Radio NZ broke a story on Monday about the amount of money the NZTA had spend on consultants to look at the Roads of National Significance showing that all up just over $200m had been spent on consultants. Here is the story:
Some $216 million has been spent since 2009 on investigation and design work for five of the seven roads – Puhoi to Wellsford, Auckland’s western ring route, the Waikato expressway, Wellington’s northern corridor and Christchurch motorways.
Information obtained by Radio New Zealand under the Official Information Act shows $200 million of this was paid to consultants.
Almost half, $92 million, was paid for work done on the northern corridor.
The Transport Agency says it is standard practice to use experienced and professional consulting firms to do planning, investigation and design work for large roading projects.
And I have kindly been provided with the OIA request, here is the key table from it showing the money spent.
Now I actually agree with the NZTA that it is pretty standard to use consultants for projects as these days as the alternative is for the agency to have to hire and retain these specialists even in times when they may not be needed. I also completely understand the need for the work to be done at some point but what I question is if it all needs to be investigated right at this point in time. Some parts of the RoNS, like the Warkworth to Wellsford section, are not even due to start construction for another 10-20 years and that is being optimistic. By the time we get around to building some parts of these things would have changed considerably including what the best practice for building roads actually is.
The issue of how much has been spent on consultants has also been picked by the transport spokespeople from both the Greens and Labour and both took opportunities to ask Gerry Brownlee in parliament yesterday about it. The most interesting one is from the Greens Julie Anne Genter:
A transcript is here
I know Gerry has said in the past that Parliament is a bit of theatre but if he really means what he said, especially about stopping the NZTA from doing reports on Urban Design/Walking and Cycling then it is pretty scary. Also Gerry claims that Otaki to Levin was not a RoNS however it is pretty clear on the NZTA’s RoNS page for Wellington that it is.
About the Wellington Northern Corridor
The Wellington Northern Corridor is being developed as a 110km four-lane expressway from Levin to Wellington Airport and is made up of the following projects (south to north):
And here is a map also showing it.
And here is the second question, this time from Phil Twyford
Transcript is here
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Here’s Campbell on this too: http://gordoncampbell.scoop.co.nz/2012/07/16/gordon-campbell-on-the-200-million-bill-for-roading-consultants/
Gosh, he’s reallt really getting desperate. It’s like a company facing bankruptcy over enormous financial mismanagement blaming it on staff buying a few pencils to do their work.
Brownlee doesn’t even know where the RoNS projects begin and end. That is very worrying.
I hope someone will call him out as a liar at the next sitting day in Parliament (about Otaki-Levin not being a RoNS). And a bald-faced one at that!
The reports on economic performance of urban design and walking and cycling would have to be some of their best value for money! For example this blog has talked about the cost of the Dominion Rd flyover a number of times. The cost of getting urban design wrong is incomprehendible.. For that flyover 50 years of loss of rents, housing, commercial business, 50 years of poorer health due to a useless cycling and walking link. Degraded personal wellbeing from the disconnect to the community/city – medication, lack of productivity.
Wasn’t Genter a transport consultant at one stage? I thought she worked with this blog’s Stu D. I presume that they worked on government and council contracts, mainly because those are the main builders of transport infrastructure. Maybe Stu could confirm this, if it isn’t commercially sensitive.
Stu might also be able to confirm whether Gordon Campbell’s description of his business is factual: “we are now stuck with the shiny new model of contracting out, which has left us at the mercy of a predatory consultancy class – since, in a country of only four million, only a limited number of skilled practitioners exists, and this elite has been virtually invited to charge the earth for their services”.
I can’t talk about the larger-scale consultancies, but it is ridiculous to say that there’s no competition among consultants, even on the big jobs. Every business will try to get the most work and money out of contract, even ethical ones will (they just won’t stoop to some of the dirtier tricks). That’s capitalism for you – to blame consultants like in Gordon’s piece forgets that government is never forced to employ a specific consultant, and has all the bargaining power of being an almost-monopoly.
No need to convince me. I’m all in favour of outsourcing government operational activity to business. It allows for competition, as you point out, but also for clear outcomes to be described in contracts with penalties if they are not delivered. It’s pretty much how most of the IT industry make money out of government and I’m bidding for a couple of government contacts at the moment.
I think Campbell’s article was just strange. It sort of buys in to the idea that the government should employ tens of thousands of extra public servants and perform all work in house, just like they did pre-1984. However, it’s a bit of an own goal for the Greens and Labour to make an issue of this… It naturally exposes Genter’s pre-parliament employment to scrutiny. I suspect that whatever Stu and Co charge is competitive and reasonable, but it won’t look good splashed around the media… A media where anyone earning more than $100k a year is depicted as being a ruthless exploiter, and their employer is held to be wasteful and extravagant.
Where they appear to be taking the questioning is that National have been waxing lyrical about good-quality spending, tightening the collective belt, etc, but they’ve spent nine figures on getting planning consultants to work on projects that have near-zero (and often sub-zero) returns on dollars spent and are unwilling to subject those projects to the same fiscal discipline that is being demanded of the rest of the public sector.
