Big money to be saved by 'doing own work'

Tasman district plans to save more than $1 million a year by bringing some of its engineering back in-house.

The council out-sourced its strategic planning, asset management planning, and contract management in 1999 to save costs.

Last year the council paid consultants from engineering firm MWH New Zealand close to $11 million to manage the work, including the design investigation and potential construction of capital works.

Now the council will bring the work, except capital projects, back into its Richmond office, and increase its fulltime engineering staff from 21 to 39.

MWH said today it was aware of the council's decision but would remain committed to supporting the TDC to continue to deliver successful infrastructure projects.

MWH said it had a rich history in the Nelson area and its work with the TDC had resulted in a number of successes over the past decade.

"With a staff that includes many lifelong local people, MWH looks forward to continuing to invest in and contribute to the community through future work with the Tasman District Council and other organisations in the area," said MWH director for New Zealand, Andrew Caseley.

The cost savings, which are estimated to rise from $856,000 next year to about $1.25 annually from 2014-15, incorporate the cost of employing the extra staff.

TDC chief executive Lindsay McKenzie told councillors at yesterday's full council meeting the cost savings were only part of the picture.

"While saving money was a prime consideration when the change was first initiated, there are also a number of strategic reasons.

"We need to regain control of the council's relationships with contractors, customers and ratepayers and the ownership of our assets which are currently managed by MWH.

"We also need to regain control over our asset and activity management plans and we need to re-establish within this organisation core competency and control."

Mr McKenzie said he had been struck by the support from MWH throughout the process "and the company has contributed significantly to get us to the point we could put this business case to you", he told councillors.

He said the changeover would be staged over five months from early next year and feature performance monitoring.

Mr McKenzie said he was aware that moves by any council to increase staff were looked on with suspicion. But what really mattered were the savings in the cost of service delivery.

The council's corporate services manager, Murray Staite, told councillors the move would shorten information times, be good for the organisation as a whole, improve management and give a better understanding of cash flows.

A review of the council's engineering needs was started last year by specialist consultants Morrison Low and Associates and looked at whether the current structure provided the best delivery in terms of ownership, expertise and cost.

Malcolm Morrison said that in his experience the councils that controlled their strategy and activity were best placed to make the most of opportunities, provide benefits for their communities and reflect and provide community wants.

"Tasman has been paying for a huge amount of transaction noise - around checking, instructions and handling contracts - all of which is non-productive."

The move was supported by most councillors, who had previously discussed the change.

However Glenys Glover questioned whether the council's management of its engineering services would be cost effective away from the competition of the open marketplace.

"And aren't we taking over something that is not core council business?"

She requested a report back in 12 months on the costs and benefits of the move and called for a division on the recommendation's vote.

Deputy mayor Tim King said the move would be a massive challenge and councillors, and ratepayers, would expect the change delivered exactly what was asked.

Ms Glover voted against the recommendation to approve the implementation of the restructure.

It is expected the new structure will be in place by next July.

The Nelson Mail