2012 ANNUAL REPORT

Prnciple 4: Operations

Silver Award for Business Excellence

Main Roads received a prestigious Silver Award as part of the 2011 Australian Business Excellence Awards. Only two Excellence Awards were granted in 2011 with Main Roads receiving the highest accolade. For 22 years, the Australian Business Excellence Awards have been recognising outstanding achievement on the journey to excellence by Australian organisations both large and small. To be recognised, organisations are independently assessed by a review panel against a set of internationally recognised criteria demonstrating a commitment to sustainable results, leadership and people. The framework is amongst the world's most rigorous business excellence models and our most recent success builds on our June 2007 achievement when we received recognition at the Bronze level. The result demonstrates that by working together we are continuing to achieve excellence as an organisation and moving close to achieving our Vision of providing excellent customer service and world class road access.

Integrated Management System

We have adopted a systematic approach to business performance improvement based on quality management principles. The Integrated Management System brings together all of our third-party certified processes into a single structure. During the year we maintained certification of our entire Management System. Continuous improvement is the cornerstone of all of the management processes and procedures.

Current Certification

Main Roads is keeping a close watch on the development of new International Standards for Road Safety and Asset Management. We have people involved in the development and review of the direction being undertaken for each of the new standards and would be seeking to adopt them within our Integrated Management System at the earliest opportunity.

Procurement Policies and Procedures

Our procurement policies and procedures comply with the requirements of the State Supply Commission and are certified to AS/NZS 9001:2008. Policies are documented in the Procurement Management Manual and all tendering and contract administration procedures are documented in the Tendering and Contract Administration Manual. An ongoing compliance program is in place to ensure that these policies and procedures are implemented. A Tender Committee, consisting of two experienced senior officers from our organisation and two senior external Government officials provide additional assurance that procurement actions comply with policies and standards for high risk, potentially contentious procurements. In addition, we submit all Procurement Plans and Tender Recommendations for Goods and Services arrangements over $5 million for review and endorsement by the WA Government's State Tender Review Committee.

Better Business Project

This project is our innovative response to the 3% Efficiency Dividend brought in by the WA State Government in 2009 during the global economic downturn. We conducted an organisation-wide consultation to identify improvements and efficiencies to the way we run our business and identified 106 Better Business recommendations. 70% if the Better Business efficiencies have now been comnpleted.

One of Better Business's aims was to ensure that we have the flexibility, culture and right capabilities to meet the communities future needs. To achieve this, we have concentrated on:

• Identifying opportunities to increase capability and skills development
• Providing a single point for information on all period and panel contracts
• Process improvements have been seen across the board
• Knowledge sharing initiatives have been developed to help spread innovative practices and ideas.

Sustainable Procurement and Buy Local

The State Supply Commission Policy on sustainable procurement requires us to demonstrate that we have considered sustainability in our procurement of goods and services. We have gone beyond the requirements of this policy to reflect this in not only our processes for procuring goods and services but also in procuring works. In addition, we apply the Buy Local Policy where we consider and give preference to local providers in our purchases as the benefits to industry development and employment are recognised. Buy Local Policy clauses are also included in all our tender documents and tender assessments. Reporting for Buy Local is extracted from information contained within the Department of Finance's 'Tenders WA' website. Data is not yet available for the current year.

Financial Targets: Actuals Compared to Budget

The following table provides a comparison of the financial targets and outcomes against criteria included in the Resource Agreement between the Commissioner of Main Roads, Minister of Transport and the Treasurer.

Further explanations are also contained at Note 41 of the Financial Statements.

Relationships with Suppliers

We have a procedure in place for dealing with procurement grievances which is referenced in all tender documents and a copy is accessible from our website. The procedure has been endorsed by the Western Australian Road Construction and Maintenance Industry Advisory Group and provides for a customer-focused, fair, structured and relationship-based approach to reviewing grievances lodged by contractors. During the year two grievances were received and these have been closed out. The grievances did not highlight any common areas of concern. The low number of grievances, which represented less than 1% of all contracts awarded, is consistent with previous years and indicates that our procurement processes continue to be fair and equitable. The table below lists our major suppliers/contractors and their award value over the past year.

Reporting to the Department of Treasury

There is a requirement to provide monthly, quarterly and annual information to the Department of Treasury. This also serves as an independent check on the integrity of financial reporting.