Flexible and fast: reducing COVID-19 impacts on Council budgets and projects

Nelson City Council voted unanimously on Thursday 17 February to create a dedicated COVID-19 fund to ensure planned capital projects can be delivered over the next few years, in response to increased prices from ever-changing and unpredictable global supply issues caused by COVID-19.

Interruptions to supply chains and scarcity of materials have left organisations and businesses throughout the world facing rapidly increasing costs. This inevitably places pressure on budgets, which were set prior to the disruption being felt, despite including industry-standard allowances for contingencies.

 
To ensure tenders for planned projects can be awarded, started on time, and completed successfully, Council will create a COVID-19 fund worth $2.8m, that will be used to cover any increased costs as a result of the pandemic. This decision comes alongside a decision to grant the Tenders Subcommittee the ability to approve the award of tenders, saving potentially 10 weeks compared to normal approval processes.
 
Group Manager Infrastructure Alec Louverdis says creating the fund will ensure funding is easily accessible at short notice when needed, but it is designed to only be drawn on when absolutely necessary.
 
“This streamlined process will ultimately save money for ratepayers in the longer term as materials can be secured quickly and will allow contractors to plan their work programmes with greater certainty.
 
“Council’s projects will continue to face a lot of strain due to the economic situation created by COVID-19. To secure the best possible prices for Nelson, and ensure we can complete planned projects, it’s vital we have this money on hand so we can act fast when required.”
 
Nelson Mayor Rachel Reese says COVID-19 is causing disruption to the supply chain and price stability for the businesses that undertake Council’s work. 

“It’s important that we adjust our processes to achieve the best prices possible while we continue with infrastructure investment in the city.

“These changes will provide a framework for timely decision-making while maintaining budgetary discipline. They are a temporary change and will be reviewed regularly throughout the remainder of the year.”

Civil Contractors New Zealand (CCNZ) Nelson Marlborough Chairman Brendon Dodd says:

“In addition to the current streamlined procurement and early contractor involvement process used successfully by Nelson City Council in close collaboration and partnership with the Nelson Marlborough CCNZ, we wish to state our support for the continued innovation by Council in thinking of ways to deal with the challenges COVID-19 is posing the industry.

“Further streamlining of Council’s internal contract award processes will ensure greater certainty for all contractors and will further allow all contractors to manage pricing, workloads and programming – delivering better outcomes for all during these very tough times for the industry.”

The COVID-19 fund will be reassessed by Council in 12 months’ time, giving elected members the chance to evaluate the success of the fund and whether it should continue or stop.