TRANSIT NEW ZEALAND

 

PERFORMANCE SPECIFIED MAINTENANCE

CONTRACT PSMC 001

 

TNZ CONTRACT NO. 2/98-025/601

 

Request for Tender

 

Note: The following document represents part of the tender document only. For further information, please contact Transit New Zealand directly.

 

 

PART 2:          GENERAL DESCRIPTION OF CONTRACT

 

2.1              INTRODUCCION

 

The fundamental principle pertaining to this Contract, is the provision by the Contractor of all services and physical works for the maintenance of state highway Assets, for a period of 10 years, to prescribed Performance Measures for a lump sum price, with the Contractor carrying all risks except those specifically excluded. This clause presents a general overview of the philosophy of the Contract.

 

The Contractor will aim to maximise the reliability, safety and availability of the network to road users. The Contractor will also aim to operate the network to the satisfaction of road users, adjacent landowners and members of the public.

 

Assets:

 

The Assets to be maintained include everything within the state highway corridor.

 

Information pertaining to the Assets has been provided to all Invited Tenderers in good faith. Appendices L and M list all of the information provided. Invited Tenderers must verify for themselves the adequacy and accuracy of the information provided before lodging their Tender.

 

Performance Measures:

 

The Performance Measures and Method of Calculation are set out in Appendix G and represent the minimum acceptable levels the Contractor must achieve. The Contractor is required to implement a complete Quality System which includes monitoring of its own performance and the demonstration of compliance with the Performance Measures throughout, and at the end of, the contract period.

 

The Contract provides for formal annual audits of the Contractor's performance by an independent party. The Superintendent will also monitor the Contractor's performance at regular and random intervals, and assets the performance of the Contractor accordingly.

 

Lump Sum Price:

 

The tendered lump sum price will include all costs to bring the Assets up to the Base Condition Standard, together with the cost to provide all the required services to meet the Performance Measures. Innovation is strongly encourages under the PSMC. The Contractor is expected to develop innovative ways of providing the Services and achieving the specified Performance Measures. There will be no extra payments for innovation development costs and there will be no reduction in payment to the Contract, in the event that innovation reduces the Contractor's cost provide the contract conditions are met. Refer Clause 4.5.4.

 

The Contractor will be paid for the Services monthly throughout the Contract period, regardless of the quantum of the actual works and services provided.

 

Risks:

 

A risk is defined as an uncertain event which when it occurs, may have a material effect on the extent of the Services to be performed by the Contractor or the cost to the Contractor of performing the Services.

 

Except where explicitly stated to the contrary, the Contractor bears all risks in the lump sum tendered price. The explicitly stated risks accepted by the Principal are listed in Appendix H.

 

PSMC Trial:

 

This Contract is a trial of the Performance Specified Maintenance Contract (PSMC) form of the contracting out maintenance works and services. It is a new form of contract in New Zealand and has only been utilised to a limited extent overseas.

 

The PSMC form of contract seeks to maximise the skills, expertise, innovation and systems of the roading industry to provide better outcomes, and thus better value for money.

 

The Contract is non-prescriptive, and it allows the Contractor to elect how it meets the required outcomes.

 

The trial has the support of Transfund New Zealand, subject to the following conditions:

 

1.      The trial will proceed if it can be demonstrated that the cost to maintain the Assets to a like standard by the existing methods and contracts is greater than the cost of carrying out the maintenance under a PSMC.

 

The cost of maintenance utilising the existing methods and contracts is the Award Hurdle. All Invited Tenderers are required to demonstrate they can overcome the Award Hurdle before the Base Tender and any Alternatives Offers are considered.

 

2.      Tenders received be evaluated in accordance with an approved Competitive Pricing Procedure. Transfund New Zealand has given approval to the procedure set out in Appendix J.

 

Fundamental to the Contract is the need for a co-operative approach by the contracting parties, and a willingness of the Contractor to accept risk. The Contract does not provide for withholding payment as a penalty for a non-performance of the Contractor except as expressly provide in the general conditions. Instead it provides for termination of the Contract by the Principal in the event that the Contractor fails to meet its obligations under the Contract.

 

The proposed establishment of a Management Board together with the framework of this document, are considered by the Principal to promote the Contract objectives.

 

In awarding this Contract the Principal expects:

·         To engage a contractor who embraces the philosophy stated above

 

·         To engage a contractor that will take every step to make this trial a success; and

 

·         All parties to be successful.

