Construction Category Management Planning Version 1.1 (May 2015)

2 Category Vision $20M in savings within 5 years To adopt Best Practice Construction Category Management processes that meet the needs of government Key Service Capabilities Financial, commercial, performance and risk management Early engagement and collaboration with government agencies and industry leaders WoG approach Strategic Framework Move away from transactional approach into strategic category management approach Implement evidence based and result driven practices Align construction category with the market Engage with government agencies Engage with industry leaders and encourage innovation Promote standardisation and fit for purpose within construction category Lead change by acting as a change agent Drive cost saving initiatives and communicate them with government agencies Commitments Provide internal and external stakeholders with the best service Increase competition amongst suppliers Deliver best value for money Reduce government red tape Eliminate non-value adding costs and inefficiencies Ensure data currency and accuracy at all times Continuous improvement by challenging status quo Commitment towards supplier diversity A comprehensive category plan will be developed once key learnings and opportunities have been identified following completion of Best Practice Construction Procurement Pilots

Category Scope Construction & Facilities Management Construction Materials, Equipment & Services ($6.73B) Construction Materials Civil Services. Concrete. Asphalt. Construction related. Demolition suppliers & materials. Traffic Management. Industrial Gas. Internal Building Materials General Contractors. Rails & Fencing. Tier 1. Steel. Tier 2 Direct Professional Plant & Equipment Services. Earthmoving &. Architects Excavations. Surveyors, Quantity. Industrial & Surveyors & Estimating Construction. Engineering design, Equipment Hire Environmental Consulting & Geotech Services Building Services ($727M) Fire Protection Systems. Fire & safety. Locksmiths. Security equipment. Security services General Trades. Electrical. HVAC. Plumbing. Painting. Landscaping. General equipment & plant repair. Power Equipment & Services Property & FM ($2B) Property Food & Drinking (Management & Leasing) Water. Facility Management. Food, Catering Assets & Consumables. Land Related Expenses. Drinking Water. Realty Services. Rental Payments Property Maintenance Waste. Cleaning Materials. Recycling. Cleaning Services. Waste. Laundry & Management Laundry Equipment. Pest Control. Removals 1. A data re-categorisation pilot is currently being conducted within NSWP. A detailed spend breakdown will be available once this has been completed. 2. FM has a separate CMP.

4 Category Priorities and Objectives Sub-Categories : Construction, Professional and Project Management Services Short Term Priorities Run pilot projects based best practice procurement (refer p.5) Incorporate learnings from pilot projects into construction category management and policy Cost and spend data collection and analysis Construction category market analysis Early engagement of internal and external stakeholders Performance measurement and review Cut red tape Standardisation across government agencies Identify opportunities and implement them across government agencies Review and simplify construction government policies/procedures Key Challenges Understanding the needs of government agencies Change management Managing the rapid, volatile and discontinuous change in the construction market Limitations towards diversity and SMEs Low flexibility as a result of standardisation Five Year Objectives Implement best practice in construction category management and innovative construction procurement Establish strategic relationships with suppliers and government agencies Maximise opportunities for SMEs Drivers include: Stakeholder management Process improvement and innovation Performance management and reporting Challenge status quo Diversity and SMEs Sustainability Knowledge management Benefits program Annual Addressable Spend approx. $9 -10B Metrics14/1515/1616/1717/18 Savings ($m)tbc

Best Practice Procurement Initiative 5 = Value realised Early Contractor Engagement and Collaboration Project Scope & Budget Agreed Appoint Integrated Team Invite supply chain to best practice design, price and cost discussions Specification amended & value engineering agreed Tender Issued & Evaluation plan drafted Tenders returns Evaluation and Award Contract Management Trial programs will be established with government agencies based on early engagement and collaborative work practices. Savings may be achieved with best practice procurement models as demonstrated by the UK’s Government Construction Strategy (2012). 1. Early Supplier engagement 2. Integrated supply chains 3. Collaborative team focus 4. Transparent and agile 5. Governance and continuity 6. Optimise whole life cycle costs 7. Clear KPI tracking 8. Provides cost certainty 9. SME facility 10. Health and safety focus 1. Lower costs 2. Cost competition and control 3. Improved project design 4. Faster speed to market 5. Reduced disputes, claims and litigations 6. Higher client satisfaction rates 7. Reduced project risk 8. Fair supplier margins maintained 9. Increased SME and local business engagement 10. Increased innovation and sustainability Features Benefits