on engineering principles and field data analysis, without taking into account any constraints;
  • considering interdependencies between assets, which are primarily interdependencies within a catchment area or proximity dependencies;
  • ensuring that services to important medical and emergency facilities, schools, or important public transport links and strategic routes are maintained; and
  • external factors (geographic and timing) that are linked to specific client goals and targets or support specific requirements of the wider recovery process.

4.24
The prioritisation process determines the order in which projects are released to the design teams. It is run at three-monthly intervals to enable reprioritisation based on new information and data, and to ensure that SCIRT is doing the "right things at the right time". The prioritisation is used to prepare a rebuild schedule, which is shown in Figure 4. Generally, this leads to SCIRT working from east to west.

Figure 4
SCIRT rebuild schedule at catchment level, as at February 2013

Figure 4: SCIRT rebuild schedule at catchment level, as at February 2013.

Source: SCIRT.

4.25
SCIRT uses this process to reinstate services where they are needed most and provide the greatest benefit, despite the complexity of the situation. SCIRT is transparent in its scheduling, making the information publicly available.

4.26
The system uses computer software to automate the process, but it can be adjusted manually to respond to shifting priorities identified by the asset owners. From our observations during our audit, the process to define projects and prioritise them is effective and efficient.

Quality assurance in the design stages (Gates 1, 2, and 3)

SCIRT has focused on developing a high-performance team as an alternative to using a competitive model within the IST. This approach was particularly effective in the design stages. As a result, SCIRT is able to leverage the collective expertise of its staff to achieve thorough project scoping. Processes, including quality assurance, have evolved and are improving.

4.27
SCIRT encourages high levels of performance from its staff in several ways. It was originally planned that the teams of design engineers (who are responsible for developing solutions to reinstate damaged infrastructure) would move to a competitive model and eventually be measured against a target cost in a manner similar to the delivery teams. We were told that SCIRT considered this approach, but thought that competition between design teams would inhibit the gains to be made from collaboration.

4.28
Instead, a project is allocated to one of the four design teams based on existing workload and appropriate skill sets. Staff try to create a buffer between the design phase and the construction phase so that there is a source of projects ready for allocation to delivery teams. Their performance is monitored against the quality, cost, and timeliness of their work. KPIs for the design process include the quality of design and documentation, innovations used in projects, and waste minimisation.

4.29
The four design teams are composed of staff seconded from different organisations, bringing together a range of methods, experiences, and ideas. By working collaboratively, SCIRT encourages its staff to leverage their collective skills and knowledge. Staff and asset owner representatives consider different options for a project during the design process, before recommending a preferred option.

4.30
The designers consult with other IST staff, and early contractor involvement provides advice on constructability. There are a number of planned workshops, including a risk workshop. As well as carrying out the two major design stages, designers also provide support to the construction and handover phases.

4.31
The design teams have been co-located to increase efficiency. Staff spoke positively about SCIRT and appeared consistently enthusiastic about their work. One relatively new member commented that SCIRT was "like a giant consultancy on steroids". SCIRT has worked effectively to build team spirit among a group of individual contractors. One of the advantages we observed from SCIRT having a skilled team is that project scoping is done well.7

4.32
The design process has been refined over time, meaning that not as much detail about earlier projects was recorded. Relevant project information to aid planning and decision-making is now well documented.

Layers of review and inspection (Gates 0-9)

There are layers of internal review and inspection throughout the design and construction stages that form part of an appropriate quality control system. In our view, periodic testing by the three public entities would provide greater assurance that the controls continue to be effective.

4.33
Layers of review and quality assurance have been built into the design and construction phases to ensure good standards. For instance, the design manager signs off the concept design and the detailed design, all designs are internally peer reviewed, technical leads8 internally peer review designs relating to their expertise, and higher risk projects such as structures or specific geotechnical situations require independent external review.

4.34
The IST oversees the delivery teams when projects move into construction. The IST manages the interface between delivery teams and external agencies such as the three public entities and regulatory authorities. The construction inspection programme and test plan for the delivery team to follow are determined during detailed design. The asset owner's standards and guidelines that SCIRT works to prescribe the tests that must be carried out at various stages, and the delivery teams must hold records of these tests.

4.35
Project co-ordinators carry out construction verification audits to check that prescribed processes have been adopted. They also carry out handover audits to ensure that all relevant documents and data are completed and available.9 The relevant responsible manager carries out additional audits on KRA performance. Quality managers and site engineers are appointed within each delivery team. Nonconformance records are raised when defects are identified and are reported monthly. Although these layers of internal review are comprehensive, periodic testing by the three public entities would provide assurance that the system continues to operate in the manner described. The CGG has approved an audit and monitoring framework that, at the time of our audit, was yet to be implemented.

External review

Stakeholders and surveys

SCIRT is open to external review and actively seeks objective views to inform its strategies.

4.36
SCIRT have actively engaged with companies that could perform subcontracted work for the SCIRT delivery teams. Feedback has been sought through a series of surveys and focus groups on whether subcontractors have enough capacity, and appetite, to "ramp up" with additional resources to deliver SCIRT's programme. The feedback also provided subcontractors' views on SCIRT as an organisation, their perception of fairness, and risks to sustainability for the duration of the rebuild. SCIRT collects data weekly on numbers of workers, their trades/skills, and major plant and equipment.

4.37
The results of SCIRT's surveys indicated that the attitude towards doing more SCIRT work was positive for just over half the respondents and neutral for almost a third. Several contractors had limited capacity to take on more work when they were surveyed. The discussion forums generated a wide range of concerns, such as wanting more opportunity to participate in early contractor involvement, wanting more work, rates being too low, costs of compliance being too high, lack of local knowledge, and staff retention challenges.

