While the CCNZ applauds the extra $1.9 billion for the NZ Upgrade Programme it says it is still uncertain when many of the green-lit projects will begin and it was disappointing to hear that some of the projects in the original work programme have now been scaled back or cancelled – again.
The Government’s reasoning for cancelling some of the planned projects is that costs have increased since the projects were originally estimated. The association says that while cost increases resulting from the pandemic are difficult to control, the Government could do more to tackle rising land costs, increasingly expensive consenting processes, and ever-increasing numbers of special contract conditions.
“We also need to see a more accurate estimation of project costs by Government departments and an understanding by politicians and the public that they can’t expect projects to be delivered based on two or three-year-old optimistic estimates conceived without significant contractor input,” says CCNZ chief Peter Silcock.
Many of the factors driving up costs will continue to have an impact in the years ahead, he adds.
“New Zealand has a burning need to unclog its creaking transport infrastructure. With interest rates at low levels, perhaps borrowing now to fund the projects would have been the better choice than deferring or cancelling some of them.
“The on and off history of a number of the NZ Upgrade Programme projects is frustrating and does little to build the confidence of business owners or people looking to take up careers in infrastructure. The under investment in our roading infrastructure will also have ongoing negative impacts on construction productivity, further driving up costs.
“Whatever happens next, it’s clear the country and our industry need more certainty about the future pipeline of work. If New Zealand can get that right, it will make it much easier for contracting companies to commit to training and developing the infrastructure workforce it so badly needs to complete critical projects to a high standard – on time and on budget.”