Agency Accreditation Scheme for Construction

  • Policy
Updated: 1 Jul 2019
Defines the management of risks and to reduce cost overruns in the procurement of construction works by establishing effective and efficient asset procurement practices in government.

1. Purpose

The purpose of the Agency accreditation scheme for construction is to manage risks and reduce cost overruns in the procurement of construction works by establishing effective and efficient asset procurement practices in government. The scheme applies irrespective of the source of funding for the project.

2. Scheme outline

  • The Agency accreditation scheme is based on the premise that an agency should procure assets using external systems and resources where appropriate to supplement its own capabilities.
  • The scheme involves consideration of two independent factors:
    • the agency’s procurement capabilities, and
    • the level of risk in the project or program being procured.
  • An agency will be required to obtain external support if the level of risk is high in relation to its assessed capabilities.  These capabilities should be consistent with the agency’s core service delivery functions.

3. Procurement capabilities

  • The scheme applies separately to the planning and delivery phases of construction procurement:
    • The planning phase, which essentially involves preparation of the business case and the project approval process, commences after an agency has decided to construct an asset following a strategic assessment of options for satisfying a need.
    • The delivery phase is the process of dealing with service providers delivering the asset.  This includes documenting requirements, selecting and managing service providers.
  • The capabilities required to manage the inherent risks in each procurement phase can be described in terms of systems and competencies (knowledge, skills and abilities) to perform the required tasks. (refer attachment 1)

4. Procurement risk

  • The risk level of a proposed construction project is assessed using the risk assessment tool developed for the Gateway review process. (refer to the Gateway review system)
  • The tool generates a score that indicates whether the project involves a high, medium or low level of risk. The indicative project budget is a significant factor in this assessment.
  • Agencies are required to conduct a risk assessment at the commencement of the planning phase for every construction project or program valued at $1 million or above.
  • The risk assessment generated by the tool is to be included with the routine economic appraisal submitted to NSW Treasury in support of the bid for capital funding.

5. Accreditation

  • NSW Treasury assesses agencies for accreditation for each of the two procurement phases.  An agency may be accredited to undertake planning without support, but be required to obtain support for the delivery phase.
  • An agency will be accredited for a particular procurement phase if it is considered to have all the capabilities necessary to carry out that phase without external support at any level of procurement risk.
  • Remaining agencies will not be accredited on the basis they do not have the capabilities required to manage that phase without external support, except for the planning phase for low risk projects valued at less than $50 million (for which accreditation is not required).
  • The list of accredited agencies, as at December 2012, is at attachment 2.
  • A non accredited agency can obtain “partial” accreditation for a phase of a specific project or program assessed at low or medium risk. To do so, it must demonstrate that it has the competencies necessary to successfully manage that phase of the project. (refer attachment 3)

The table below articulates these requirements for accredited and non-accredited agencies.

Agency accreditation status - Planning and/or delivery phases

Project

Risk

Accredited:-

Projects of all values

Non-accredited:-

Projects valued >$50M

Non-accredited:-

Projects valued <$50M

Partial accredited:-

Projects valued <$50M

H

Can undertake without external support using own procurement system

Require external support.  Must use the government procurement system

Require external support.  Must use the government procurement system

N/A - Require external support and must use the government procurement system for delivery phase

M

Can undertake without external support using own procurement system

Require external support.  Must use the government procurement system

Require external support.  Must use the government procurement system

Can undertake without external support but must use the government procurement system

L

Can undertake without external support using own procurement system

Require external support.  Must use the government procurement system

Can undertake planning without external support. Delivery requires external support and use of the government procurement delivery system

Can undertake without external support but must use the government procurement system for delivery phase (partial accreditation not required for planning phase)

6. External support

  • The external support that agencies will be required to obtain includes:
    • using the government procurement system for construction for the delivery phase that is developed and maintained by NSW Treasury.
    • engaging approved external advisers with relevant competencies to assist in managing the procurement.  Such expert advisers must use the government procurement system for construction, unless they are accredited agencies in which case they may use their own system.
  • The government procurement system for construction generally consists of guidelines and procedures for the selection of procurement strategies, contract risk allocation, supplier selection (including prequalification), tendering and formal dispute resolution. The system provides support for agencies in engaging expert advisers.
  • The support that agencies will be required to obtain for each relevant phase of a project is outlined in the above table and summarised below:
    • a fully accredited agency will be authorised to carry out procurement at any assessed risk level without the support of external resources.  It will need to maintain effective procurement systems;
    • a non-accredited agency must engage the support of external advisers and use the government procurement system for construction (where those advisers are not accredited agencies), for projects and programs of any risk level except for the planning phase of low risk projects valued below $50 million;
    • a “partially” accredited agency will be authorised to carry out the relevant phase/s of a construction project of low or medium risk without the support of external resources, but must use the government procurement system for construction.