4.38
SCIRT protected the identity of respondents to ensure that the feedback was open and honest. It uses the information to better understand market dynamics, forecast skill shortages, inform human resources strategy, and improve its processes in preparation for increasing resource scarcity as the vertical rebuild10 accelerates. SCIRT has found the focus groups particularly useful. It plans to continue using these methods to inform strategy.

4.39
SCIRT carries out independent and internal surveys on staff engagement and community views. Results of these surveys are discussed in other sections of this Part.

Independent audit

The independent audit of claims is an essential control to provide assurance that the financial systems at SCIRT are appropriate. It also contributes to fraud detection. There has been a delay with the audit because the quality of information provided by some delivery teams was lacking. The independent auditor of claims made recommendations to improve the process, which should be given due consideration by the three public entities.

4.40
The independent audit of claims is an essential control to provide assurance that the financial systems in place at SCIRT are appropriate. It also contributes to fraud detection.

4.41
The three public entities ask an independent commercial firm to audit the monthly claims made by delivery teams for the actual costs they incur on SCIRT projects. These costs are known as Limb 1 construction costs (see paragraphs 2.56 and 4.133-4.134). The audit also covers the corresponding payments back from CCC to the delivery teams through SCIRT. The auditor examines the claims in detail and produces a monthly progress report to the three public entities that includes comment on any issues arising.

4.42
The independent auditor has reported that the claims validation process has been delayed for several reasons, including hold-ups from delivery teams when their claims are queried. Several issues are hindering, complicating, and preventing cost validation.

4.43
First, several delivery teams are not presenting claims in a format that is easy to audit. The format requires the independent auditor to review portions of a claim at separate intervals instead of all at once. Formats also differ between delivery teams, and the auditor has to manipulate the documents received to make them suitable for review. The delivery teams have been slow in responding to questions of clarification and substantiation from the auditor.

4.44
The resulting effect is that fewer claims are validated than originally anticipated, and a backlog of claims still to be reviewed is growing. The independent auditor commented that it was not clear when particular agreed-to rates were to be applied and for what periods. The independent auditor also reported that they have to revisit projects more frequently than necessary, which is forming an inefficient working pattern.

4.45
The independent auditor suggested adding incentives to the claims validation process to provide more motivation for the delivery teams to improve their process. They have also proposed reduced validation of payments to the IST because of its low error rate.

Target cost (Gate 4)

The target cost is an important element of the commercial model. It is intended to provide commercial tension. The process for setting project target costs is transparent and well documented, and there is a clear rationale for pricing inputs to the project costs.

4.46
SCIRT estimators create a target cost for every construction project. The target cost is an important element of the commercial model. It provides the standard against which project cost performance is measured and is the most significant factor in determining the Limb 3 pain/gain payment (see paragraphs 2.56 and 4.133-4.134). It is also intended to provide commercial tension.

4.47
SCIRT's estimators are part of IST. They are experienced in the construction industry, but involve other team members and industry experts to test their assumptions and judgement. The estimators set target costs independently of the non-owner participants, and early contractor involvement during this stage is limited to a methodology statement.

4.48
We were told that conflicts of interest are managed by ensuring that staff seconded from one of the five non-owner participants are not involved in projects allocated to their parent company, although SCIRT was unable to provide us with a formal policy. Also, the estimating manager reviews all target costs to ensure consistency and adherence to the master pricing schedule.

4.49
A target cost is built up from pricing inputs for key components using a master pricing schedule containing a common database of rates for labour, materials, plant, productivity, and so on. It is the product of an assumed level of resource, productivity, and unit costs. Master files are created for standard jobs to avoid duplication. The process for setting project target costs is transparent and well-documented, and there is a clear rationale for pricing inputs to the project costs.

4.50
Risk was initially calculated as an allowance within the target cost. Mid-way through 2012, risk registers were implemented as a way to identify and account for risk. The risk register is initiated during the design phase, added to as a project progresses through to the estimation phase, and debated during risk workshops.

4.51
The estimators complete the register and price construction risks only. Priced risks are a small proportion of the whole register, because the design risks are mostly resolved by this stage. The project incurs actual costs, irrespective of risk allowances in target costs. The risk allowance is based on the total cost of the risk materialising multiplied by a probability factor of the risk occurring.

4.52
We had an engineering expert review the target cost process as part of a benchmarking study to compare rates and construction costs within SCIRT (see paragraphs 4.66-4.86). Our expert concluded that pricing for job requirements such as dewatering11 were more precise because of good scoping and that cost savings would be likely to be achieved in high-level efficiencies, rather than the basic rates for labour, plant, and materials.

4.53
The target cost can be adjusted by a variation that the SCIRT General Manager approves. A variation is allowed if there is an increase or decrease in the scope of a project, if there is a fundamental change to design, if the three public entities suspend work, or in other circumstances approved by the SCIRT Board. Variations are for only these reasons, not events that are listed and priced in the risk register. An approved variation is the only authorisation to change the target cost after it has been set.

Independent target cost estimator

The independent estimator's role is to ensure that target costs represent fair market pricing that is equitable to both owner and non-owner participants. This role is critical to maintaining commercial tension and signalling risks. His expertise and independence is valuable, but his balance of work should remain on core responsibilities to ensure that target costs continue to drive efficiencies.

4.54
The three public entities engage an independent estimator to provide two important aspects of independent assurance: the validation of target cost estimates and an independent commercial audit of non-owner participant's rate, allowances, and terms of compensation. He is not part of SCIRT but provides services directly to the three public entities.

