Registered Master Builders held its annual Constructive Forum on 12 September 2019. Constructive is New Zealand’s only Construction Industry Forum, bringing together the entire supply chain, from finance, land, design and build, and enabling sectors such as research, training and regulation.
The enduring theme is collaboration. Given sector events, like the Construction Sector Accord, the timing of this year’s Forum was fitting. Last year’s Constructive took stock to understand how the sector was tracking. This year’s focus was how the sector could disrupt, transform and modernise its thinking and practices.
The panel discussions identified a range of issues, but more importantly practical actions the sector need to undertake to improve its health and vitality. A more vibrant sector is critical in responding to the increasing demand for building and infrastructure our urban environments need. This is especially pressing given the sustained and upward trend of building consents and the forecasted demand for building and infrastructure over the next five years in the National Construction Pipeline Report.
State of the Sector
We surveyed the sector and related industries leaders and representatives to get their views on New Zealand’s economy and on the sector’s major issues. Respondents agreed the economy had performed well over the last 12 months. However, they had mixed views as to whether this would continue over the next 12 months. Respondents regarded Government and council regulations, business performance, and the lack of skills as the most critical issues affecting the sector right now. The State of the Sector Panel spoke about the sector’s issues identified in the survey. They agreed addressing risk allocation, needing to improve collaboration and further developing all round business skills was essential.
Urban Development Minister Hon Phil Twyford spoke about the importance of the construction sector to the Government. He also outlined the Government ‘s reforms with Kainga Ora, the Resource Management Act and their wider Urban Growth Agenda. Hon Jenny Salesa, Minister of Building and Construction spoke about the importance of strengthening the partnership between the Government and the sector and the role of the Construction Sector Accord in achieving this. Ministers reiterated the mutual benefits of a positive relationship between the Government and sector. We will continue to advocate the Government and their officials engage with the sector, rather than just consult.
Andrew Bayly, the Opposition’s Spokesperson for Building and Construction emphasised their policy priorities. He spoke at length of the need for trust between the Government and sector during the procurement process. He raised the need for all parties to work together to ensure the best possible project outcomes.
Recent failures of major construction companies demonstrate the sector must take ownership and better understand the implications of their business decisions. The Risk Management Panel argued understanding risk is the essence of managing a construction company and more risk focussed education needs to occur.
The Panel discussed how cashflow limitations and short-term business planning meant that construction companies often relied on the continued success of individual projects to keep themselves afloat. Should this success waver, there were serious implications for not only the company, but also supplier stakeholders and sub-contractors. Further failures of the sector could provide an opening for international companies, who would not necessarily invest back into the sector. There was strong consensus that the public’s value perception of builders and construction needs to change.
Panellists discussed the failures in the existing procurement model and the need to move to a less adversarial partnership approach. Recent sector boom and bust cycles have led to a lack of skills to recognise, understand, and mitigate risk within the sector. Similarly, there were also issues with capability in government agencies’ procurement personnel.
How technology can improve sector collaboration and trust
Speakers and Panellists spoke about how technology is driving transformation. They outlined opportunities to share local learnings about the innovative technology and processes being utilised. There was agreement the sector is no longer looking at overseas examples of leading practice, but also developing world class solutions themselves.
Panellists discussed the benefits of Building Information Modelling (BIM). Specifically, how BIM drives greater project collaboration, reduces costs and enables quicker build times. BIM enables the sector to use technology to improve the construction life cycle and identify potential issues before they become real ones. It also allows parties to, in effect, build twice – first digitally and then physically.
BIM Innovation Awards
The Awards focussed on how BIM underpinned and drove greater team collaboration during the lifecycle of the project. Russell Property Group and Dominion Interiors picked up the Overall Award as well as the $25-50 million category for their work on the QT Hotel Auckland. Southbase Construction won the over $50 million award for their work on Tūranga, the new Christchurch Central Library, and NZ Strong Group's work on Airways Air Traffic Control Facility in Whenuapai won the under $25 million category.
Following on from Constructive, Master Builders is working to advance solutions to issues facing the sector. The Vertical Construction Leaders Group, made up of New Zealand’s leading construction companies, has commissioned PwC to establish criteria to measure “what good looks like” in a construction company. This seeks to address the consequences of the recent boom and bust cycle that’s led to companies failing and others struggling to be profitable.
The next stage is developing a benchmarking tool. This would give parties the ability to assess the performance and robustness of construction companies against the “good” criteria. This tool would provide companies with a means to identify areas of business improvement. In the long-term the end goal is an industry-led accreditation scheme. This scheme could provide minimum financial, operational and compliance standards for companies to meet as part of a project tendering process.
Participants identified the opportunities the Construction Sector Accord brings for the Government and the sector to work together. This collaboration is critical and needs long-term action and certainty to achieve the Accord’s strategic aims. The Government has signalled the Accord’s work programme will be publicly available later this year. Several Constructive Panellists and Speakers are on the Accord Steering Committee and they’ll be involved in progressing the programme.
Master Builders Chief Executive, David Kelly said Constructive was about the sector coming together to positively collaborate in addressing the issues facing it. The work the VCLG and the Accord is doing emphasises the opportunities meaningful collaboration can deliver. Next year’s Constructive Forum, in Auckland, will provide an occasion to measure how this collaboration is progressing for the betterment of the sector.
We would like to acknowledge the continuous suppor of our sponsors, BCITO, CARTERS, Placemakers and MBIE. Also our supporters GIB and NZIA. Constructive would not be possible without this investment into the future of the sector.