The Great Construction Debate
Former Auckland Branch President, Phil Eaton of Greenstone Group, provides an overview of the recent Great Construction Debate held in Auckland, where contractors and clients/consultants gathered with 250 attendees to discuss the current barriers, challenges, opportunities and potential solutions for the New Zealand construction industry.
Special thanks to our sponsor, NZ Strong, our panel of contractors; Chris Hunter of NZ Strong, Terry Buchan of Hawkins and Dan Ashby of Icon Co, and our panel of clients/consultants; Chris Haines of Rider Levett Bucknall, Waren Warfield of RCP, Rebecca MacDonald of Air New Zealand, Leah Singer of Entwine and Shane Brealey, an Independent Construction Advisor.
What were the key issues identified and discussed by the consultants and contractors at the debate?
The debate format was fantastic to promote sharp conversations from the most experienced leaders in the industry. There were many issues discussed. A select few are:
- The fragmentation in the industry which creates inefficiencies, blocks collaboration and reduces transparency in the supply pipeline and as a result of all that does not encourage innovation, training and development.
- The poor set up of projects at the outset due to inexperienced teams or undercapitalised projects results in a lot of inefficiencies and false starts.
- Stability in the industry has been a key inhibitor of creating controlled growth, collaboration and training. The boom bust nature of the industry is a massive roadblock to creating a better industry.
- Skill shortages right across the full spectrum of roles. Most of the discussions to date have focused on labour and trade shortages but with the aging nature of the senior people in the industry the transfer of knowledge and training of the next leaders is of upmost importance.
- Trust in the construction sector is a big issue. Everyone has had their fingers burnt and are a bit more than weary. However, we must continue to create partnerships and move forward.
What are the challenges around each of these issues for contractors and consultants? Are the challenges different? How are they conflicting?
The main issue for all parties is that the market is at its absolute peak capacity yet more work needs to be done. Resources are stretched which means they are busy trying to deliver what is currently being developed and built and not change the market or even further develop their businesses.
For the developers the issue of construction costs is a major issue. But with nearly everything built in a bespoke way it has been very difficult to get efficiencies.
Repetition and standardisation is one way to improve this. Off-site manufacture is used in components of the commercial market (ie: bathroom pods) however it is possible to do more here.
The builders provided some stark examples of supply chain costs that indicate how inefficient our market appears to be when compared to Australia. We know that the NZ market is significantly more expensive, and it appears to be caused by low experience, lack of skills and poor productivity right through the design and construction process.
A main issue for the builders is the ability to predict their forward workload. So, more transparency in the construction pipeline is required. However, this is difficult to achieve due to the market forces and cycles.
One topic that came up on the night was New Zealand's performance in relation to the Australian industry. Why do you believe the New Zealand building industry is less productive than the Australian?
The market is very fragmented with many small business and sub-contractors. With a fragmented market it is very difficult to create transparency and through that strong partnerships. In turn that prevents the industry developing and reinvest in their businesses. They tend to be in a more protective mode. Training and innovation are less likely to be carried out as the small businesses cannot afford it or do not have the confidence in forward work to do so.
What was agreed/resolved during the discussion and what are the next steps?
Property Council created this debate to further develop the arguments and knowledge around the issues. A few new issues or viewpoints came out of the debate and many of the attendees took away some new information that they can use to further develop their businesses and contribute to the industry. Separately the Property Council will be using the content from the debate to inform its advocacy strategy.