 

 

2.2              SERVICES TO BE PROVIDE

 

The Services under the Contract shall include:

 

·         management of the Assets for a period of 10 years, to meet the Performance Measures

 

·         routine, periodic maintenance and rehabilitation of the Assets, including pavements, surfaces, drainage, traffic safety signs and equipment, highway lighting currently the responsibility of the Principal, and railway level crossing, vegetation control, etc.

 

·         collection and management of asset inventory data, including RAMM database data

 

·         routine and periodic (non-structural) maintenance and rehabilitation of bridges and other structures within, over or under the networks

 

·         call-out and attendance to emergencies

 

·         response to public requests, complaints and feedback

 

·         other services such as Land Entry, Access Control and Overweight Permit Supervision.

 

The services include receipt of the Assets and records from the existing service suppliers and, at the completion of the Contract, handover of the Assets and records to the incoming contractor/s.

 

The Contractor will be responsible for arranging all resources and skills necessary to undertake the Services including establishment of depots, and provision of labour, plant and materials.

 

The Services to be Provided shall not include:

 

·         installation and maintenance of speed camera detectors, traffic counting station detectors and recorders, barrier arms and associated signals, variable message signs, emergency telephones and closed-circuit televisions

 

·         structural repair and structural maintenance of bridges

 

·         maintenance of projects, whilst they are in a defects liability period and the subject of other separate and discrete contracts.

 

The Services to be Provided are more fully described in Appendix F.

 

2.3              VARIATIONS TO SCOPE AND TIMING OF SERVICES

 

The Contractor is required to accept variations to the Services to be Provide throughout the term of the Contract, as advised by the Superintendent and in accordance with Clause 4.7. Variations may result from, but not limited to, the following:

 

·         changes to the Contractor's maintenance programme suggested or required by the Principal

 

·         variations to the Performance Measures which are defined in Appendix G

 

 

2.4              LIMIT OF WORKS

 

The lateral Limit of Works is the road reserve boundaries for the Assets except as noted bellow. Where an existing fence line lies within the road reserve boundary, the Limit of Works shall be defined by the fence line.

 

The legal road reserve boundaries are illustrated on "Terra View" 4.0 GIS Data View and Local Land Information. A copy of this information is available for viewing by all Invited Tenderers during the tender period.

 

The Contractor is required to have some means of establishing where the legal road reserve boundaries are, and land ownership, throughout the duration of the Contract.

 

In addition, there exists in specific areas, agreements of one sort or another with adjoining landowners relating to a variety of matters which are directly or indirectly relevant to the maintenance of the Assets. The Contractor is responsible for the Principal's obligation in respect of these agreements. The agreements are indexed in Appendix L.

 

In a number of locations, the state highway is known to be located only partly within the legal road reserve. Under such circumstances the Limit of Works is to be taken as the existing fence line, or the top of a cut batter, or toe of a fill batter, which ever is of greater offset from the road centreline but extending to the inlet and outlet structures of any culverts under the road.

 

In urban areas the Principal has a Memorandum of understanding with each territorial authority defining limits of responsibility. These are included in Appendix E.

 

The detailed definition of the Limit of Works, including the extent of the networks and relevant local agreements is included as Appendix E.

 

Ownership of the Assets within the Limit of Works remains with the Principal.

 

 

2.5              VARIATIONS TO LIMIT OF WORKS

 

The Contractor is required to accept variations to the Limit of Works throughout the term of the Contract, as advised by the Superintendent and in accordance with Clause 4.7. Variations may result from, but are not limited to, the following:

·         Handover of additional section/s of highway or completed construction projects to the Contractor

 

·         Handover of sections of the Assets to other authorities (e.g. Councils)

 

·         Removal of a section of the Assets

 

·         Temporary removal of a section of the Assets to facilitate capital and other works projects by another party.

 

 

2.11          MAINTENANCE RESPONSIBILITY

 

The Contractor will not be responsible for maintenance to any assets that lie within the limit of works of current contracts between the date of possession of site and the end of the maintenance period of those separate contracts. All maintenance and defects are the responsibility of other contractor/s until the end of a defects liability period at which time the assets will be handed over to the Contractor.

 

The Contractor will not be responsible for maintenance to any part of the network which has been upgraded as a capital work by another party, while the length of highway is the subject of a defects liability period.

 

The Contractor will not be responsible for the maintenance of that section of the highway included within the limits of a capital works contract being undertaken within the Limit of Works by another party for the duration of that other contract. The Contractor's responsibility under such circumstances ends on the date of handover of possession of site to the capital works contractor and begins again when the satisfactorily completed work is handed back to the Principal and the Contractor for ongoing maintenance.

