Our category approach and delivery models Our category approach and delivery models
Overview of our category approach and delivery models we use to engage with our suppliers.
Category Management
Our category approach
We have adopted a category management based approach to procurement, which acknowledges a combination of organisational structure, the uniqueness of individual category requirements and supplier markets. This will also aid us in focusing on an ‘all of business’ cross functional approach to procurement rather than a siloed approach.
The procurement categories described below form the basis for the development of Procurement Category Plans and the reporting of spend data.
Category positioning is a way of understanding how important each procurement activity is to AT, and how important AT might be to potential suppliers or providers in the relevant supply market.
The category positioning matrix assesses the strategic importance, business impacts and risks in delivery against relative value. It is a useful tool to help inform the approach to market, the type of relationship to be developed with the supplier/s and consideration of key outcomes from the procurement process.
Each procurement opportunity will be strategically assessed to identify which of these positions applies and will be documented in both overarching Category Strategies and individual procurement plans.
| Category position | Description | Value/risk | Approach | Arrangements |
| High value strategic | Strategically important Specialist services or goods Limited capable suppliers |
High/High | Collaboration to attract, select and manage key suppliers |
|
| Low value strategic | Strategically important Shortage of reliable suppliers |
Low/High | Security of supply Tactical engagement Develop suitable alternatives |
|
| High value - non-strategic | Many potential suppliers | High/Low | Secure benefits |
|
| Low value - non-strategic | Routine purchases Many potential suppliers |
Low/Low | Minimal attention Process efficiencies |
|
Category descriptions
| Corporate Goods and Services (GS) | |
| The GS category includes the provision of corporate goods and services which are procured to support the entire Auckland Transport organisation. This category includes: corporate supplies, utilities, fleet vehicles, finance, procurement, legal, property, human resources, communications and marketing professional services. | |
| Sub Categories | Business Services; Finance; Human Resources; Marketing and Advertising; Utilities, Onsite Non-Employees. |
| Auckland Transport Accountability | Finance Division – Procurement Department supported by applicable business departments. |
| Category Positioning | All 4 quadrants depending on the nature of the requirement with indicative annual spend of $18M. |
| Delivery Models | Staged, Supplier Panel and Collaborative. |
| Supplier Market | Due to the varied nature of corporate goods and services, the supply market is impossible to define generically. Some markets feature a large number of capable suppliers whilst others are more monopolistic in nature and so individual categories of spend can be captured in associated category plans. |
| Procurement Approach | AoG contracts should always be explored first and also to leverage demand with other CCOs under our Group Source strategy. Should these options not prove suitable or appropriate, other routes to market such as direct award, closed or open RFx can be used in line with AT's Procurement Policy, |
| Asset Construction (AC) and Physical Works (includes PW1, PW2, PW3 and PW4) | |
| The AC category includes construction projects or programmes of work necessary to bring new transport assets or transport facilities into service. In 2017, the PW category was implemented during the establishment of Physical Works Supplier Panels (PWSP) for construction contractors, where the scope of work includes construction of roads including bridges, streetscape, and traffic signals; construction of transport interchanges including car parks and busway stations/rail stations buildings. |
|
| Sub Categories |
|
| Accountability | Infrastructure Division – Construction, Investment & Development and Roading Groups |
| Category Positioning | High value strategic & high value non-strategic quadrants, with indicative Annual Spend $390M (32%) |
| Delivery Models | Staged, Design & Construct (including Early Contractor Involvement), Shared Risk and Supplier Panel |
| Supplier Market | The AC and PW category has a mature well established supplier market with multiple organisations competing strongly on price and service. There are several large, highly resourced suppliers competing for large projects, however high entry cost can be a barrier to the entry for new suppliers wanting to compete for such projects. A number of suppliers are available for smaller projects or to act as subcontractors to the larger suppliers. The supplier market is generally unrestricted with market competition from other central and local government organisations as well as private industry. |
| Procurement Approach | Value for Money will be achieved through the use of collaborative contracting, reduction in administrative overheads, focus on delivery and the selection of the most appropriate delivery model. |