No other part of the public sector could spend $200m on consultants for scoping projects without facing serious ministerial grilling, in the current environment. The problem isn’t the use of consultants, per se, the problem is the use of that much consultant time when everybody else is being told to stop spending. Hell, National were going to thoroughly screw with delivery of technology education in schools in order to save less than 75% of what NZTA have thrown at consultants for the Roads of Dubious Significance; roads that have very, very dubious business cases.
Exactly.
G4S!
I don’t think highlighting Genter’s consultant history is problematic at all, and I don’t think what the public will take away from this is that fact anyway.
Yes Ms Genter formerly worked where Stu and I currently work, she maintains a close professional relationship with the company and it still good friends with most of the staff. No secrets there.
Yes we do a lot of work for various councils and government agencies (as well as private companies) because they are the ones that generally plan and fund transport.
No that description of our business is not factual. Almost all of our work is to competitive tender against at least three or four other companies or groups of consultants. In any case the client selects their preferred bid according to the quality of the proposal and/or how much they want to spend. We do pay our staff quite well, but they are all highly skilled with lots of study and experience under their belt to do the jobs they do properly. Having said that we run a very tight ship with low overheads and outgoings, unlike large councils and government departments. We cost a job according to what we need to spend in terms of time and resources to get it done. If they client doesn’t want to pay that then we don’t get the job. There is certainly no predatory action there. Our consultancy class is at the mercy of those that hold the checkbooks!
We usually compete against large multinationals and indeed are multinational ourselves, (HQ in Brisbane and project offices in Singapore, China and Portland) and we work on projects in Australia and Aisa from NZ. Really the comment about a country of only four million with limited number of elite consultant-oligarchs is totally misguided, the New Zealand transport consultancy market is much wider than just New Zealand itself, think Asia-Pacific.
In defence of the consultancy model, it makes sense in a lot of situations. For example we specialise in public transit network redesign and parking reviews, we do them nearly constantly in various cities and towns. But that’s the sort of thing a council might do once every few decades, if at all. So we are an elite in that regard because that is our specialist niche. It makes a hell of a lot of sense for a council to contract us to do what we are very skilled and experienced at doing on a day to day basis, that to try and acquire and train their own appropriately skilled staff to do the same job as a one-off. Contracting consultants isn’t just about time and manpower, it’s about buying experience and technical skill to do a specialized job properly.
That’s certainly the case for us with our focussed niche, but perhaps there is the argument that NZTA could do a lot more of it’s design and development work in house given that it constantly works on state highway projects.
Also, if you outsource pretty much ALL your technical ability, how can you ever judge the quality, necessity, or scope of what you outsource? Yes, Councils and NZTA should have more in-house staff, and make sure they retain them. But with this government constantly trying to reduce the number of public servants (in a country which is already at the bottom of #s of public servants per population), that won’t happen.
That’s a valid issue. My experience is with the IT field. I worked for an Australian state government where every IT function was outsourced except strategy and contract management. About 15 government staff were overseeing outsourcing contracts worth over $100million a year, and probably employing a few hundred vendor staff (or “predatory consultants” if you prefer the Campbell terminology). The strategy staff ensured that the services delivered were fit for purpose and fitted in with our overall direction for IT. The contract management staff ensured that the contract was followed and looked after value-for-money issues, such as benchmarking prices annually. I think the degree of government oversight was about right… the system worked well.
On the other hand, my experience with NZ government agencies is that they tend to overdo the government side of the relationship. Tender requirements are often way too long, contain way too much detail, and are often just a bit strange. Like asking for functionality in software that no offering in the market contains… do they want a $1million product, or are they actually asking for a $50million bespoke solution in order to meet some trivial-but-essential requirement like a particular screen layout. Also, there is a tendency to confuse customer representation (which is necessary) with project management… The minute the government customer wades in and tries to project manage the vendor, then the risk is all transferred back to government. I’ve lost track of the number of simple government projects that I’ve seen that should take about a month for a competent programmer to develop and test, but have two project managers and a project director assigned from the government side. I’d be interested to hear if the same thing goes on in the transport sector, or if the engineers have their act together to a greater extent.
Hi Obi –
Yes, Julie previously worked with us here at MRCagney (www.mrcagney.com).
I’m personally very proud of what Julie has managed to achieve, both before and after entering Parliament. The wonderful thing about Julie is that even when you disagree with her (and even I do from time to time!), you almost always find yourself respecting her point of view – and vice versa. Julie is a warm, intelligent, and wonderful human being – exactly the sort of person we need in parliament (on both sides of the political spectrum).
Watching the parliamentary videos shown above saddens me: Mr Brownlee seems happy to wallow gleefully in his own ignorance, to the point where he tries to argue that a section of the RON is not a RON! Unbelievable ignorance or arrogance, or both. While Julie may not always be right, Mr Brownlee is – from what I can tell – almost always wrong. (I should state that my own personal political views are relatively colourful; lying somewhere between shades of yellow and green).
