Watercare, New Zealand’s largest company in the water and wastewater industry, is inherently linked to community and the environment. Every day it supplies around 379 million litres of water to Auckland and collects, treats and disposes around 396 million litres of wastewater. It also carries out significant work to upgrade and build infrastructure in order to maintain levels of service and provide capacity for New Zealand’s fast-growing population.
In early 2019, to walk its sustainability talk, Watercare introduced a new vision for its infrastructure construction delivery called 40:20:20.
In order to realise this vision, Watercare developed the Enterprise Model, which has adapted best practice from international models, and is breaking the mould for Watercare’s infrastructure construction delivery. A new procurement strategy has transformed how Watercare engages with suppliers and has been delivered through an innovative procurement process.
The model comprises two core components;
- Programme First: a business unit will enable Watercare, its two construction partners and design consultants to work collaboratively as one team with a shared goal. The core deliverable is to create the environment to extract maximum value from Watercare’s fully-funded infrastructure programme and deliver the 40:20:20 vision.
- The delivery of the programme of works: integrated development of business cases, designs and the delivery of the construction of the projects required to meet the needs of Auckland.
What inspired Watercare’s Enterprise Model?
Watercare decided to take leadership position and introduced its Enterprise Model to support company targets and address industry issues (such as profitability, risk allocation, training and investment) in order to achieve its 40:20:20 vision. The project was championed by Chief Infrastructure Delivery Officer Steve Webster in response to the following challenges:
- 40:20:20 vision – in order to realise this vision, Watercare couldn’t continue to procure construction contractors in the same way.
- Feedback from industry – Watercare’s traditional approach for infrastructure was to engage construction contractors solely on a project-by-project basis. This gave no long-term certainty and prevented opportunities to innovate, add value and improve safety initiatives. The industry was crying out for opportunities to shape the solutions they would be constructing through involvement earlier in the process.
- Crisis in NZ infrastructure – both the NZ government and industry recognise there is a gap between where the construction sector is now and where it needs to be to meet the future needs of New Zealanders.
- Capability and standards – long-term partnerships with suppliers open opportunities for all to invest in capability, increase standards, continuously improve and learn.
- Lost programme value – international best practice shows there is considerable value to be gained by looking at the programme level.
- Inefficiencies in traditional project-based procurement – although Watercare’s traditional approach leads to robust outputs, it is time intensive and financially intensive for Watercare and its contractors.
A non-traditional approach to procurement
Watercare’s desire to get efficient and rapid results from the Enterprise Model led to adopting an agile approach for selecting the construction partners. The procurement approach for the Enterprise Model completely “breaks the mould” on Watercare’s traditional, project-based approach, which presented a number of challenges:
- New to the industry – as this model is brand new, there was potential for the lack of understanding to become an obstacle, resulting in resistance to engage with the process and Watercare. To overcome this Watercare ran two market briefing sessions; first for the whole infrastructure supplier market to share the 40:20:20 vision and Enterprise Model strategy, the second to specifically address the construction partner RFP process and expectations.
- New to Watercare – making the Enterprise Model a success relies on Watercare changing as much as our suppliers. Watercare engaged a change manager to assess the change impact so that targeted support could be provided to staff both in preparation and during the transition to the new ways of working. A second agile squad was formed to support this transition.
- Time – The procurement squad adopted agile ways of working with a scrum framework. This removed unnecessary work, kept everything transparent, open and focussed. A single-stage procurement process was chosen to reduce the time; the resulting risk of too many respondents to evaluate was overcome by the market briefing process prior to the RFP where we clearly communicated expectations.
- Resource – Watercare has a very lean supply chain team, so consultants were engaged to ensure this project was successful and delivered in good time.
- Complexity – having the team co-located and working in sprints resolved traditionally complex challenges of a large procurement project into simpler ‘bite-sized’ deliverables for the entire squad to solve together.
Measuring the success of Watercare’s Enterprise Model
Although the Enterprise Model is in its early days, benefits have already been realised as a result of Watercare’s innovative approaches, including:
- The NZ$2.4bn procurement took only 7 months, from initiating the team to signing the contract. This would traditionally have taken 12-18 months.
- Great engagement and response from suppliers and industry.
- Enthusiastic engagement and appetite from Watercare. Honest and open communication throughout meant that people understand the ‘why’ and have the opportunity to shape the Enterprise Model as it evolves.
- Since October, the newly appointed construction partners, design consultants and Watercare have been working together in the Programme First Team to establish the Enterprise Model
- More collaborative ways of working and engagement as Watercare and its partners start transitioning from traditional ways of working to the Enterprise Model.
PASA Awards 2019
Watercare was shortlisted for the final round of judging for PASA’s “Breaking The Mould – Best example of non-traditional procurement” award. This award invited submissions from procurement teams in Australia and New Zealand and was designed to highlight and recognise procurement projects where there has been a demonstrably new, unique or non-traditional approach taken.