Sydney Region Road Maintenance Contracts

In November 2013, Roads and Maritime Services (RMS) outsourced the maintenance of State roads in the Sydney region south and west zones using an innovative contracting approach called the Stewardship Maintenance Contract (SMC). The SMC links risk to reward, and uses a performance framework where outcomes should drive improved performance over time.

RMS’ SMC contract management includes most elements of good practice, including governance and dispute resolution mechanisms. However, key elements are missing which reduces its effectiveness, according to a report released by the NSW Auditor-General, Margaret Crawford.

RMS does not have procedures to guide its contract managers in exercising specific provisions of the SMC. ‘Effective contract management should be supported by specific procedures that explain the interventions RMS may be required to exercise in the SMC,’ said the Auditor-General.

Performance and financial reporting for the SMC is based on a mix of RMS and contractor provided data. ‘Overall, RMS has not done enough to assure itself that contractor supplied data is correct. This is important because the data is used to measure performance and calculate contractor payments,’ said the Auditor-General.

RMS achieved around 80 per cent of the expected SMC business case cost savings in 2014−15. However, it has not tracked benefits achieved since then.

This audit assessed whether RMS had effectively managed the outsourcing of road maintenance in the Sydney region south and west zones. The contracts run for seven years, with a combined cost of around $240 million per annum.

Further information

Ian Goodwin, Deputy Auditor-General, on 9275 7107 or 0428 641 531 and email