 

A join inspection by all parties on completion of other contracts will identify any particular maintenance or omission responsibilities of the other contractor that may exist at the end of their contract maintenance period, and the Contractor will not resume responsibility for ongoing day to day and periodic maintenance of part of the Assets in question until the identified reasonable responsibilities of the other contractor are discharged, but only to the extend that such responsibilities have not been discharged.

 

 

2.12          QUALITY REQUIREMENTS

 

The Contractor will be required to develop and implement an auditable Quality System for all Services provided.

 

It will be the Contractor's responsibility to ensure all subcontractors and subconsultants comply will the requirements of the Quality System.

 

 

2.13          SAFETY REQUIREMENTS

 

The Contractor shall develop and implement an aggressive Safety Management and Intervention Plan. This Plan shall provide, at a minimum:

 

·         Identification and prevention of safety problems

 

·         Detailed procedures such as traffic management and emergency response

 

·         Information management

 

·         Safety monitoring

 

A more detailed description of the requirements is in Appendix F Clause F14.

 

 

2.14          ENVIRONMENTAL REQUIREMENTS

 

The Contractor shall act in an environmentally sensitive manner at all times.

 

The Contractor will comply with all requirements of all resource consents for the Services under the Contract, including any reporting requirements.

 

Documents relating to current and pending resource consents issued under the Resource Management Act 1991 have been provided to all Invited Tenderers. These documents are listed in Appendix L.

 

The Contractor will be responsible for the annual charges, and all other costs associated with those resource consents that are not related to capital works projects, together with responsibility for renewal of the resource consents, and procurement of any further resource consents, as may be necessary for continued execution of the Services under the Contract. The condition of any such resource consents must be met.

 

The Contractor's attention is drawn to:

 

·         The existence of scenic and similar reserve land adjacent to the Limit of Works

 

·         Geological and geomorphic features within and adjoining the Limits of Work of cultural, environmental or scenic significance.

 

·         The existence and limitations of Regional Council general authorisations, and guidelines

 

The Contractor is required to identify all locations of environmental, cultural, and scenic value, and put in place procedures and practices that satisfy the conditions of all consents, compliance notices, and guidelines, including those related to emergencies.

 

 

4.5              CONTRACTOR'S OPERATIONAL OBLIGATIONS

 

4.5.1    Quality Plan

(a)   The Contractor must develop, maintain and follow a Quality System and Quality Plan.

 

(b)   The Quality System shall be effective upon Commencement of the Contract and shall be independently certified to ISO 9002 standard within a period specified by the Contractor. Refer to Clause 1.4.2.6.

 

4.5.4        Innovation Requirements

 

(a)    Throughout the term of the Contract, the Contractor must explore, develop and present to the Management Board potential Improvement Initiatives.

 

(b)    The Contractor must, in a similar manner, pursue potential Improvement Initiatives suggested to it by notice from the Principal or the Superintendent.

 

 

4.5.4.1 Relevant Initiatives

 

Examples of potential Improvement Initiatives are:

 

·         Reduced maintenance cost and resulting payment (e.g. maintenance effort, longer life treatments);

 

·         Reduced running costs;

 

·         Improved levels of Service;

 

·         Improved road safety performance;

 

·         Added functionality (e.g. more features to meet road user needs);

 

·         Reduced capital cost; and

 

·         Increased service life of the Assets.

 

 

4.5.4.2 Approval of improvement Initiatives

 

(a)   The Contractor may carry out Improvement Initiatives as of right that do not require any additional payment or any reduction in the level of Service, Performance Measures or the Contractor's Obligations otherwise Improvement Initiatives will only be implemented if approved by the Management Board. The Contractor, in seeking approval to implement a new Initiative, must present to the Management Board for its consideration a brief report including:

 

·         Description of the nature of the Initiative;

·         Previous implementations;

·         Risk involved and methods for mitigation;

·         Time proposed to implement;

·         Additional or reduced payment for the Initiative;

·         Benefits quantified and qualified including any safety related benefits;

·         Special conditions;

·         Proposed sharing of benefits between Principal and Contractor; and

·         Consistency with the TNZ national state highway management

 

(b)   The Management Board must assess the proposed Initiative and, if appropriate, make a recommendation to the Principal for its Approval, including in respect of any proposed alterations to payments under the Contract as provided for in Clause 4.6.12.

 

In making its recommendation in respect of alteration to payment the Management Board shall be guided by the principle that if any cost saving results from an Approved Improvement Initiative which does not relax any requirements of the Contract then there shall be no reduction in payments.