4.55
The independent estimator reports monthly to the three public entities on target cost reconciliation, market behaviour, and price inflation, and other general conclusions and recommendations. Pricing inputs are updated by the independent estimator as new information becomes available. He also completes a formal six-monthly review and update of the master pricing schedule.

4.56
The independent estimator's validation role is to ensure that target costs represent fair market pricing (while taking into account the conditions in Christchurch), are equitable to both owner and non-owner participants, are prepared in a transparent manner, and could withstand scrutiny if audited.

4.57
The independent estimator attends feedback sessions with SCIRT and carries out project site visits to ensure that productivity and pricing assumptions are achievable and equitable. He monitors price inflation for a selection of typical supply items to develop a cost inflation index specific to SCIRT works. He compares that index with other published construction indices regionally and nationally. He assessed that the overall cost inflation specific to SCIRT would be 4.7% for the 12 months before April 2013.

4.58
The independent estimator reported in February 2013 (based on the results of price inflation monitoring) that labour and salaried staff rates could increase by up to 6% between February and December 2013. He sees an increasing shortage of skilled labour as a risk, along with the need to provide travel and accommodation for people brought in from outside Canterbury.

4.59
The independent estimator creates a target cost for each project independently from SCIRT. This target cost is compared with the target cost from the SCIRT estimator during a pricing review. If the independent target costs differ by more than 2%, there is a discussion to identify the reasons for the difference and to debate the assumptions influencing the estimate.

4.60
SCIRT's price might be higher or lower than the independent estimator's price. Each party adjusts its price as it sees fit until the difference is less than 2%. At the end of the negotiation, the adjusted SCIRT target cost is always selected as the project target cost. The independent estimator has reported that, in February 2013, the combined agreed target costs after the review process were 3% lower than the value of SCIRT's original target costs. The independent estimator's role is critical to maintaining commercial tension.

4.61
The independent estimator has reviewed the rules around Limb 1 reimbursement for delivery teams (see paragraphs 4.133-4.134) and sought to improve definitions to reduce misinterpretation and dispute in the monthly claim process. He has increasingly become involved in the early contractor involvement process and can challenge the methods delivery teams propose. He has also been used to resolve disputes about commercial aspects of SCIRT.

4.62
Although his expertise and impartiality is an asset, the balance of his work should remain on core responsibilities to ensure that target costs continue to drive efficiencies.

Productivity rates

Delivery teams are achieving productivities lower than the rates initially set. Despite an improving trend, it is not expected that they will reach the targeted productivity rates. Initial rates were taken from industry norms and moderated to account for Christchurch's post-earthquake conditions. The independent estimator concluded that these rates needed to decrease to account for the experience in the field. Several challenges unique to Christchurch were the reasons for this.

4.63
Productivity rates are a measure of how quickly a construction task can be completed. These rates require group discussion because of their subjective nature and sensitivity to external factors. Industry norms were used as a starting point for productivity rates, which were then moderated to account for the conditions in Christchurch. Delivery teams have not been meeting the set productivity rates, despite an improving trend, which affects their overall performance against the target cost.

4.64
The independent estimator's review of productivity rates concluded that these needed to decrease to reflect a more realistic target. It said that the delivery teams were unable to achieve the original target rates because of:

  • ground conditions in Christchurch being worse than expected;
  • contractors from other areas lacking familiarity with Christchurch conditions;
  • the prevalence of deep gravity sewers;
  • the design, resilience, and compliance features of SCIRT; and
  • traffic disruption restricting movement around the city.

4.65
After the independent estimator's scheduled six-monthly formal review of rates in April 2013, SCIRT agreed on 10 May 2013 to reduce labour rates by about 10%, reduce productivity rates, and increase resource levels slightly. The combined effect of changes to pricing inputs was expected to result in an increase to the average wastewater project target cost of around 2%-4%. The average annual escalation provision in the estimate for the SCIRT horizontal infrastructure rebuild programme is 5.5%.

Comparing SCIRT construction costs

We commissioned an engineering expert to look at how construction rates for pricing SCIRT projects compare to those for similar projects elsewhere in Canterbury and New Zealand. SCIRT's rates for wastewater construction were consistent with similar projects in Canterbury and 30-50% higher than elsewhere. SCIRT's rates for water supply were similar to Canterbury rates and higher than elsewhere. SCIRT's rates for stormwater were lower, for Canterbury and elsewhere.

Ground conditions and the need to work around existing utilities have a significant effect on price. SCIRT manages the effect of these factors through a consistent approach to pricing, sound risk management, and use of its collective experience and learning. When relevant variables are considered, SCIRT projects seem reasonably priced.

4.66
We commissioned an engineering expert to carry out a benchmarking study on our behalf. Our expert looked at how rates and construction costs for SCIRT projects compare to rates and costs for similar projects in greater Canterbury and throughout New Zealand. It was difficult to make exact comparisons between projects, because each of them has been carried out in differing market conditions, in differing ground conditions, and to varying specifications. Our expert took these variables into consideration before forming a view for this report.

Scope and methodology

4.67
The study compared SCIRT's construction costs with those obtained from local government databases throughout the country. It compared the construction rates used to compile the target costs with rates used for similar types of work within Canterbury and in other parts of New Zealand.12

4.68
The other contracts used for comparisons were a mixture of direct procurement and competitive tender contracts. The SCIRT projects were carried out in late 2011 and throughout most of 2012. The projects for greater Canterbury and New Zealand were carried out between 2009 and 2012. The inflation movement during this time was between 3% and 6%. As this movement is not likely to affect the overall trends identified in the benchmarking work, the data was not adjusted for inflation.

