Towards better contracts

This report provides a summary of interviews conducted with infrastructure contracting professionals in the public and private sectors around current contracting practices. It aims to increase transparency and awareness of current procurement practice challenges.

Te Waihanga interviewed 26 government construction contract participants to investigate current contracting practices. This included people working in the legal, procurement, project management, and design/engineering space.

The interviews were conducted in 2023, and found that agencies’ capability as infrastructure clients was generally limited and lacking across the sector.

Key findings

• The knowledge, level of experience, capability, and behaviours of individuals acting in key contract administration roles has a significant impact on project outcomes. However, few agencies had any strategic processes or evaluation structure in use when selecting individuals for key contract delivery roles.
• Despite an increasing general awareness of the benefits from fair and clear risk transfer and collaboration, little has changed in procurement and contracting practice between 2018 and 2023. Special conditions are still being used extensively to customise contracts to specific agencies, rather than having a standard set of special conditions across government.
• Collaborative contracting can lead to improved contract performance and better project outcomes, but uptake is low.
• A sense that procurement, specifically the tender stage, was somewhat disconnected from the overall project delivery, and all interviewees (client and contractor) considered continuity of representation throughout the procurement and delivery process to be beneficial to the contract outcomes.
• Dispute resolution processes within contracts are seen as a last resort, expensive, and often producing unsatisfactory outcomes.