‘Smart shopping’ on infrastructure
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Hey there, time traveller!
This article was published 22/03/2021 (508 days ago), so information in it may no longer be current.
Much is made of the notion that Winnipeg is wholesale city and Winnipeggers are frugal shoppers. We know when to buy, what to buy, why to buy it and never pay the regular posted price. We always hunt for just that right deal, on sale, discounted, negotiated down even further if we can get away with it — never hurts to ask, right?
We plan. We know when flyers are to reach our doors, scour through them, then wait to shop the day sales start. In short, we’re “smart shoppers.”
The premier has declared he wants to model government purchasing after our shopping practices so it, too, can be a “smart shopper,” extract best value for dollar, minimize waste, plan ahead and know, according to plan, the purpose for the needed purchase. Who can argue that objective?
While the provincial government, to its great credit, has improved procurement significantly through Central Services shopping, there remains an area of substantial savings to budgets in the purchase of construction services: the building of our infrastructure.
Like the Winnipeg “smart shopper,” industry needs to know — not guess — with a level of certainty and predictability the provincial capital investment priorities, years in advance. We need that information to prepare, to gear up for the prospect of work, to organize our human and capital resources, to begin discussions with fuel, oil, petroleum, equipment suppliers and aggregate producers to line up supplies.
We negotiate product costs, and we do that usually in the dead of winter, when prices are down — in other words, “on sale.”
All this preparation allows us to bid competitively in the spring that follows. And remember, we compete for the work. Construction contracts are awarded to the lowest bid price. So, it’s in the public interest for government to be a smart shopper.
Manitoba can be that smart shopper and its capital budgets can go much further — anecdotally estimated up to 15 per cent — if it would plan, release multi-year budgets, give the construction, design and supply-side industries the market information (the flyers) around which to organize well ahead.
So heading into the April 7 provincial budget, what should Manitobans hear being implemented in its references to construction purchasing to enable the distinction of “smart shopper”?
Begin with the following steps:
• Plan and release: commit to preparing an annual and five-year capital budget, which allows government the latitude to adjust annually to meet shifting priorities. Treat every capital purchase as an “investment,” not a “spend.” Investment requires a focus on objective and return.
• Make public Manitoba Infrastructure’s assessment of our highways’ condition and needs; align the program with a balance of investment in new and existing assets.
• Advertise tenders early: between 70 and 80 per cent of the annual capital program should be advertised and awarded between January and April allowing competitive bidding in the “dead of winter.” This supports industry ability to get the job done, in the same year.
Along with budget management, adopt guiding principles to get the biggest economic boost, including:
• Roll out the long-term investment plans, with annual incremental increase to budgets.
• Prioritize projects that hold the highest return on investment (i.e. those attached to trade).
• Embrace, by working with the private sector in contract scoping, innovation that is aligned with environmental stewardship.
Finally, investment programs must be reviewed annually to ensure the intended goals are being met, and so lessons learned can adjust investment plans and feed into strategies.
Smart shopping by government? It’s absolutely possible, and the City of Winnipeg serves as an example.
Winnipeg has adopted an annual and five-year capital budget process which annually lays out six years of planned capital investments. That includes bus purchases, streets, parks, bridges, libraries, community centers — you name it. It signs design and engineering contracts a year ahead of project construction. It tenders projects early and awards contracts to the lowest bidder quickly, allowing work to start early and be completed on time.
The end result? Winnipeg benefits by competitive bidding and rolls savings into future capital budgets, extending the value of its capital program. Winnipeg is a “smart shopper.”
If Winnipeg can do it, so can the province.
Disciplined budget planning and execution is smart shopping. The premier wants it. We hope the April 7 budget reflects that.
Chris Lorenc is president of the Manitoba Heavy Construction