4.69
The study focused on wastewater, stormwater, and water reticulation. It selected projects representing a good cross-section of these assets. Our expert made comparisons for each of these three main assets. The wastewater network is the deepest of the three water systems, suffered the most damage in the earthquakes, and represents the largest proportion of the overall costs (67% of the 2012/13 budget), so it proved to be the most useful reference for the benchmarking exercise. The study also compared preliminary and general (onsite overheads) aspects of the projects, the traffic management component, and the risk and contingency aspects, as well as reasons for any differences.

4.70
We considered including road repairs in the benchmarking review. However, because SCIRT has completed only a small proportion of repair work of roads in the rebuild programme so far, we considered that it was less useful to compare costs now. This and the variations in the types of road repairs would make any benchmarking exercise problematic without a significant amount of appropriate data.

4.71
Our expert stressed that comparing rates of different projects within the civil construction market can never be an exact science. Many variables can affect the outcome. For the purchasers of services, this adds uncertainty to the outcome being procured. A prudent client will review the prevailing market and determine the most appropriate procurement option to maximise the chances of obtaining the best "value for money" outcome.

4.72
Some of the variables that can affect the outcome are:

  • the scale and value of the project within the context of the market;
  • the demand for resources;
  • the timing and urgency of the project;
  • the complexity of the project;
  • the risk allocated to the contract and the appetite of the contractor for taking on risk;
  • the contractor's confidence in the purchaser (client); and
  • the purchaser's capacity and ability to scope the works, manage the contract, and comply with contractual obligations.

Main findings

4.73
The benchmarking study found that wastewater construction rates vary significantly. Ground conditions (affecting the requirement for dewatering and/or special bedding) and a requirement to work around existing utilities can have a significant effect on price. The average greater Canterbury rates and SCIRT rates are between 30% and 50% higher than the New Zealand rates. Our expert concluded that the ground conditions were among the worst in the country for this type of construction and that, in this context, SCIRT's prices compared reasonably favourably.

4.74
The study also compared cost trends for various pipe diameters at different depths for wastewater projects. In all instances, average cost per metre to lay pipe increased with increasing depth for SCIRT, greater Canterbury, and New Zealand projects. Our expert showed that although prices for SCIRT projects were slightly higher than greater Canterbury projects at shallower depths, the rates for the SCIRT projects were consistently less than greater Canterbury projects the deeper pipes were laid. He concluded from these trends that SCIRT is managing the risks associated with poor ground conditions effectively.

4.75
The cost of manholes at various depths also showed that projects in greater Canterbury are trending higher than SCIRT. It is difficult to explain why, although it is likely that this reflects the different ways that contractors price projects, with other costs being included in the manhole rate. Our expert found that SCIRT's approach to pricing and management of risk was more consistent than the other projects used for comparison.

4.76
Less information was available for water supply and stormwater than for wastewater. Rates for water supply were reasonably consistent between projects, apart from a few outliers. Variation in price related to ground conditions, the diameter and length of pipe being laid, the design criteria, and the context within which the work was being done. SCIRT's rates for water supply were similar to greater Canterbury rates, and higher than New Zealand rates. The average SCIRT rates for stormwater were lower than both greater Canterbury and New Zealand rates.

4.77
SCIRT might be experiencing some efficiency gains in repairing stormwater reticulation because the work is being carried out concurrently with roading repairs. Our expert concluded that there was less variation throughout the region and country for stormwater projects because of the shallower depths that pipes are laid at.

4.78
Preliminary and general costs are those associated with the establishment, management (for example, site supervision and overheads), and disestablishment of projects. The benchmarking study found that SCIRT's costs for onsite overheads were consistent with greater Canterbury costs and slightly higher than costs in other parts of New Zealand. Our expert concluded that SCIRT does not have excessively high construction project overheads and matches the construction project overheads on more traditionally bid contracts within greater Canterbury.

4.79
Our expert found that traffic management planning and implementation costs for SCIRT were consistent with greater Canterbury and higher than the rest of New Zealand. Two of the projects in the New Zealand data set did not allocate all the traffic management costs separately, which lowered the average cost for New Zealand. The rates for SCIRT were considered appropriate for the traffic management needs in Christchurch and the safety standards required by SCIRT.

4.80
Every project has a degree of risk associated with its delivery and a contingency allowance to cover additional works. Our expert compared the percentage of the project cost attributed to risk and contingency. The study found that the risk and contingency costs were lower for SCIRT than the projects from greater Canterbury and New Zealand, suggesting that SCIRT is managing its risks well.

4.81
SCIRT manages risks early, rather than transferring them to the delivery teams. This is achieved through thorough scoping, greater pricing transparency, and being precise about its rates. Transferring risk to the private sector during construction projects comes at a price and can result in a different standard or quality of infrastructure to that really needed.

4.82
SCIRT's effectiveness is also linked to strong design work and the availability of experts. The more detailed the design and the more detailed the development of the bill of quantities, the lower the potential of contracting risk. SCIRT is capitalising on its collective experience and learning. In some other parts of Canterbury, the ground conditions are just as bad and prices reflect this.

4.83
Choosing the right procurement method is largely driven by the most appropriate way to manage risk. Transferring all the risks to the private sector partner can be costly and there can also be perverse incentives when a contractor is preoccupied with concerns about liability. In our view, SCIRT is managing the risk appropriately.

4.84
The review of plant and labour rates indicates that SCIRT's rates compare reasonably favourably. SCIRT's rates were generally lower across all categories used in the study for comparison. Our expert said that SCIRT's rates are transparent and do not include a "preliminary and general" cost margin. Productivity rates are likely to show the greatest movement during the rebuild. It is expected that, as SCIRT progresses and work generally moves west to areas of lesser damage, productivity rates will increase.

