News & Events

Major roading contract awarded

Thursday May 20 2021

Palmerston North City Council has awarded a major roading maintenance and upgrade contract to Fulton Hogan. The two organisations signed the $38 million three-year contract yesterday.

Photo shows mayor and senior managers from Council and Fulton Hogan posing in front of a truck branded with Fulton Hogan and Palmy logos.

Representatives from Palmerston North City Council and Fulton Hogan stand outside a co-branded truck following the contract signing. From left to right: Fulton Hogan’s Renewals and Customer Service Manager Andy Payne, Regional Manager Vic Maggs, Lower NI Ops Manager and Governance Board member Blair Gregory, Council’s Chief Infrastructure Officer Sarah Sinclair, Council’s Chief Executive Heather Shotter, City Mayor Grant Smith, and Fulton Hogan Chief Executive Graeme Johnson.

The current contract with Higgins ends on 30 June 2021, and Fulton Hogan is scheduled to take over the contract from 1 July.

A thorough procurement process occurred

In 2019, Council commenced work on a strategy to update the way in which the maintenance, resurfacing and rehabilitation of the Council’s roading network would be contracted – well ahead of the end of the current contract term.

Last year, we embarked on rescoping our contract to bring 10 smaller contracts of work under one larger contract. This meant the amount and value of work to be done by the main contractor was substantially increased, with an aim of encouraging more competition.

The tender process was completed in line with Council’s Waka Kotahi New Zealand Transport Agency approved procurement policy and our roading procurement process.

Our key requirements were:

  • An improved level of service for residents and ratepayers
  • Greater efficiency and improved coordination of services
  • Incentivising investment in capacity and capability
  • Greater clarity in terms of performance and outcomes and making the key performance indicators more specific.

We worked with neighbouring councils to determine the best process for the city and the region, so our contract is made to align with other Council’s re-tendering processes.

Three companies tendered for our contract, with Fulton Hogan being the successful tenderer.

The contract is for an initial three years from July 1, 2021. Council has the right to renew the contract for two further three-year periods, up to a maximum of nine years.

Local employment was a factor

Council’s procurement policy ensures we give special attention in the contract scoring and evaluation to the local presence provided by a contractor. Given the scale and scope of the work required under this contract, all of the contractors needed a significant local base.

All three of the tenderers have local depots here in Palmerston North, and already employ large numbers of local staff.

Another step we’ve taken to keep work in Palmy and to support small to medium-sized businesses is including a requirement that 20 per cent of the value of the contract must be delivered by sub-contractors.

Fulton Hogan are also part of the consortium awarded the contract to deliver Te Ahu a Turanga, so they are already growing the size of their team.

Council Chief Executive, Heather Shotter, says Fulton Hogan has a big job ahead.

“Our city is growing fast, and we need to be able to move our residents, visitors and freight around our city easily and safely. This contract is paramount to that objective and road users' experiences. We believe this new contract will provide our ratepayers with value for money, more accountability and exceptional customer service.”

Fulton Hogan’s Regional Manager Vic Maggs says the company is delighted to have this endorsement from the Palmerston North City Council.

“The Manawatū is one of the most dynamic regions in New Zealand, where we’re fortunate to already be involved in two major progressive projects – Te Ahu a Tūranga, and the Ohakea Te Whare Toroa airside upgrade. The opportunity to meet the Council’s service, efficiency, capacity building and communications objectives is a challenge we accept with both hands, and can’t wait to get started.”

Thank you to Higgins

Higgins has been our contractor for the past 10 years, and other large periods over recent decades, and we’d like to thank them and commend them for the service they’ve provided our city. We’re confident our residents will share that sentiment.

While this contract with Higgins has come to an end, we will continue to work with them on a range of capital investment projects, building on our excellent relationship we have had with them.

Handover is already underway

Council staff are already working closely with Fulton Hogan to ensure a smooth transition. This process will ensure our roading and active transport network continues to be maintained and upgraded to the high standard our residents and visitors expect.