Chief’s Chat –Official Launch of the Vertical Construction Leadership Group

11 November 2022

As we near the end of 2022, the sector is facing some challenges with a slowdown in residential new build enquiries. This will test the resilience of the sector, and it will be critical that businesses plan to navigate the year ahead. Many are already doing so, and we are working on information and advice in the new year to help businesses think about the critical areas of their business to focus on. 

Despite the ongoing challenges, there have been some positive wins this year. It was pleasing to see that MBIE was prepared to listen to the concerns that Master Builders and others raised about the timing of introducing new insulation standards. The delay of the H1/AS1 code change has provided some much-needed breathing space. The relaunch of the Vertical Construction Leadership Group will help tackle ongoing issues in the commercial sector, and the Constructive Forum once again provided valuable insights on how to navigate the current environment. But most importantly, we are continuing to deliver the high-quality homes, workplaces, and communities that New Zealand needs. 

Earlier this month, 72 representatives from New Zealand’s leading commercial construction companies officially launched the Vertical Construction Leadership Group (VCLG). Led by Master Builders and launched by Minister of Building and Construction Hon Dr Megan Woods, the Group brings the commercial contractors together to focus on the crucial issues impacting productivity and the sector’s ability to deliver critical infrastructure. It is set to tackle: supply chain disruption, labour market shortages, sector sustainability, procurement, contracting, and risk allocation. 

We surveyed leaders within the VCLG to illustrate the scale of the issues facing the sector. All are experiencing cost increases for both labour and materials, with 37% facing on-site delays of more than six weeks, and nearly half saying that procurement has become more complicated in the last 12 months. And with 42% managing projects costing over $100 million, delivering these complex projects come with significant risks. Over the next few years, the VCLG will work to mitigate these risks and deliver a stronger and more sustainable sector that meets the current and future needs of New Zealand. 

We know that consenting is an ongoing pain point for most of our members. In our latest State of the Sector survey, 83% of respondents reported experiencing consenting delays, with 58% facing delays of five weeks of more. This leads to substantial risk and cost increases for both builders and homeowners. 

In September, Master Builders submitted on the Government’s Building Consent System Review. The review is an opportunity to address a broken system hampered by a risk-averse approach, inefficiencies, inconsistencies and underinvestment in technology. 

We called for a substantial reduction in the number of consenting authorities to improve consistency and speed up consent decision-making. Our other recommendations included consolidating resource, building and subdivision consents to avoid duplication, making better use of available technologies, creating a consistent standards framework with clear KPIs for local authorities, and streamlining the consenting processes to recognise lower-risk projects and builders’ own levels of expertise. 

While we support the review, we think there is an opportunity for the Government to implement some quick wins, now. 

MBIE could exercise its regulatory powers more to provide greater direction to consenting authorities on how they must interpret regulations. This could include allowing less scope for discretion and applying sanctions or even removing consenting accreditation status if statutory timeframes are exceeded or other performance measures are not met. Another area is the use of technology for remote inspections which could significantly reduce the frustrating delays that hold up projects unnecessarily. While some consent authorities are using the available technology, it is inconsistent and not universally available.

Despite the trials of this year and the two before it, conditions are starting to improve. We are no longer hampered by lockdowns and border restrictions, and the sector is confident in its own success. Over the summer break, take the time to relax and recharge. We have a busy 2023 year ahead, which will be tough for some of in our sector and also includes an election. 

David Kelly