4.85
Our engineering expert told us that ground conditions and a requirement to work around existing utilities have a significant effect on price. The specific challenges SCIRT faces are:

  • carrying out projects in the most damaged and physically challenging areas of Christchurch and in geotechnically challenging areas;
  • a significantly greater requirement for dewatering and shoring up the sides of trenches;
  • a requirement for higher technical standards to be applied because of the ground conditions and the need for resilience;
  • greater traffic management requirements because of traffic density and safety standards; and
  • the size and complexity of the rebuild in Christchurch.

4.86
SCIRT manages the effect of these factors through a consistent approach to pricing, sound risk management, and use of its collective experience and learning.

Allocating projects to delivery teams (Gates 1 and 5)

Relative performance between delivery teams fluctuates. The system allows for poorer performing delivery teams to improve their performance and increase their share of work accordingly. Likewise, high-performing delivery teams must continue to improve or risk being outperformed by another delivery team and losing their share of work. This suggests that the allocation model is working as intended and is providing the desired incentive to delivery teams to compete for work.

4.87
Project allocation is part of the system of penalties and incentives that foster desirable behaviours and constrain cost inflation. The target allocation for work is determined by a delivery performance score (DPS) and financial performance against target cost, although the project allocation of work is determined by several factors.

4.88
Effective project allocation is important because it supports good performance in delivery teams and provides a safeguard against conflicts of interest. The integrity of the system also depends on the quality of performance measurement and the system for establishing target costs.

4.89
The allocation process consists of two parts. The first is the generation of a DPS, which determines the targeted percentage of work by cost to be allocated to each delivery team (target allocation). This score is a measure of cost and service performance in current projects. Initially, the target allocation was set at 20% for each delivery team until there was enough performance data to begin differentiating shares based on performance.

4.90
The second part considers factors that might influence why a delivery team should not be allocated a project. These factors include the delivery team's capability and capacity, proximity to a project, and safety performance.

4.91
Early contractor involvement allocation is done early in the process to gain construction expertise and advice during the design and estimating phases. Performance scoring is used only for construction allocation, and early contractor involvement allocation is generally equal for all teams.

4.92
The delivery team that is allocated early contractor involvement is not guaranteed construction allocation. However, if a delivery team has been allocated early contractor involvement, SCIRT says there is value in having that team continue with the construction of that project.

4.93
Figure 5 shows changes in the target allocation of work (targeted percentage of the total work by cost to be allocated to them) for each of the delivery teams' target scores, and the actual allocation of projects to delivery teams, between January, and April, and September 2013.

4.94
Target scores are represented as a percentage of the total work that has been allocated to the delivery teams, by target cost value. Continual change in the target allocation from one month to the next might suggest that there is tension in the system and delivery teams are competing for work.

4.95
Figure 5 shows that the target allocation increased for some delivery teams during this period and for others decreased, with target allocations for each delivery team changing independently of each other. Figure 5 also shows the difference between the highest value and the lowest value (the range) for each delivery team. There was a greater difference between delivery teams' target allocations in April than there was in January and September 2013.

Figure 5
Target allocation for delivery teams in January, April, and September 2013

Delivery team A B C D E Range
Target allocation* (%) January 19 22 21 18 20 4
Target allocation* (%) April 16 24 23 18 19 8
Target allocation* (%) September 18.4 20.9 23.1 19.0 18.5 4.7
Change in target allocation from January to April -3 +2 +2 0 -1
Change in target allocation from April to September +2.4 -3.1 +0.1 +1.0 -0.5

* Percentage of the total work by target cost value.

4.96
Figure 6 shows the changes in actual project allocation (percentage of total work by cost actually allocated to them) for each of the delivery teams between January, April, and September 2013). Figure 6 also shows the difference between the highest percentage and the lowest percentage (the range) of work allocated to each delivery team.

4.97
There are similar trends in Figure 6 to those in Figure 5. The actual project allocation increased for some delivery teams during this period and for others decreased, with the project allocations for each delivery team changing independently of each other. There was a greater difference between delivery teams' actual project allocations in April than there was in January and September 2013.

Figure 6
Project allocation for delivery teams in January, April, and September 2013

Delivery team A B C D E Range
Project allocation (%) January 17 20 20 21 22 5
Project allocation (%) April 14 24 21 22 19 10
Project allocation (%) September 17.1 21.4 22.1 19.8 19.7 5
Change in allocation from January to April -3 +4 +1 +1 -3
Change in allocation from April to September +3.1 -2.6 +1.1 -2.2 +0.7

Note: Project allocation is the percentage of the total work by target cost value.

4.98
To determine whether project allocations were more or less following target allocations, we compared them for each of the delivery teams for each of the months (see Figure 7). In January and April, there was between 0% and 4% difference between target allocations and project allocations. In September, the difference in target allocations and project allocations had narrowed and was between 0.5% and 1.3%.

Figure 7
Difference between target allocations and project allocations for delivery teams in January, April, and September 2013

Delivery team A B C D E
Difference between target allocations and project allocations in January 2 2 1 3 2
Difference between target allocations and project allocations in April 2 0 2 4 0
Difference between target allocations and project allocations in September 1.3 0.5 1.0 0.8 1.2

4.99
We have shown two significant trends in this snapshot from January 2013 to September 2013. First, there was movement in delivery teams' target allocations and actual project allocations between months, and the allocations for each delivery team moved independently of each other. The range in target allocations and in actual project allocations between delivery teams was greater in April than in January and September 2013.

