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International Best Practice in Tender Price Evaluation, Wellington, New Zealand

Best practice tender processes delivering greater value for infrastructure

Aotearoa New Zealand needs to get better value from its infrastructure investment if it is to thrive; this includes unlocking more value through tender processes. The New Zealand Infrastructure Commission, Te Waihanga, engaged Aurecon’s Infrastructure Advisory team to prepare a report to understand how greater value can be achieved, particularly for government agencies.

Tender processes are a powerful driver of project outcomes and, if well designed, can improve project value, supporting market development and broader social outcomes. A principle of Government procurement is to obtain best value for the taxpayer’s investment.

While there has been a shift away from price-centric evaluation, this has not always been consistent in either its application or effect. Methods used for evaluation in some cases still result in tender price being the key determining factor, and views on overall project price definition can be inconsistent or unclear.

Aurecon reviewed international best practice in construction price evaluation and identified elements that could result in practical benefits for New Zealand. This report included the following:

  • Methodology – choosing and applying appropriate price evaluation methods
  • Process – defining price, risk assessment, market engagement, whole of life, broader outcomes, capability, and transparency
  • System Level Improvements – performance measurement, portfolio level risk management and contract terms

The report provides practical recommendations on alternative tender processes, allowing readers to effectively evaluate value and procurement outcomes.

Drawing on extensive research of industry guidance and interviews with procurement agencies in eight international jurisdictions, including the UK, USA, Japan, Canada, Australia and New Zealand, the report establishes how price assessment and procurement guidance translates into practical benefits.

A fresh perspective and clear direction

This report responds to changing Government legislation and increasing public expectation to use major projects as an opportunity to deliver social and environmental good, such as lower emissions, improved living standards for communities and incorporating Te Ao Māori values into projects. It provides both a fresh perspective and clear recommendations for organisations on how to incorporate these wider values into tender price evaluation.

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