Delivering better infrastructure with what we have?

A few months ago at an āpōpō Symposium, I listened to Mark Moloney present an insight into the overarching audit of 2022/23 Annual Reports. So I was really intrigued to read the actual report recently released by The Office of the Auditor-General, New Zealand - Insights into Local Government 2023.

The report provides an interesting overview of the challenges and performance of our local councils. We have heard all about the economic pressures, climate change impacts, and the aftermath of the 2023 North Island weather events.

The report discusses councils' financial management, infrastructure investment, and performance in key areas like water quality and resource consents. The report also emphasizes the importance of transparent reporting and the ongoing need for councils to balance financial sustainability with community needs.

Some key reflections/ takeaways from my reading of the report..

Many councils under delivered their capital expenditure programmes.

• In 2021/22, councils spent 76% of their budgeted $7.68 billion, a significant drop from the 88% achieved in 2020/21. However, there was improvement in 2022/23, where councils spent 94% of their $7.5 billion budgeted capital expenditure, the highest in 11 years.
• Interestingly the capital budget decreased from $7.68 billion in 2021/ 2022 to $7.5 billion in 2022/23. Inflated by the smaller group who delivered at or near their budget.
• In 2021/22, 50 councils spent less than 80% of their capital expenditure budgets. This is a significant increase from the 28 councils in 2020/21 and is close to the highest number in this category in the last 11 years (as the second image below shows, the highest was 52 councils in 2019/20). However, in 2022/23, 36 councils spent less than 80% of their capital expenditure budgets.

We are traversing a really interesting time in local government whereby the local government sector is under intense scrutiny and pressure. I am super passionate about delivering projects and programmes of work, and how we can achieve community outcomes by doing so.

So while the future is uncertain for a number of reasons, what can we actually influence, or control?

We have an opportunity to focus on delivering the projects set within LTP budgets really well as a starter (the basics). There are real opportunities to;

• Improve Project Management to ensure consistent approaches, instilling disciplines that help with timely delivery of projects, and manage risk better, allowing risk based decisions to be made. Ultimately prioritising projects and efforts where it matters most.
• Optimise Procurement Processes: Procurement plays a critical role in the successful delivery of infrastructure projects. Councils should explore strategic sourcing opportunities, such as greater use of strategic panels, or joint procurement with other councils, to reduce costs, reduce administration, and secure better terms. Better visibility of the "pipeline" can assist the supply chain to be ready and the organisation in communicating the work ahead - being a smart buyer.
• Leverage Technology for Better Oversight: Investing in project management software can provide councils with real-time insights into project progress, helping to identify issues early and adjust plans accordingly. This technology can also improve transparency, ensuring that stakeholders are kept informed throughout the project lifecycle. I know through my research our councils use a variety of tools all with different functionalities.
• Foster and Encourage Collaboration and Knowledge Sharing: Collaboration between councils (and supply chain partners) can lead to better outcomes by sharing resources, experiences, and lessons learned. Establishing means for regular knowledge exchange can help councils adopt best practices more quickly and avoid common pitfalls. Really hard to do when everyone is busy, but its inevitable someone else is struggling with a challenge you are facing, or has recently addressed something similar.
• Strategic Budgeting: More accurate budgeting and forecasting to align capital expenditure with realistic delivery capabilities. We constantly hear about budgets being blown, by spending more time planning, scoping and getting budgets accurate we set our projects and our project managers up for success.
• Capacity / Capability Building: Increasing the capacity and capability of council teams to manage large capital programmes, possibly through partnerships or shared services. We all know investment needs to increase, are our people ready to deliver that uplift?

I am a strong believer in enhanced delivery thinking, through bundling and using smarter procurement that allows the supply chain (who btw are feeling the slow down in workload significantly) to respond and build capability and capacity - done through adopting programme or portfolio management approaches that can significantly assist delivery;

1. Programme Management: through grouping related projects under a single programme, councils could ensure alignment with broader strategic goals, optimise resource allocation, procure smarter, reduce administrative effort, and manage risks more effectively across multiple projects.
2. Portfolio Management: By thinking more strategically, it allows councils to prioritize projects based on overall value and impact, ensuring that resources are directed toward initiatives that provide the greatest benefit.

By moving away from a project by project approach, this enables better coordination, risk management, and strategic decision-making, ultimately leading to improved outcomes in capital programme delivery. Improving infrastructure delivery in local government does require a multifaceted approach. By embracing programme and portfolio management, enhancing project management practices, optimizing procurement, leveraging technology, and fostering greater collaboration, councils can overcome current challenges and deliver essential infrastructure projects more effectively.

The report and video by Mark linked below provides some valuable insights that if embraced could lead to significant improvements in delivering infrastructure for our communities. By making the most of the budgets that have recently been set, there is no better time than the present tp get stuck into our newly adopted 2024 Long Term Plans.

We're super lucky at Beca to have some super smart humans who love this stuff as much as I do. I am always keen to chat infrastructure delivery and ways we can collectively lift our game.

Feel free to get in touch, or comment below.

https://oag.parliament.nz/2024/local-govt

#workwithwhatyougot #infrastructuredelivery #thinksmarter #continuousimprovement #assetmanagement

Beca | āpōpō | New Zealand Infrastructure Commission, Te Waihanga