2018 Perspectives

Review of 2017 – Mind the Gap!

The 2017 year was a massive year for the civil construction industry with a full pipeline of work challenging the industry’s capacity and capability. Peter Silcock, chief executive, Civil Contractors New Zealand.

WE NEED TO acknowledge and congratulate all our people for the massive effort they have put in during 2017.

Civil construction workloads continued to put pressure on the industry with Kaikoura earthquake recovery work, major state highway projects (like Puhoi to Warkworth, Transmission Gully, Christchurch Motorways and the Waikato Expressway), high levels of residential work, the government’s broadband roll-out, Auckland’s Central Rail Link and an increasing investment in our water infrastructure.

Two significant civil construction jobs were opened in 2017 – Waterview Tunnel and the Kapiti Expressway. Both demonstrate that well-planned and executed projects can provide massive value to both road users and the wider community with cycleways, skate parks, sports fields, wetlands and native planting.

It is also refreshing to see the high level of community engagement and buy in that the contractors and clients generated during the construction phase of those projects. The potential to further leverage that to promote our industry and the development and career opportunities we have should not be underestimated.

The new Labour/NZ First government took office quickly setting some ambitious goals: Building 100,000 affordable homes (which will require siteworks, roads, drainage and utility supplies), the planting of one billion trees (which will require access roads and skid pads) and the significant development of public transport networks.

They have also committed to the Manawatu Gorge alternative route and the $1 billion per year Regional Development Fund.

We need to congratulate the government for its level of ambition and desire to get on with its work. However, it was disappointing that the first significant communication relating directly to civil construction was the announcement that Auckland’s East West Link would not be proceeding and that the government saw light rail between the city and the airport as the priority.

We know how long it takes to get a large civil construction project started so the announcement signalled to the civil construction industry that the change in government’s focus from private to public transport could result in a critical hole in the forward work programme. As they say on the London Underground – MIND THE GAP!

The change of government has seen the pipeline of work became murky because contractors understand that new projects can be years in gestation as they go through a myriad of planning, consultation, consenting, funding, financing and procurement stages. It can take years before the excavator moves in and scoops up the first bucket of dirt. East West link was scheduled to start in 2018 while light rail to the airport is just getting out of bed.

The critical issue here is not about public versus private transport, it is about the potential gap in the work programme and what that means to investment and jobs in the civil construction industry.

Quite simply the industry requires a constant level of work to maintain capability and capacity. With the ambitious infrastructure and construction development programme set by the Labour/NZ First government this is not the time to be running contractors into a soft patch of work. We need to retain and build the sector’s investment in people, plant and systems if we want to deliver on the ambitious goals this government has set.

The capacity and capability of the contracting industry to deliver the $11 billion per year infrastructure work programme we had in front of us was a real talking point in 2017. CCNZ’s message has always been clear, provide long-term pipelines of work and commit to quality infrastructure investment (rather than lowest price) and the industry will build the capability and capacity required.

What is frustrating is that the biggest challenges that contractors face in retaining and building capability and capacity are created by clients! The lack of a clear pipeline of work, delays in getting projects started, inefficient procurement processes and specifications/contract provisions that waste the industry’s resources.

The big questions for clients in 2018 are:

  1. Do you have the capability and capacity to effectively and efficiently manage the infrastructure investments you plan to make?
  2. Do you have the systems and people to bring fit-for-purpose contracts to the market on time?
  3. Do your procurement systems, policies, documentations and contracting methods make best use of the industry resources?
  4. Do your procurement processes support and encourage the training and development of the people who will build and maintain your infrastructure in the future?

This year (2018) is shaping up to be a very interesting and challenging year.

The government wants to get on with the work as much as contractors do. They have set some ambitious targets and now they must be bold, to cut through some of the bureaucratic processes, hold ups and delays. “Let’s do this” is after all something that I would expect to hear from a contractor.

With East West Link not proceeding in its current form are there jobs that can be brought forward to fill the gap? Can we accelerate jobs we already have underway? Is there infrastructure that needs to be developed to support the housing developments that the government has planned?

Creating certainty about the forward work programme is in everyone’s interests; the government, contractors, employees, subcontractors and service suppliers. Everyone relies on that.

To make things happen in 2018 the government needs to work with people who know how to get quality outcomes at pace. People who take smart and innovative approaches using proven global technologies implemented by established New Zealand based companies that know our environment, climate and employ our people.

This article first appeared in Contractor Perspectives 2018.

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