| Road Corridor Maintenance (RM) | |
| The RM category includes maintenance and renewal activities within the road corridor and town centres. Includes: local roads, footpaths, at grade carparks, cycle ways, bridges, retaining walls, guardrails, signs, street lights. It excludes bulk storm water systems. | |
| Sub Categories | Road Maintenance, Street Light Maintenance |
| Accountability | Infrastructure Division – Road Corridor Group |
| Category Positioning | High Value Strategic with indicative Annual Spend $286M (23%) |
| Delivery Models | Staged, Design & Construct, Shared Risk and Collaborative |
| Supplier Market | The RM category has a mature well established supplier market with multiple organisations competing strongly on price and service, including some interest from off-shore firms. Despite high entry costs the supplier market is generally unrestricted with several large, highly resourced suppliers. Street lighting contractors are required to be approved by the network owner and must employ technicians with approved work type competencies. Market competition exists from other central and local government organisations as well as private industry. |
| Procurement Approach | Value for Money will be achieved through a consistent regional approach to contracting using collaboration and a focus on delivery. We have successfully implemented ten regional road maintenance and renewal and five regional street light maintenance and renewal contracts on a longer 4+2+2 or 4+1+1 terms. Competition has been maintained by limiting the number of contracts any one supplier can hold. Cross organisational collaboration also occurs between Auckland Council, Watercare and utility providers to ensure coordination of activities in the road corridor. The maintenance providers may also be called upon to carry out minor construction activities in the road corridor. This procurement approach is consistent with the recommendations of the 2011 Road Maintenance Task Force and 2012 Road Efficiency Group. |
| Facilities Maintenance (FM) | |
| The FM category includes manned security and the maintenance and renewal of all Auckland Transport facilities and equipment not covered under the RM category. This includes public transport facilities (bus stations and stops, rail stations, ferry terminals and wharfs), parking buildings and other Auckland Transport owned buildings and property. | |
| Sub Categories |
|
| Auckland Transport Accountability | Auckland Transport Asset Management Division - Rail, Bus, Ferry, Departments and Transport Services Division - Parking Services Department supported by Property Operations Department. |
| Category Positioning |
*Spend for technical facilities maintenance, general facilities maintenance and manned security subcategories have now reduced by $2.7M, $2.5M and $3M respectively following commencement of the new rail operator under a vertically integrated model. |
| Delivery Models | Staged, Supplier Panel and Collaborative |
| Supplier Market | The FM category has an established market with multiple organisations competing on price and quality of service. With the exception of some specialist category areas, the supplier market is generally unrestricted, with low barriers to entry and competition from both the public and private sector. |
| Procurement Approach | Value for Money will be achieved through the reduction of transaction costs through business wide regional based maintenance and renewal contracts. Generally, shorter to medium term agreements will be better suited to this category so that flexibility can be maintained in a low risk competitive market, however in specialist areas longer term contracts will be established. Opportunities exist to explore supplier panels and collaborative contracts where possible and to leverage requirements with Auckland Council and its other CCOs. |
| Transport Professional Services (PS) | |
| The PS category includes all engineering and transport related professional services typically provided by consulting engineers to the Integrated Networks, Service Delivery and Planning and Investment. This includes transport strategy or policy development, planning, investigation and design services. | |
| Sub Categories | Design, Engineering, Management, Planning, Research, Review Current Suppliers Panels under the PS category includes:
Note: the previous Technical Support Services (TSS) panel is now operating under TTEPS |
| Auckland Transport Accountability | Finance Division – Procurement function supported by applicable business departments |
| Category Positioning | High Value Non-Strategic, with indicative Annual Spend $102M (8%) |
| Delivery Models | Staged, Supplier Panel and Collaborative |
| Supplier Market | The PS category has an active well established supplier market with multiple organisations competing strongly on price and service. There are several large, highly resourced suppliers who deliver across multiple disciplines and many smaller to medium sized suppliers who specialise in specific services. Except for some specialist areas, the supplier market is generally unrestricted with low barriers to entry and has market competition from both public and private sector. |