7. Rules and responsibilities

7.1 NSW Treasury will:

  • accredit agencies, including partial accreditation.  NSW Treasury may seek information or assistance from the agency applying for accreditation and other expert agencies;
  • review and revise an agency’s accreditation on the basis of an agency’s procurement management performance or changes to its capability.  For example loss or gain of in-house expert personnel may result in adjustment to the accreditation status;

7.2 Agencies will:

  • have ultimate responsibility for the efficiency and effectiveness of their procurement and for implementing the Government’s Procurement Policy;
  • advise NSW Treasury of significant changes in their procurement capabilities, for example through movement of key procurement personnel. (Not applicable to non-accredited agencies).

8. Scheme coverage

8.1 The scheme will:

  • apply to construction projects and programs above a value of $1 million;
  • apply on a whole-of-government basis to all government departments, statutory authorities, trusts and other government entities;
  • not apply to State Owned Corporations subject to the State Owned Corporations Act.

9. Attachment 1

9.1 Typical capabilities

PLANNING phase capabilities

Competency#

Systems##

Project management (at project director level) including risk management and consultant management

Project management procedures

Systems to ensure project managers gain and maintain relevant, current competencies

Cognisant with NSW budget and total asset management processes for planning of construction projects

Management of planning and development of construction works

Asset planning procedures and tools (including economic appraisal, value management, risk assessment, environmental impact assessment) leading to preparation of business case

Options identification procedures

Project approval processes

DELIVERY phase capabilities

Competency#

Systems##

Project management of construction projects

Project management procedures etc as above

Organisational management procedures, e.g. reporting systems and delegations

Knowledge of industry and appropriate procurement strategies

Guidance on procurement strategy options

Project definition and documentation

Robust and up to date standard commercial contract conditions incorporating government requirements for risk allocation and effective dispute resolution processes

Probity and tender evaluation, knowledge of government procurement environment

Tendering systems and associated procedures ensuring competitiveness for Government work, probity, fairness and transparency

Contract management for construction contracts

Contract administration procedures including feedback processes

Dispute resolution

Dispute resolution procedures


Notes:

#            “Competency” includes knowledge and skills that are based on experience in carrying out the relevant activity.

##         “Systems” must be proven in practice and maintained through feedback processes.

10. Attachment 2

10.1 Agency accreditation scheme for construction

Procurement greater than $1 million.

See a list of all currently accredited agencies DOCX, 119.49 KB

11. Attachment 3

11.1 Application for partial accreditation

A non-accredited agency may apply to NSW Treasury for accreditation to undertake the planning phase or delivery phase of a particular construction project if it believes it has in-house staff with suitable competencies for that project.  Even though partial accreditation may be received, the agency will still be required to use the government procurement system available through NSW Treasury.

Partial accreditation may be sought for:

  • the planning phase of medium risk profile projects less than $50 million in value; and
  • the delivery phase of medium and low risk profile projects of value less than $50 million.

[Accreditation is not required for procurements below $1 million or planning of low risk projects less than $50 million.]

The risk profile of a project is determined using the Gateway Review System Risk Assessment Tool.

The planning phase under the accreditation scheme commences at the time an agency starts evaluating its options for satisfying a service delivery need.  It essentially comprises the selection of an option and the development of the necessary business case to support a bid for project funding. The delivery phase follows funding approval.

Agencies applying to NSW Treasury for partial accreditation should include:

  • the agency’s business unit that will be responsible for the project
  • project name
  • whether accreditation is sought for the planning phase or delivery phase
  • estimated project value and phase duration
  • a copy of the project’s risk profile, based on the Gateway risk assessment tool
  • competencies of proposed project members, including for each member:
    • name;
    • position in agency;
    • proposed role on project; and
    • experience in planning or delivery (as appropriate) of similar type projects.