Highway contract sector shake-up

18:45, Dec 26 2013

Downer Engineering has won a seven-year, $69 million maintenance contract for South Canterbury's state highway network.

The New Zealand Transport Agency's (NZTA) announcement is a major shake-up to the local roading contracting industry.

It is unknown how many jobs will be affected at the unsuccessful contracting firms.

NZTA's Peter Connors said the new deal offered "major efficiencies".

"It's a new approach. Rather than several contractors getting bits of the maintenance work, all of it goes to one firm or consortium," he said.

Mr Connors said NZTA had spoken to roading firms, who wanted contracts longer than the usual one to three year period.


The Timaru business manager of one of the unsuccessful firms, Bevan Sandison, of Opus, said seven of its 18 staff were dedicated fulltime to state highway-related work, while everyone else contributed in some way.

This would finish in March once the new contract comes into effect.

"It means we have to rethink our operations. We might have to get into more agricultural or building work as a result," Mr Sandison said.

He said Opus would continue to work on council-owned roads.

"It's a difficult period for us, but we're confident something good will come out of it," he said.

Opus has provided civil engineering work on South Canterbury's state highway network for the last 23 years.

Downer formed a partnership with engineering services provider GHD, surfacing supplier Isaac, Paul Smith Earthmoving and vegetation control operator GSL to deliver the new contract.

"I don't expect a major change in the workforce required for the jobs. It just won't be spread over several firms," Mr Connors said.

Fulton Hogan's Canterbury region deputy manager, Brett King, confirmed the firm's joint consortium contract bid with Sicon and Opus was unsuccessful.

"Seven years is a long time for a contract, but firms had asked for longer contracts. The tendering process can be a bit of a flip of the coin. You win some, you lose some," Mr King said.

Fulton Hogan employs about 85 people at its Timaru office. It had several major projects over summer, including work on the Tekapo canal.

"We've had bits and bobs of the state highway network, but we're lucky it's not our main work," he said.

Mr Connors said capital projects - such as bridge building - would still up be for tender. He said Downer was already responsible for much of NZTA's maintenance work in South Canterbury.

No one from Downer was available for comment.

The contract comes into effect on April 1.

The Timaru Herald