4.100
Secondly, the changes in target allocations from January to April and from April to September were more or less consistent with the changes in actual project allocations in the same periods. For example, where there was an increase in target allocation for a delivery team, there was a corresponding increase to project allocation of similar magnitude for that delivery team.

4.101
These trends indicate that there is tension in the system for delivery teams when competing for work. It provides an incentive for poorer-performing delivery teams to improve their performance and increase their share of work. Likewise, high-performing delivery teams must continue to improve or risk being outperformed by another delivery team and lose their share of work.

4.102
In practice, there are some imperfections that affect delivery teams being allocated their target share. Each of the delivery teams originally had an uneven share of the work. This was because of the different quantity of work they completed under the IRMO arrangement. Also, there is only a short history of performance measurement on which to base allocation decisions. Particularly in the early stages, the allocation of a large project can significantly affect the difference between target and actual allocations. SCIRT expects this inevitable "lumpy" phenomenon to even out as more projects are completed.

4.103
Changing the allocation targets too frequently can also create uncertainty for the delivery teams. SCIRT works with delivery teams to achieve a balance between maintaining competitive tension and facilitating future work planning.

4.104
We conclude from these observations that, at the time of our audit, the allocation model was working and providing the intended incentives for delivery teams to compete for work. We could not determine from this analysis to what extent the delivery teams are collaborating or whether collaboration influences performance. The integrity of the system depends on the quality of KRA measurement and the quality of the target costs.

Measuring service performance

Ensuring the quality of KRA measures is of fundamental importance to maintaining the integrity of the wider commercial framework. The KRAs provide good coverage of service performance, help realise benefits, and mitigate operational risks.

4.105
The framework for performance measurement of delivery teams is laid out in the Alliance Agreement and the Key Result Areas Management Plan. KRAs are used to measure aspects of delivery team performance that do not relate to cost but that are identified as important to the three public entities.

4.106
The KRA monitoring information contributes to two important performance scores:

  • A DPS is generated for each delivery team, to determine the allocation of projects and intended to drive competition between delivery teams. The DPS is based on performance against KRAs and performance against target cost. The DPS determines the target share for each delivery team.
  • An OPS is generated as a consolidated measure for all delivery teams to adjust the non-owner participant's remuneration through the pain/gain part of the commercial framework. This mechanism is described in the next section on the three-limb commercial framework.

The KRA framework

4.107
The KRA framework covers the following service-related areas: safety, value, our team, customer satisfaction, and environment. They are designed to cover important aspects of project delivery, are operationally focused, and link to the programme objectives in the Alliance Agreement.

4.108
The KRAs are broken down further into KPIs and measures against which delivery teams are assessed. Delivery teams self-report the KRAs, although IST audits the raw data.

Safety

4.109
SCIRT considers safety to be very important. It is considered as a separate factor in the second part of project allocation (see paragraph 4.90), rather than contributing to the DPS. This is why the safety KRA carries a weighting of 0.

4.110
By considering safety during the second part of the allocation model, SCIRT can stop allocating work to a delivery team that has a poor safety record. If it were included as part of the DPS, it would have less effect.

Value

4.111
The value KRA includes measures for productivity, quality, and innovation. It is one of the few KRAs that measure performance of IST, rather than of delivery teams. Delivery teams contribute to the design process through early contractor involvement.

4.112
Innovations13 are captured in the value register, are reviewed by IST management, and are costed by the Resource Co-ordinator. Innovations count towards the DPS only when they have been approved and taken up by other delivery teams. This is a source of tension for the delivery teams because there is a time lag for the measure to have an effect on their DPS.

Our Team

4.113
The "Our Team" KRA is a measure unique to SCIRT. This measure comes from an understanding of the stress and hardship that staff experience from being affected by circumstances in Christchurch while continuing to work as professionals in the rebuild. This measure indicates that SCIRT values staff wellness.

4.114
The Our Team KRA also includes up-skilling the workforce, with a focus on numbers completing NZQA qualifications, to support the higher objective of "lifting the capability of the sector-wide workforce". Good performance in this KRA can help to address labour shortages by improving the capability of those already working with SCIRT and attracting others.

Customer satisfaction

4.115
SCIRT measures customer satisfaction for both the product and communication. It uses a combination of results from three surveys to determine the score. The surveys are:

  • community in areas where work was finished (shortly after work completed);
  • a representative sample from the wider Christchurch community (repeated six-monthly); and
  • identified representatives from key stakeholder organisations (repeated quarterly).

4.116
SCIRT states:

The results to date show excellent levels of satisfaction that have been due to a focussed effort in engaging affected members of the community with the programme.

4.117
The New Zealand Council for Infrastructural Development (the infrastructure industry body) carried out research during February to April 2013 to assess perceptions of the Christchurch rebuild. The research involved a mixture of stakeholder interviews and an online survey, to obtain feedback from infrastructure leaders, industry, members of Parliament and other community leaders, and members of the New Zealand Council for Infrastructural Development. Two-thirds of the respondents lived in Canterbury, and the rest were spread throughout New Zealand.

4.118
SCIRT featured in the list of things that were seen as going well in Christchurch. When asked about specific aspects of SCIRT, respondents rated its capacity to deliver, its leadership, and its communications particularly highly.

Environment

4.119
The final KRA is a measure of environmental awareness and waste minimisation. The KRAs are designed to encourage desirable behaviours, not just on the particular element measured but also for general matters relating to the KRA. For example, measuring the number of initiatives to improve environmental performance is intended to make environmental matters "front of mind" more generally. This is an assumption that should be tested through compliance audits on other aspects of environmental performance.