| Procurement Approach | Value for Money will be achieved by developing and maintaining competitive tension in the supplier market and reducing transaction costs through business wide regional based contracts. We have implemented Traffic & transportation engineering PS Panel, Technical Support Services and Traffic Monitoring Services Supplier Panel. As these panels come to the end of their terms it is expected that some rationalisation of these panels will occur, allowing a more business wide approach to procurement to occur. There remains opportunity to utilise supplier panels and collaborative contracts where available and to leverage demand with Auckland Council and its other CCOs. |
| Business Technology (BT) | |
| The BT category includes provision and support of all business technology and communication network systems, equipment and services. It includes: technology hardware and software, communication network systems, CCTV, traffic signals, electronic information signs, ticketing and pay and display equipment and intelligent transport systems (route scheduling, real-time and ticketing) and associated professional services. | |
| Sub Categories | Hardware, Software & Applications, Technology Operations, Technology Professional Services, Information Security, Digital Architecture |
| Auckland Transport Accountability | Business Technology Division |
| Category Positioning | All 4 quadrants depending on the nature of the requirement with indicative annual spend of $50M |
| Delivery Models | Staged, Supplier Panel and Collaborative |
| Supplier Market | The technology market has limitations within NZ with a limited number of key players who are able to provide the level of complex and advanced support required to our business. This is particularly evident with physical personnel/contractors being in short supply. These suppliers are comprised of both global powerhouses, medium enterprises and small niche service providers. |
| Procurement Approach | Due to the increasing diversity of Business Technology, the procurement approach will need to be flexible, adaptable and agile to take advantage of a fast-moving market. More commodity based/common technology requirements will be wholly owned by the BT group and will benefit from an increased focus on category planning and use of AoG contracts as a first option. In other, more specialised areas that cross multiple business units, the key will be early engagement of BT during projects. Any assets which are connected to the Auckland Transport network will have an impact on network performance and therefore should be highlighted to BT at the earliest opportunity. |
| Public Transport Service Delivery (PT) | |
| The PT category includes the provision and operation of rail, bus, ferry and on-demand public transport services as well as concessionary fare subsidy schemes (total mobility) and On Demand Rideshare requirements. Decarbonisation and Sustainability are key objectives for this category which also includes associated access agreements, procurement and maintenance of Auckland Transport owned rolling stock, vehicles, ferries, facilities and EV Charging Infrastructure. Note: Procurement Strategies are to be completed at a Sub-Category level |
|
| Sub Categories | Bus, Ferry, Rail, Fare Subsidies (CFS), Light Rail |
| Auckland Transport Accountability | Auckland Transport Metro Division – Rail, Bus, Ferry Departments supported by the Integrated Network Enablement Team. |
| Category Positioning | High Value - Strategic. Indicative Annual Spend $575M (37%) Bus $330M Rail $170M (Operator $120M, Vehicles $49M) Ferry $20M Total Mobility $7M On Demand $7M (includes trials) EV Charging Infrastructure and HV Connections $4.5M (bus)* Access Agreements $36M *Additional future costs for chargers and HV connections are expected to be c$24M, however funding is currently c$12M in RLTP 22-24 |
| Delivery Models | Staged and PTOM Partnership and Collaborative |
| Supplier Market | The PT category includes the provision and operation of rail, bus, ferry and on-demand public transport services as well as concessionary fare subsidy schemes (total mobility) and On Demand Rideshare requirements. Decarbonisation and Sustainability are key objectives for this category which also includes associated access agreements, procurement and maintenance of Auckland Transport owned rolling stock, vehicles, ferries, facilities and EV Charging Infrastructure. Total Mobility is less constrained being an open application process to select approved participants whereas On-demand has some market limitations as this solution matures and future requirements are determined. |
| Procurement Approach | Value for Money will be obtained through optimal consolidation of service units, determination of where future key asset investment and ownership is best positioned and the completion of procurements and appropriate contracts, primarily under the current / future PTOM partnership delivery model. Competition may also be maintained by strategically determining of the number of contracts / units any one supplier can hold. This approach recognises that we and our suppliers, are reliant on each other for delivering affordable public transport services that our customers want to use. |
| Service Delivery (SD) | |