 

 

4.5.4.3  Implementation of initiatives

 

If implementation of an Approved Initiative results in an effect on payment, a variation will be issued for its adoption.

 

 

4.5.4.4  Consideration by Management Board      

 

(a)     It is intended that the Management Board will reach a solution and make a recommendation to the Principal which will be beneficial and agreeable to both the Principal and the Contractor.

 

(b)     The actual process implemented will vary depending on a number of factors, including but not limited to the type of Initiative and its cost benefit, technical issues, funding levels and corporate and Government policies.

 

 

Some possible examples of outcomes of discussion within the Management Board are listed below.

 

·         The Principal funds the Initiative to gain benefits from improved service levels with nil reduction in maintenance volume of work and associated payments.

 

·         The Principal provides 100% of funding for the Initiative, the Contractor's volume of work varies and Contract payment to the Contractor is varied accordingly.

 

·         The Principal and the Contractor jointly fund the Initiative and both parties share the benefits from implementing the Initiative. The benefits may be cost benefits, payment benefits or service benefits.

 

·         The Contractor funds the Initiative with no change to the Lump Sum Payment as the Initiative reduces the overall costs of the project to the Contractor and does not require any lowering of the Performance Measures.

·         The Contractor funds the Initiative and reduces its required maintenance costs and shares the benefit with the Principal by a reduction to payments from the Principal.

 

4.6.9        Adjustment for Rise and Fall in Costs

 

(a)   All prices, but not percentages, in the Price Schedules and the Lump Sum Payment are subject to adjustment for rise and fall in costs.

 

(b)   The Adjustment will be made once only in each calendar year.

 

(c)   The adjustment will be determined by the method described in Appendix D.

 

 

Calculation of Cost Fluctuation Adjustment

 

The amounts payable by the Principal to the Contractor, under the terms of the Contract shall be adjusted up or down by amounts calculated in accordance with the following formula:

 

C = VxF

Where:

 

F = [ ]

 

Where:

 

The value of F shall be rounded to four decimal places before final multiplication with valuation of work, V.

 

F= Cost Fluctuation adjustment factor

 

C= Cost fluctuation adjusted payment due to the Contractor for the month under consideration.

 

V= Payment due to the Contractor for the month under consideration based on the lump sum and any Additional Works, priced using the rates agreed as the basis of the Contract, and excluding the cost fluctuation adjustment.

 

W= Labour Cost Index - All Salary and Wage Rates; All Sections Combined, All Industries Combined, published by Statistics New Zealand for the quarter within which August falls for the year under consideration.

 

G= Producers Price Index  Inputs- Industry Group 10 Non-Metallic Mineral Products, published by Statistics New Zealand for the quarter within which August falls for the year under consideration.

 

B= Producers Price Index Inputs- Industry Group 15 Construction, published by Statistics New Zealand for the quarter within which August falls for the year under consideration.

T= Producers Price Index Inputs- Industry Group 17 Part 1 Transport and Storage.

 

R= Producers Price Index Inputs- Industry Group 17 Part 2 Road Transport, published by Statistics New Zealand for the quarter within which August falls for the year under consideration.

 

P= Farm Expenses Price Index- All Farms - Fuel, published by Statistics New Zealand for the quarter within which August falls for the year under consideration.

 

W', G', B', T', R', P'= As defined for W, G, B, T, R and P respectively but applying for the quarter during which August 1998 fell.

 

For the period ending 30th June 1999, no cost fluctuation shall be paid. i.e. F=1 and C=V

 

For subsequent years the cost fluctuation factor, F, shall be calculated once only using the indices for the quarter containing the month of August. As an example, the value of F to apply for payments in the months of 1st July 1999 to 30 June 2000 shall be established using the indices for the quarter containing the month of August 1999.

 

For the purpose of calculating the cost fluctuation adjustment, any payment items which are based on actual cost or current prices and any advances shall be excluded from the calculation.

 

No other cost fluctuation adjustment will be made by reason of any inaccuracy in the proportion of inputs specified.

 

The indices to be used in the calculation of fluctuation shall be those first published by Statistics New Zealand for the first quarter.

 

If at any time any of the indices referred to are no longer published by Statistics New Zealand, or if the basis of any index is materially changed, the adjustment shall thereafter be calculated by using such other index or in such other manner, as will fairly reflect the changes as previously measured by that index.

 

 

Extent and Limit of Works

 

The Limit of Works is as follows:

 

                                                                                 

State

Highway