Implementing the KRA framework

It is appropriate that the KRAs continue to be reassessed to keep measures relevant. The performance scores need accompanying context to assess performance. They are a measure of the relative performance of delivery teams, not of SCIRT. Performance since July 2012 suggests that the scores are now a better reflection of performance.

4.120
SCIRT has recognised the fundamental importance of the KRA framework. An example of this is when SCIRT reviewed the weighting given to KRAs. The KRAs and respective KPIs are weighted to place greater importance on particular areas. The weighting has changed since the signing of the Alliance Agreement, and is currently 0% for safety, 35% for value for money, 20% for "our team", 30% for customer satisfaction, and 15% for environment.

4.121
In our view, it is appropriate that the weightings have changed and continue to be reassessed. This shows a willingness to respond to the changing circumstances and to keep measures relevant.

4.122
The KRAs are used to influence behaviours, to identify trends, and to differentiate performance between delivery teams. The DPS and OPS are grouped into levels of 0-50 unsatisfactory, 50-65 minimum condition of satisfaction, 65-80 stretch, and 80-100 outstanding. The scores themselves are meaningless without context and should not be viewed as an overall measure of SCIRT's performance.

4.123
Some of the wording and definitions of measures had scope for interpretation or for variable reporting when we reviewed them. For example, it is not clear what constitutes a "safety conversation", and delivery teams could manipulate the score for some measures by including or excluding subcontractors in staff numbers. SCIRT is aware of these reporting anomalies and is working towards setting firmer standards on how information is collected and reported.

4.124
SCIRT began allocating work based on performance scores in June 2012. This had a dramatic effect on delivery team performance against KRAs, which increased sharply (see Figure 8).

Figure 8
Delivery Performance Scores for delivery teams, from November 2011 to March 2013

Figure 8 Delivery Performance Scores for delivery teams, from November 2011 to March 2013.

Note: Delivery team names have been omitted for confidentiality reasons.

4.125
Figure 8 shows that, from November 2011 to May 2012, the measured performance of delivery teams was relatively constant. Between June and July 2012, there was a sudden increase in performance scores. This was when SCIRT began using the scores for project allocation. The performance scores then reach a peak in October 2012. Between October and December 2012, the scores generally decrease before recovering around January 2013.

4.126
SCIRT staff consider that the sharp increase in performance scores was partly because of improved performance and partly because of better reporting of that performance in response to the scores having an effect on project allocation.

4.127
Figure 9 shows the performance of delivery teams from February 2013 to July 2013.

Figure 9
Delivery team performance against key result areas, from February 2013 to July 2013

Figure 9 Delivery team performance against key result areas, from February 2013 to July 2013.

Note: Delivery team names have been omitted for confidentiality reasons.

4.128
Since February 2013, there has been no further sudden increases in scores and trends have been more gradual.

4.129
The rapid increase in performance scores shown in Figure 8 is, in our view, a reflection of delivery teams improving their reporting systems. The more constant trends in Figure 9 show that there have been no further fluctuations of this nature and that the scores are a better reflection of actual performance.

4.130
Delivery teams hold records on the actions they have taken to meet KRA measures. They report to SCIRT on each measure at intervals specified in the KRA framework. Although the system uses self-reporting, IST staff audit documentation and records and carry out site inspections. The KRAs provide an incentive to perform well, but also for delivery teams to hold good records to prove they acted in the manner claimed. As time goes on, delivery teams will have longer to prepare more accurate and efficient methods of reporting.

4.131
Figure 8 indicates that, when performance scores began having an effect on project allocation, the delivery teams responded in a way to improve their scores and get more work. This indicates that work allocation is important to delivery teams and can be used as an incentive.

4.132
Although SCIRT has the emphasis in the right place, it needs to resolve any reporting issues to ensure that delivery teams maintain confidence in the system and that SCIRT realises the benefits of an alliance. During discussion with SCIRT staff, we saw a desire to improve the effectiveness of the KRAs.

Three-limb payment framework

The delivery teams receive payment under a three-limb commercial framework. We had an engineering expert review the size of Limb 2 and comment on its comparability with industry standards. He concluded that the Limb 2 combined profit margin and corporate overheads were within the usual range and appropriate for SCIRT. It is not clear yet whether the pain/gain incentive payment is influencing the behaviour of delivery teams.

4.133
The delivery teams receive payment under a three-limb commercial framework, with Limb 1 a reimbursement of actual costs, Limb 2 a profit and corporate overhead margin on the target cost, and Limb 3 a payment or penalty determined by achievement against financial and service performance measures (see Figure 2 in Part 2). Financial performance is measured by comparing the actual costs of a project against a target cost. Service performance is measured against KRAs (see paragraphs 4.105-4.119).

4.134
Limb 1 is the total of the actual costs of the project claimed by the delivery team. It includes costs such as labour, plant, materials, transport, site facilities, communication, and advertising. It does not include any off-site overheads or profit. All costs are coded and reported to show that they have been allocated correctly, and an independent audit provides assurance to the three public entities that rates and expenses charged to the project are as defined in the Alliance Agreement.

4.135
Limb 2 is paid as a fixed lump sum to cover profit and corporate overheads. It is a set margin. For projects, this is calculated by applying the margin to the Limb 1 costs of the target cost (not the actual costs) incurred by the delivery team under Limb 1 for the project. Once the target cost is set, the amount paid under Limb 2 does not change unless there is an approved variation to the target cost.

4.136
We had an engineering expert review the size of Limb 2 as a percentage of target cost and comment on its comparability with industry standards. He concluded that the Limb 2 combined profit margin and corporate overheads were well within the usual range and appropriate for SCIRT.

