Part 1: Introduction

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

1.1
The New Zealand Transport Agency (NZTA) is responsible for managing the state highway network (the network). The network has a value of $28 billion and is one of the New Zealand’s most important assets. It comprises almost 11,000km of roads, with 5,981km in the North Island and 4,924km in the South Island. The network carries half of New Zealand’s traffic, and NZTA spends about $500 million on the network each year.1

1.2
In 2010 and 2011, we carried out two performance audits assessing how effectively NZTA delivered maintenance and renewals work on the network.

1.3
We published New Zealand Transport Agency: Information and planning for maintaining and renewing the state highway network (our first report) in September 2010. Our first report looked at how NZTA:

  • collected and stored information about the condition of the network, with an emphasis on the network’s structural assets (such as tunnels and bridges); and
  • planned its maintenance and renewals work, including ensuring that service levels were aligned with users’ expectations.

1.4
We published New Zealand Transport Agency: Delivering maintenance and renewals work on the state highway network (our second report) in September 2011. Our second report looked at how NZTA:

  • designed and selected its service delivery models, including how it encouraged and supported more suppliers into the maintenance and renewals contracting market; and
  • monitored the performance of its contractors, including how NZTA benchmarked contractor performance and how it responded to problems with that performance.

1.5
The two reports contained 15 recommendations. This follow-up report looks at how NZTA has responded to our findings and main recommendations from the two earlier reports.

Developments since our two earlier reports

1.6
Since we published our two earlier reports, several causes have led NZTA to significantly change the way it delivers its network maintenance and renewals activity.

1.7
First, through the Government Policy Statement on Land Transport Funding, the Government held funding for state highway maintenance and operations constant between 2012 and 2015. This required NZTA to find savings of
$160 million during that period.

1.8
Secondly, the Government established the Road Maintenance Taskforce (the Taskforce) in July 2011 to identify opportunities for road controlling authorities (including NZTA) to deliver maintenance and operations more effectively and efficiently.

1.9
The Taskforce reported in October 2012 and identified four general areas for improvement:

  • adapting the business models used to deliver maintenance, renewals, and operations;
  • improving procurement practices;
  • improving prioritisation and optimisation of activities by differentiating levels of service; and
  • introducing advanced asset management practices throughout New Zealand.

1.10
In October 2012, the Minister of Transport announced that NZTA would implement the Taskforce’s recommendations.

1.11
Finally, NZTA carried out its own reviews, including in 2012 a review of how it procures maintenance and renewals services.2

1.12
As a result, NZTA has made many changes to the way it organises and delivers its maintenance and renewals activity.

1.13
The most significant change is to the way NZTA procures its maintenance and renewals work. NZTA has introduced Network Outcomes Contracts for this work (see Part 4). The new contracts are being introduced over the next two years. Compared with most existing contracts, the new contracts have a longer duration, cover larger areas, and include a wider range of services.

1.14
NZTA has established a Network Outcomes Team in its National Office with the aim of delivering better strategic asset management and optimise investment for all state highway activities. NZTA is also:

  • restructuring the way in which professional services are provided, including bringing the state highway maintenance and renewals contract management function in-house to increase accountability and ownership;
  • providing a nationally consistent highway classification system (which includes different levels of service for different road classifications);
  • developing a nationwide resurfacing and pavement renewals programme to determine optimal maintenance times; and
  • placing a greater emphasis on effective performance monitoring.

1.15
We did not review all of these changes in our follow-up work. It was significantly smaller than the original audits and comprised:

  • a request to NTZA to provide us with written information on the progress it had made on our previous recommendations;
  • a desk-based review of that information, which included plans, reports, strategies, and contract documentation; and
  • a small number of interviews with NZTA staff, to check out aspects of progress.

1.16
Accordingly, we have included only those changes that are relevant to the two earlier reports and their recommendations. We discuss the Network Outcomes Contracts in some detail in Parts 4 and 5 because these directly relate to several of our findings.

1: This includes network maintenance as well as costs for planning and legal issues, emergency works, specialist work (including traffic counting), and expenditure specific to NZTA’s National Office.

2: New Zealand Transport Agency, State Highway Maintenance and Operations Review, consultation document, July 2012.

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