Chief's Chatmore ››

30 October 2018

Understanding construction procurement in New Zealand 

Recent high-profile failures of some of our largest construction companies has shone a light on poor procurement practice in New Zealand. Addressing this requires all parties to change their practices – from clients through to lead and sub-contractors, and the lawyers who advise each side. 

Master Builders is working closely with the Society of Construction Law (SCL) to facilitate discussions with sector leaders, held around the country, to enable debate on procurement practice. 

The sessions bring together developers, building owners, construction companies and the lawyers representing them. The discussion will focus on areas including procurement approaches, contract provisions, and risk mitigation.

We will be sharing our Lead Contractor Guidelines, which were launched at the recent “all-of-sector” Constructive Forum, to help ensure contractors understand the risk they are taking on when they sign contracts. The guidelines were developed by the Vertical Construction Leader’s Group. This group includes the CEOs of New Zealand’s leading commercial construction companies, and advocates on number of broader policy issues, including risk transfer, procurement, and retentions. This group, led by Master Builders, is committed to working closely with the sector and many will be in attendance at the meetings, held in Auckland, Wellington and Christchurch.

We have held two initial sessions in Auckland and Wellington with Hazelton Law presenting on key aspects of construction contracts and special conditions. It is important that our members understand these contracts and some of the traps that might be in the contracts they are signing. There has been an enthusiastic response to these sessions and we look forward to the upcoming sessions with SCL.

It is up to all of us to step up. We cannot expect the change to only come from clients – we can do more to educate them and put an end to their focus on the cheapest price. As a sector we also need to be mindful of the types of projects we are taking on. We need to ask the
right questions and ensure we get the time to fully understand the risks involved in the contracts we are taking on.

We need a long-term solution to ensure a strong and sustainable construction industry that can serve New Zealand now and into the future. This is your chance to play a part. 

David Kelly