4.137
Limb 3 is also known as the "pain/gain" share. It is an incentive payment determined by both financial and service performance. If the actual cost of a project is less than the target cost, a "gain" is created. If actual costs are greater than the target cost, "pain" is created (see Figure 10).

Figure 10
Illustration of Limb 3 pain/gain model

Figure 10 Illustration of Limb 3 pain/gain model.

4.138
The final Limb 3 payment is calculated by adding up all the pain and gain for every project and sharing this 50/50 between the three public entities and the delivery teams. The delivery teams' share is then adjusted by the OPS and shared between each delivery team in proportion to the value of work completed, as shown in Figure 11.

Figure 11
Allocation of Limb 3 to delivery teams, by % of work completed

Figure 11 Allocation of Limb 3 to delivery teams, by % of work completed.

4.139
The primary intended benefit of Limb 3 is to motivate delivery teams to achieve the best cost results. A "pain" result will reduce the earnings of delivery teams, while a "gain" will reward delivery teams.

4.140
A secondary intended benefit of Limb 3 is to encourage delivery teams that are performing well, to assist under-performing delivery teams, and to ensure that the final result will be a gain, rather than a pain.

4.141
At the time of our audit, the delivery teams were in a position of pain, and there was an increasing gap between the highest-performing delivery team and the lowest-performing team.

4.142
It is too early in the programme to form a view on whether Limb 3 is encouraging collaboration between the delivery teams. However, SCIRT suggested that this behaviour would become stronger towards the end of the programme, when the size and effect of Limb 3 becomes more certain.

Added benefits of SCIRT

SCIRT's objectives go beyond standard industry requirements to include building capability and resilience. Systems and incentives are in place to record and implement innovations that create efficiencies for the Christchurch rebuild and of wider value to the construction industry. SCIRT should continue to demonstrate the complete bundle of benefits and monitor emerging risks.

4.143
The independent estimator told us that, although commercial tension in an alliance is always softer than in a traditional tendering process, this is offset by the gains of collaboration. SCIRT's objectives not only contain all the standard requirements such as health and safety, environmental protection, and consultation but they also include additional benefits, such as lifting the capability of the sector workforce and improving the resilience of infrastructure.

4.144
In reporting on performance, SCIRT maintains a register of innovations and initiatives. In February 2013, SCIRT reported that 161 innovations were at various stages of deliberation. Of these, 34 were in use, with estimated benefits of almost $10 million. Initiatives include wellness initiatives, such as providing bicycles for staff to use around the city to encourage fitness, reduce cost, and reduce their carbon footprint. Some delivery teams have held volunteer days, where they help a local family in need.

4.145
Other initiatives relate more directly to improvements in construction work. For example, a contractor has come up with several modifications to their trench shield. The first includes a bracket that holds the geotextile roll, which speeds up the process of installing it into the trench. The second modification sees the addition of a bracket and wheels to lift the trench shield off the bottom of the trench. This allows the compaction of bedding material against the ground, and the wheels enable the shield to be moved along the trench with ease.

4.146
An example of an innovation developed by SCIRT with an effect at a programme level and long-term benefits for local government is the Pipe Damage Assessment Tool. The tool was developed to provide a desktop assessment of the condition of wastewater and stormwater pipes.

4.147
SCIRT had more than 1600km of gravity wastewater and 900km of stormwater pipes to assess for damage. The cost of collecting all the data needed using traditional CCTV methods was estimated to be around $125 million and might have taken more than four years. There was a need to reliably predict CCTV outputs and provide estimates of damage based on a range of inputs using representative sampling.

4.148
The geographic information systems and spreadsheet-based tool that SCIRT produced is able provide information on the recommended action for pipes with an accuracy of 75%-95% to the observed CCTV outcome. The tool is now a reliable and accurate method for predicting the condition of earthquake-damaged pipes, saving significant amounts of time and money. The tool could be used in other cities affected by earthquake damage.

4.149
Another example of significant efficiencies achieved is the customisation of AutoCAD, a software application for computer-aided design and drafting. SCIRT started its design work using a standard AutoCAD tool. However, it realised that design work needed to speed up and that it would need to create efficiencies rather than hire more engineers. The team worked on automating a number of time-consuming and repetitive tasks. They also developed the capacity for design managers to monitor AutoCAD usage. SCIRT was able to quantify the time saved for each task and the overall increase in efficiency. It has now set a savings target from drafting of about $22 million.

4.150
SCIRT has a major initiative called "For Real" to meet its objective of building capability and to address the risk of resource scarcity. The For Real scheme is designed to fast-track potential new apprentices into the workforce. The scheme offers successful candidates free training, New Zealand Qualifications Authority qualifications, and continued on-the-job training with one of the lead contractors.

4.151
SCIRT aims to train 1000 people for the Canterbury rebuild under this scheme. We were told that uptake of this initiative has been reduced because of the slow start of the vertical rebuild and the lack of demand on SCIRT resources.

7: We discuss the basis for, and effect of, this finding further in paragraphs 4.67-4.86.

8: Technical leads are all CCC secondees who have a working knowledge of CCC standards.

9: Includes design reports, construction drawings, records of reviews, CCTV footage, photos during and after construction, non-compliance reports, consent details, as-built records, audit reports, completion certificates, and cost of work to asset levels.

10: The vertical rebuild involves buildings and associated infrastructure.

11: Dewatering is the removal of water from solid materials or soil.

12: To make accurate comparisons, the Limb 2 profit and corporate overhead margin has been applied to SCIRT target costs, because the costs for greater Canterbury and New Zealand would also have had similar margins included.

13: An innovation is defined as a feature of a system, operation, or built work that gives better performance at the same cost or same performance at less cost.

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