| The SD category includes operational services at all Auckland Transport facilities. Includes: security services, parking enforcement, roading and parking signage, towing, special events and traffic management, purchase of rolling stock, bus and ferries. | |
| Sub Categories | Parking Harbourmaster Towing Event Management |
| Auckland Transport Accountability | Auckland Transport Service Delivery Division – Network Management, Network Services, ATOC, Parking Services & Compliance and Harbourmaster |
| Category Positioning | Low Value – Strategic with indicative Annual Spend $9M Parking Services $2.3M Metering Services $1.6M Towing $2.5M Event Management $2M* (includes Services & Equipment) Harbourmaster $0.2M *Service Delivery Network Services and Management expenditure ($5M) is included in Traffic and transport engineering professional services (TTEPS) and Traffic Management subcategories within the infrastructure category. |
| Delivery Models | Staged and Collaborative |
| Supplier Market | The Service Delivery category has varied requirements with established markets and multiple organisations competing on price and service quality. For some specialist category areas, the local supplier market is constrained, with barriers to entry influenced by investment and Health and Safety requirements. |
| Procurement Approach | Value for Money will be achieved through the use of collaborative contracting, reduction in administrative overheads, focus on delivery and the selection of the most appropriate delivery model. |
Procurement delivery models
A delivery model is the relationship established between Auckland Transport and a supplier to enable the purchase of the output required to deliver an activity. Each delivery model has a different approach to contracting, work methods and risk allocation to suppliers.
In selecting the appropriate delivery model, we will assess the activity against the following criteria:
- Complexity
- Evolving and Future Category Developments
- Innovation potential
- Scale
- Risk profile
- Timing and urgency
- Supplier market
- Stakeholder requirements
- Uncertainty
- Level of our involvement
Delivery models we use
Note 1: Shared risk and Supplier panel are considered advanced delivery models by Waka Kotahi The New Zealand Transport Agency. Use of these models for Waka Kotahi funded activities will require specific approval by the Waka Kotahi.
Note 2: A Public Private Partnership (PPP) financing model may be used where an Auckland Transport or private business venture is funded and operated through a partnership between Auckland Transport and one or more private sector companies.
Under a staged approach, activities are delivered through a staged series of separate contracts (e.g. investigation only, design only or construction only). This is a well understood and widely used approach to procurement and is often described as the ‘Traditional’ approach. It is best suited to small, simple and low risk projects.
A traditional design and construct delivery model uses a single contract to complete the detailed design and construction. This usually involves a lump sum price arrangement where more risk is accepted by the supplier.
A shared risk delivery model uses an integrated team comprising of the buyer, consultants and contractors and material suppliers. The team members are incentivised to work collaboratively and impartially to deliver what is best for the project and to achieve high performance standards. Successful collaboration demands that all parties commercial interests be aligned. Risk is shared by all parties with only two possible outcomes to working together: either all parties succeed, or all parties fail. No team member can win at the expense of another. An Alliance is an example of the shared risk delivery model and is best suited to large, complex and high risk projects.
A supplier panel delivery model appoints a group of suppliers that, as a panel, offer the best combination of skills and experience required to deliver a specified group of outputs. The supplier panel model uses a two-stage process. In the first stage, suppliers are appointed to the panel through a competitive process. In the second stage, tasks are allocated to panel members. Tasks may be allocated to a preferred panel member by either direct appointment, or through a competitive process involving two or more panel members.
PTOM is a new delivery model created as a result of the amendment to the Land Transport Management Act in 2013, that sets the framework for building more effective public private partnerships with public transport service operators that focus on customer needs. This will include a mix of collaborative planning, joint investment and risk and reward sharing.
Under a collaborative delivery model, activities are delivered by leveraging arrangements already put in place by other organisations, including MBIE and Auckland Council and its CCO’s. Common collaborative arrangements include All of Government (AoG) contracts, Syndicated and Common Capability contracts. We will look to utilise these contracts where appropriate as it is expected that these contracts will offer direct savings as well as a reduction in procurement overheads.
A practical application of delivery models