The enterprise model an innovative approach to project management in New Zealand

Blog posted by: Conrad Heine, 29 Sep 2021.

With a population just shy of five million, New Zealand may not be the first country that springs to mind for projects at scale needing innovation. But Watercare, the utility serving the water needs of Auckland, New Zealand's largest city with one-third of the country's population, is a local giant.

The challenges it faces are similarly vast in scale: a rapidly growing population to serve (set to reach 2.4 million by 2050); sustained drought, which is overwhelming its ageing water-supply infrastructure; and repeated large-scale pollution from wastewater and stormwater capacity, now outstripped for decades by Auckland's growth.

Thus, Watercare has giant plans: its Asset Management Plan, released in July, details an infrastructure spend of NZ$18.5bn over 20 years: “half growth, and half renewals, replacement and resilience”, says Jon Lamonte, Watercare's chief executive since early 2021. But a programme of this scale, “not seen in water in New Zealand ever”, demands an approach beyond the traditional.

So, since 2019, Watercare has been moving to transform its project management. Its Enterprise Model (EM), established in 2019, involves the selection of contractors for a large range of projects, rather than project-by-project. It draws heavily on the principles of enterprise project management (EPM). EPM is complex, but its purpose is straightforward: to enable efficient and effective project management on a large scale, across multiple projects rather than in silos, within a large enterprise.

EPM can be transformative, as at Watercare. According to Lamonte, the new approach is already bearing fruit. In mid-July, responding to Auckland's drought-wrought supply challenges, Watercare brought onstream Waikato 50, a brand-new water treatment plant that has significantly boosted Auckland's water supply from the Waikato River to the south.

“The project was delivered in 10 months; had it been a traditional project, it would have taken 10 years.”

Redefining relationships

For Watercare, key to the transformative nature of the EM is how it redefines Watercare's relationships with its partners on infrastructure projects.

“Historically we had worked project-by-project, through a standard tendering process,” says Lamonte. This traditional approach appeared to work well, but problems were in the pipeline for its construction industry partners. “The model was not working for industry. We needed to do something different to deal with the problems industry was facing.”

Discrete projects meant industry found it hard to invest in the people, plant or equipment at the scale needed without the long-term security of a forward works programme. This, in turn, had the potential to affect Watercare's ability to meet its own objectives, even as planning for projects necessary for Auckland's future got underway.

Meanwhile, Watercare needed tools to meet the targets it had set itself for its infrastructure vision: a reduction in carbon by 40 per cent and costs by 20 per cent; and to improve health and safety outcomes by 20 per cent each year.

So, in late 2019, the EM was created when Watercare announced a 10-year infrastructure construction partnership with local firms Fletcher and Fulton Hogan (selected after a competitive tender process).

The EM comprises two components: Programme First, a business unit integrating Watercare and its partners, working as one team, with a core deliverable of extracting maximum value from the full partnership via the development of a long-term relationship; and Programme Delivery, where the focus is not just on delivery, but also on programme-wide gains and continual improvements, and efficiencies within particular projects.

Lamonte says: “This is so significant for us… a way of giving the private sector a clear pipeline of work so they can make investments in people, plant and technology. Not an alliance as such, but a long-term relationship with a portfolio that gives us hard dollar elements for projects.”

Aligning objectives

Although still in its early days, with its partners on board, the EM is taking shape. “A lot of the early-stage process was really trying to work on the relationships, the values, how it can work, before we got into the mechanics of delivering projects,” says Lamonte.

Key to this are the relationships that are built, with fair allocation of risk, as contractors and designers come on board early as part of the partnership arrangement. “Our partners are not coming off one project wondering where the next is coming from… we are building the respect, trust and motivation to get the right outcomes.”

The record-time completion of the Waikato 50 water treatment plant – which also included a new pumping station at a separate site ­– is the first visible payoff from the shift to EM, and, according to Lamonte, “the best example of the model's demonstrated advantages”.

He acknowledges that the need for a response to the challenges of the drought had “focused minds. We would not always want that tight timeline. But a whole treatment plant in 12 months – we would not have got that without the model. Everyone was in the room from the start. It was a real aligning of objectives.”

And in a market the size of New Zealand, the adoption of the EM by a player of Watercare's size has the potential to strengthen industry in general, a point already acknowledged by the Construction Sector Accord, a government-industry platform set up in 2019 to address industry challenges.

A downstream conversion

As Watercare heads into the delivery of its 20-year plan, the EM is evolving, with the next stage including new design arrangements along the lines of the construction partnership.

“We want to standardise the product, and not have a bespoke model every time insofar as possible. This does not remove the need for innovation, but we want to standardise – this will be cheaper and more efficient to drive.”

Lamonte himself admits to having been sceptical initially when he came on board earlier this year, as, in his pre-Watercare life, “I had seen alliance projects in the UK going not so well” (he won't be drawn on which ones).

The relationships that are the bedrock of the EM are the key to his conversion. “When you work together you want to make things happen. I can see how this can work and work well.”

For Watercare, EM is embedded, but a constant work in progress. “We review it all the time, to see what can be done better. This is something you don't see conventionally on projects – there usually isn't time.”

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About the Author

Conrad Heine

Conrad Heine is a freelance journalist from New Zealand, based in London. As well as blogging for the APM, he has written for Project about the overseas campuses of British universities, the project management of elections and post-disaster project management. He also focuses on business education and development issues.