As for your second question about consultants, that is a very interesting topic indeed and one that requires more space than is available here. Personally, I agree with Nico R; many projects are best left to specialist consultants that work across a variety of cities and countries and are therein exposed to a variety of issues and solutions. On the other hand, I can’t help but feel that the pendulum has in some places swung too far; in some situations government agencies would be better off retaining knowledge/expertise internally rather than hiring external consultants/contractors. One of the other benefits of using consultants is that they are generally seen to be more independent than the public sector, although this line is often blurred (it’s hard to disagree with someone who is paying your bills!).
Gordon Campbell is probably right in a historical sense: I do believe that consultants have in the past exploited their position and charged too much. You see this sometimes in the excessively high rates charged by senior consultants; they do so because they can – not because they add that much value. But that situation is changing rapidly – competition is intensifying and profit margins are declining. If the costs to NZTA from using consultants are high, then it’s probably because of systematic inefficiencies (such as inefficient competitive tendering processes), rather than profit gouging consultants or wasteful public servants.
Regards,
Stuart.
Obi, as Matt’s post points out there is clearly a valid place for consultants in this work. Whether that valid place is 90% of expenditure is an interesting question.
The bigger issue, once again pointed out in the post above, is why do all of these at once when there’s no hope of advancing them into construction for ages. And that it’s well known some will be cancelled before construction can commence.
Here: http://publicaddress.net/hardnews/its-not-funny-because-its-our-money/
Clearly the RoNS represent policy capture by vested interest. Look at the panic in Ak road lobby circles at the thought that the feeding time at the trough is nearing an end; they are frantically pulling ‘urgent’ roading projects out of their various hats (or elsewhere). They are clearly too lazy to adjust their skill sets to face new challenges; just had it too easy for too long. So it goes.
As a business owner I understand the urge to moan when an comfortable income source changes tack but it is, in my experience, always better to set out to change your offer than to try to change the world…. Although with this gov they have been spectacularly successful with the later approach so will no doubt redouble those efforts. This will make these NZ engineering companies unprepared for the coming change. Will a Chinese company be building the CRL, and say Parsons Brinckerhoff doing the detailed design? Or will Fletchers learn enough IP from Waterview to just get there…?
If anybody is keen, it might be an idea to do an Official Information Act request to find out how much those reports – “like that on the impact of urban form on economic performance, Valuing Urban Design, and Business cases for walking and cycling” – actually cost. All you have to do is email the Minister’s office or the department and they have to respond within 20 working days.
Brownlee’s claim must come from the fact he doesn’t value the ideas explored in those reports or their conclusions. They can’t anywhere near the cost of the roading reports.
If Brownlee made his choices on the basis of actual costs or any real outcomes we wouldn’t be having this discussion. I think it’s quite clear that his views, and policy, are based on value judgments and ideology only.
They sound like interesting and informative reads actually.
Julie Anne Genter responded to Gerry Brownlee today; it’s worth a watch.
http://inthehouse.co.nz/node/13794
Ouch!
It’s a huge shame Gerry wasn’t there. I hope he has to respond to each and every question later, getting around some of them would be incredibly difficult. How does a general debate work?
I wonder if the NZTA website will be changed overnight to say “Otaki to Wellington Airport” 🙂
And that is why Julie will be the next minister of transport. Phil T is good, but he’s not that good.
It’s truly infuriating that NZ’s own Minister of Transport does not even know the extents of his own seven Roads of National Significance. Should this not be the prompt for immediate investigation of his ability to hold the transport ministerial position on the grounds that he’s clearly not mentally fit for the job? This is embarrassing and gives this government, and the country as a whole, a bad name.
Congrats to Julie for really exposing this ignorance and corruption. Hopefully these snips from parliament can be shown on Campbell Live, or the morning news, to reach a wider audience.
Sort of something like this then obi?
http://theoatmeal.com/comics/design_hell
That is rather excellent SM. I’ll post the link on to a webmanager friend. Anything to do with user interface look and feel is a nightmare because customer staff feel a need to contribute to the project. They don’t understand architecture or any of the implementation technologies and so they leave those things alone. But everyone understands colours and buttons and so that is where they direct their (usually considerable) energies. I once helped pitch a large solution to a county council in the UK. Social workers evaluated the system. “Concentrate on the functionality”, we told them, “because we will customise the screens however you want”. But after a month of evaluation they had no idea if they liked the functionality or not… but they all had opinions on colours and fonts.
I dont understand why National is so opposed to public transport. Have they never seen any major city in the world? Do they actually think that motorways solves congestion? Its baffling.
I’ve never understood that either – consider some of the ‘city upon the hill’ stuff that they aspire to i.e. economic performance that they supposedly seek to emulate and all of the investment those international cities have made in their public transit systems – it is simply baffling.
Also if you looked at it another way Auckland has now invested heavily in roads for about 60 years. If it invested heavily in public transport for the next 10-20 years that over-investment in roads would be free of the hoi-polloi and left to national voters to roam unmolested as the denizens of capitalism that they purport to be …
I know that you are supposed to stay away from ad-hominem stuff in Parliament but it would’ve been a perfect rebuttal to say to Mr Brownlee that it is little wonder that a man of his carriage would prescribe so little value to the potential economic benefits that may be obtained through aesthetic improvements to the urban form.