6.09.2021

Centrality of Price in New Zealand Procurement: Time for Change

The focus on centrality of price in New Zealand procurement (or securing the lowest price) continues to be a key concern for the construction industry. 

This essay analyses the issue of lowest price-based procurement and some of the recent overseas procurement processes which seek to address this issue (including that of Sweden, Scotland, and Australia).  Finally, the essay examines the Construction Sector Accord as an example of a New Zealand Government initiative which seeks to promote fair risk allocation and collaborative procurement models that are not centred on price.

Overall, the essay makes the following recommendations:

  • Consideration needs to be given to the economic, technological, commercial, social and legal factors alongside price (including client and contractor experience);
  • A good faith clause should be made mandatory in tender documents in accordance with the Accord’s principles of collaboration and transparency; and
  • To use a schedule of quantities in tender documents for lump sum contracts for principal-provided items in order to give the principal a solid basis for comparison of tender prices and to filter unusually low prices.

Victoria’s essay received a commendation and was recommended for publication by the New Zealand Society of Construction Law.  To read Victoria’s essay, please click here.

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