Big win for contractor Fulton Hogan
Signs maintenance contract with Manawatu¯ District Council This contract represents the largest single budget area within the overall council work programme, which covers roading repairs and maintenance, road sealing, footpath repairs, drainage works and
Manawatu¯ District Council has selected Fulton Hogan as its road maintenance contractor for the next three years. The contract will start on July 1. Infrastructure manager Hamish Waugh said there was a high level of interest in the contract from New Zealand’s largest infrastructure contractors.
Fulton Hogan was selected as the preferred contractor based on several attributes, including proficiency and pricing, he said.
“We were really impressed with the high calibre of tender applications received, ensuring this has been a robust and thorough selection process.”
The three-year contract is worth about $38 million, subject to final NZ Transport Agency confirmation of the 2024-27 road maintenance funding envelope.
“This contract represents the largest single budget area within the overall council work programme, which covers roading repairs and maintenance, road sealing, footpath repairs, drainage works and attendance to emergency and weather events.”
Fulton Hogan has committed to working with several established infrastructure suppliers in Manawatu¯ , ensuring the local contracting market is supported.
“This local knowledge will ensure the roading network is looked after to the highest possible standard within our available budgets,” Waugh said.
The contract has two rights of renewal of three years each, upon satisfactory performance and subject to council agreement.
Fulton Hogan replaces Higgins, which held the Manawatu¯ District Council road maintenance contract for nine years.
In 2021, Fulton Hogan replaced Higgins as Palmerston North City Council’s road maintenance contractor.
A March 2021 officer report recommending elected members approve the awarding of the contract to Fulton Hogan said the company provided the highest-quality tender and the lowest price.
Three tenders were received, but the names of the other two companies were redacted. The Palmerston North contract is for three years and is worth $38 million.
In August 2022, elected members asked for an external review of the contract to identify challenges causing the deterioration of the city’s road network.
The review was done by Building Intelligence Group, which said it was common for contracts to be reviewed at this stage.
Building Intelligence Group recommended retaining the contract with Fulton Hogan. It acknowledged there were some aspects of the contract that worked well and some that needed rescoping. The review highlighted ways in which council staff and Fulton Hogan could work more collaboratively.
The council’s summary of the report says it is committed to working with Fulton Hogan. Mayor Grant Smith, chief executive Waid Crockett and chief infrastructure officer Chris Dyhrberg met with national and regional Fulton Hogan leadership to discuss the review.
The review noted staff turnover at the council when the contract moved from Higgins to Fulton Hogan led to a lack of continuity. Fulton Hogan struggled initially to resource the contract due to the pandemic as well as workforce shortages.
The review found the present approach to managing the city’s roads was reactive, with complaints from the public driving the work programme.
This work does not fix the underlying issues causing the failure of road surfaces.
There have been budget shortfalls. For example, emergency work caused by extreme weather events is funded through existing budgets, which are already stretched by contract inflation fluctuations.
Contract inflation fluctuations are changes in the overall cost of goods and services that affect the cost of maintaining and repairing roads. They could include the cost of materials, labour and fuel.
These fluctuations are also unfunded and now exceed 20 per cent of the total value of the contract. The impact is a reduction in the available budget to renew and maintain the road network.
The review found the general condition of roads in Palmerston North met the applicable standards set by NZTA and that the council is performing better than other councils on most classes of road.
The review was discussed in a public-excluded council meeting in September.
The accompanying officer report will not be released until the conclusion of the negotiations with Fulton Hogan for a renewed term of the contract.
Fulton Hogan was founded in Dunedin in 1933 by Jules Fulton and Bob Hogan.
Meanwhile, Higgins has been awarded the contract to construct the section of the Featherston St cycleway and pedestrian improvements between Aroha St and North St.
It will install raised pedestrian crossings outside Central Normal School and Palmerston North Boys’ High School, a separated unidirectional cycleway on both sides of the road, and changes to the lane layout and light phasing at the Rangit¯ıkei St intersection.
In 2016, Higgins was purchased by Fletcher Building and is now part of the Fletcher Construction family of brands.