Procurement

FY16 SUMMARY

  • Further improved our sustainable procurement processes and specialised management of key procurement categories, achieving significant financial and environmental benefits
  • Continued our use of sustainable infrastructure and procurement frameworks from the Infrastructure Sustainability Council of Australia and Institute for Sustainable Infrastructure in the USA
  • Supported social enterprise in the USA with more than US$4M in contracts awarded to Small, Women-owned and Minority-owned businesses and Disadvantaged Business Enterprises
  • All Transurban building and office construction, fit outs and renovations supported by the Facilities function, which ensured reuse and recycling of resources where possible

Our supply chain

Our supply chain includes goods and services required for our business, as well as the procurement of large contractor-managed construction and operational projects.

Transurban directly engages more than 1,400 suppliers across our Australian and USA operations.

Our total supply chain spend in FY16 was over $800 million. Of that amount:

  • Around 50 per cent of the business was with our top 10 suppliers by spend
  • Around 80 per cent of our spend was with 50 suppliers
  • Over 60 per cent of the total annual spend was related to capital expenditure

With the growing scale and complexity of our supply chain, Transurban places a high priority on continuing to improve procurement systems to take advantage of:

  • Improving scale and value of procurement
  • Efficiency gains through automation, alignment of roles and use of standard procedures
  • Improvements to online systems, consistency of processes and information management

We actively manage risks through sourcing, approval and performance management controls.



Downloads
Supplier Sustainability Code of Practice Jan 2016


GRI G4 Indicators

  • Procurement practices DMA
  • Supplier environmental assessment DMA
  • G4-12
  • EC8
  • EC9

Sustainable procurement

Transurban has a procurement policy in place for sourcing and purchasing. We focus on ensuring our suppliers comply with best practice and adhere to our Supplier Sustainability Code of Practice.

This Code of Practice applies to all suppliers and sets a number of Governance, Community, Environmental Management, Social Responsibility and Supply Chain criteria as minimum requirements for supplier conduct, as well as ‘leading’ practices for preferred suppliers.

In all tender processes for corporate and project procurement, we outline our environment, sustainability and safety expectations including those within Transurban’s Sustainability Supplier Code of Practice and specific issues relevant to each supply contract.

Procurement systems and team

In FY15, we upgraded our procurement systems to a company-wide platform, providing a central resource for the review, approval and payment of suppliers. This has increased our visibility over all purchasing decisions made across the business, and also provides a central point for our suppliers to manage their interactions with us.

In FY16, our Procurement Team continued to centralise procurement into a dedicated category sourcing model with specialisations for:

  • Technology and corporate services
  • Infrastructure procurement
  • Facilities
  • Procurement operations
  • Supplier performance management

Examples of the significant benefits the specialised category management approach has provided include the sourcing and negotiation of Australian electricity supply contracts and upgrades to in-tunnel air quality monitoring systems in CityLink.

Infrastructure Sustainability

In FY16, about 60 per cent of the total annual spend on procurement was related to capital expenditure on major infrastructure projects. This includes the projects summarised in the Enhancing Our Networks section of this Report.

Contractors

Transurban delivers large infrastructure projects such as road construction and upgrades by engaging major contractors, which typically takes on responsibility for day-to-day delivery of the works and sub-contracting subject to conditions set by Transurban.
Transurban establishes robust project scope and contractual conditions to work with contractors to develop effective and sustainable infrastructure. A major element of capital procurement is contractor management and establishing strong expectations for sustainability management within the project scope, contracts and operational plans.

Procurement requirements and expectations are established by Transurban and our client agencies in project tender and contract documents. The requirements imposed on contractors for major projects will vary, but may include:

  • Providing project management and sustainability plans including a Sustainability Management Plan, Construction Environmental Management Plan, Stakeholder Engagement Plan and various other Risk and Governance plans
  • Use of an infrastructure sustainability rating tool and framework – either the Infrastructure Sustainability Council of Australia’s (ISCA) Infrastructure Sustainability (IS) rating tool for Australian projects or the Institute of Sustainable Infrastructure’s Envision rating tool for USA projects

Working to these standards is audited by Transurban and external assurers throughout the project to ensure compliance with agreed operating practices. These processes are a major part of contractor procurement and surveillance.

Infrastructure Sustainability Council of Australia (ISCA)

Transurban is a member of ISCA and uses the IS rating tool as an overall governance framework for our Australian development projects. The IS rating tool provides a robust and independently-verified means of assessing the overall sustainability performance of major infrastructure throughout the design, construction and operation phases.

  

The IS rating tool is used by Transurban to assess proposed sustainability initiatives on major capital projects in the tender phase, to monitor progress towards agreed sustainability rating levels during project delivery and to encourage holistic sustainability benefits.

Transurban has a target for major Australian projects to achieve at least ‘Excellent’ Design and As Built IS ratings, which require the achievement of measurable KPIs and sustainability rating ‘credits’ across a range of categories:

  • Management and Governance: Management Systems, Procurement and Purchasing, Climate Change Adaptation
  • Using Resources: Energy and Carbon, Water, Materials
  • Emissions, Pollution and Waste: Discharges to Air, Land and Water, Land, Waste
  • Ecology
  • People and Place: Community Health, Well-being and Safety, Heritage, Stakeholder Participation, Urban and Landscape Design
  • Innovation

This target is part of a requirement for major contractors as part of the project tender process.  The target needs to be achieved during delivery of the project and this is independently verified by an ISCA-appointed verifier.

Envision

Transurban also uses the Envision infrastructure rating system in the USA, with Transurban and its partners committing to achieving an Envision rating in the I-66 proposal to VDOT.

Envision is a rating system developed by the Institute for Sustainable Infrastructure which provides guidance and benchmarking on best practice in planning, designing, building, and operating civil infrastructure. The Envision assessment process operates with similar principles to the IS rating process and allows Transurban to assess the sustainability performance of major capital works projects.

  

Envision provides a framework for evaluating and rating the community, environmental, and economic benefits of infrastructure projects, including the opportunity to achieve rating credits in a range of sustainability categories:

  • Quality of Life: Purpose, Community, Wellbeing
  • Leadership: Collaboration, Management, Planning
  • Resource allocation: Materials, Energy, Water
  • Natural World: Siting, Land and Water, Biodiversity
  • Climate and Risk: Emissions, Resilience

Envision will allow infrastructure projects in the USA to be evaluated thoroughly using a transparent system of sustainability metrics.

Social procurement

In FY16, Transurban continued a number of long-term partnerships with social enterprises in an effort to support local employers, small businesses and people who may be at a disadvantage in seeking work.

In Australia, we partner with Ability Works Australia (AWA), an organisation that employs, trains and supports people with disabilities and provides meaningful employment.

In the USA, we continue to support the Small, Women-owned and Minority-owned Business (SWaM) Procurement Initiative and the Disadvantaged Business Enterprise (DBE) Program. In FY16, Transurban and its partners awarded over US$2.2 million in contracts to DBE and SWaM entities working on the 495 Express Lanes and over US$1.8 million to DBE and SWaM entities involved in the 95 Express Lanes – a total of over US$ 4 million in contracts. Over the lifetime of the assets to date through construction and operation, Transurban USA has awarded over US$60 million in contracts to DBE and SWaM entities.