The surge of infrastructure work in New Zealand has created opportunities for contracting companies to grow. Peter Silcock, chief executive, Civil Contractors New Zealand.
THE 2016 YEAR FLEW BY. It was a year full of challenges and new opportunities for the contracting industry with most of our members reporting a good supply of work but tight margins.
To be successful in today’s contracting world requires a high level of business agility. It is all about looking at new opportunities and how you can use the resources, expertise and experience you and your team have to partner with others and/or to win work and to produce outcomes that build your reputation.
The surge of infrastructure work in New Zealand has created opportunities for contracting companies to grow and has also attracted the interest of some major international construction companies. At the same time home-grown contracting companies are increasingly delivering quality projects offshore, particularly in Australia and the Pacific. There is no doubt that we are part of a global construction industry in terms of technology, equipment, people, financial support and contracts.
A few exceptions to the good availability of work have been in those areas reliant on the dairy industry and in Christchurch with the wind down of SCIRT and delays in getting council work to market. Overall the forward work plans for infrastructure work are still bulging with the Treasury Infrastructure Evidence Base 2016 update showing that the intentions for 2016 to 2025 are that $100 billion will be spent on over 3800 projects.
Getting value from that spend through smart procurement came into focus in 2016. The simple fact is that we still have too many clients and procurement managers that have a narrow view around procurement.
Many clients, such as central and local government agencies, are long-term owners and managers of assets, so they should be taking a long-term view of the contracting industry’s capability and capacity to build and maintain their infrastructure in the future.
A healthy, vibrant and competitive contracting industry is good for clients and contractors.
Let’s hope that in 2017 we see more clients taking a longer term view. Clients also need to ensure that they have the right people and skills to effectively manage their procurement processes and contracts. Real progress will only be made if organisations take a whole of life view of the costs.
Earlier in 2016 health and safety took centre stage with the introduction of the new Act. We are fortunate that WorkSafe, under the very able leadership of Gordon McDonald, did a good job of hosing down some of the consultant rhetoric around this.
The clear message was and still is – if you have a good system small tweaks are required; if you don’t have a good system then the risk just got a lot bigger and it is time to make some changes in your business.
The launch of the construction industry’s “ConstructSafe” health and safety competency testing regime has been well received with over 2500 people having taken the test over the past nine months.
Contractors and clients have welcomed having the assurance that the people on their sites know how to protect their own and their workmates’ health and safety. Contractors have praised the scheme because the feedback provided has enabled them to better target their investment in staff training and development.
We expect those numbers will continue to grow through 2017 as more people get familiar with the system and the benefits it provides.
Despite local body elections, 2016 has not seen any resolution to the challenges around local government funding of the upgrading/replacement of our three waters assets. The investment required is a massive challenge for councils, especially when many are committing to zero or very low rates increases or where population growth has slowed.
The need for that further investment has been highlighted by the water quality issues in Havelock North and I am sure that councils across the country will be closely examining the results of the inquiry. It shows how vulnerable some of our water infrastructure is and that we need to rethink our council priorities and approach to funding.
Also, in Hawke’s Bay, further delays on the Ruataniwha Water Storage System are a graphic demonstration that while we have made changes to our resource management planning systems there is still some way to go. Road blocking tactics by special interest groups and the review initiated by the new council have created further delays and uncertainty for this major civil contracting project.
Work did however get started in 2016 on one of New Zealand’s largest construction projects, the City Rail Link in Auckland. The project is a part of the planned solution for Auckland’s transport gridlock.
The housing market and transport issues in our major city took centre stage in 2016. The Auckland Unitary Plan and the ATAP process have shown some good progress. However with everyone admitting we can’t build our way out of Auckland’s transport gridlock it is beyond time to look at vehicle use charging as a means of demand management.
NZTA continues to lead the pack both in terms of the amount of work contracted and the quality of its procurement. The continued roll out of the Network Outcomes Contracts (NOCs), a significant programme of safety improvement work and a range of capital projects (many of them smaller projects), have offered opportunities to a wider range of contractors.
On the other hand, the introduction of ISNet as the NZTA prequalification system has meant that a number of contractors have chosen to relinquish their prequalification status despite the support offered to smaller contractors by NZTA.
The costs, staff time and relevance of the system are still being debated a year after its introduction. More work needs to be done in 2017 around the costs and benefits of this system.
The Kaikoura earthquake has created massive damage to our road, rail and communications networks. We are very fortunate that the quake did not occur when more vehicles were on the road or the death toll would have been much higher.
The earthquake has shown how vulnerable some of our infrastructure is and I am sure that NZTA will look to incorporate more resilience into the rebuild of the coastal road, rail and communications corridor.
We know that other parts of our infrastructure network are just as vulnerable so why wait until we have the next disaster? Over the next few years it would be great to see central and local government programmes focused on building infrastructure network resilience.
The 2017 year will see us push headlong into central government elections. Infrastructure and the cost and availability of housing will be major talking points. CCNZ will be continuing to push the message that quality infrastructure that is well planned, constructed and maintained is the foundation of well-functioning and productive communities.
Last year taught us all to expect the unexpected, to build resilience and flexibility into our teams and to embrace change. Success will be all about the attitude that you bring to 2017’s challenges and opportunities.