New Zealand’s infrastructure is not able to cope with increased severe weather events. That’s one of the key findings from the annual Construction Industry Survey, a partnership between Teletrac Navman and Civil Contractors New Zealand.
Only 7 percent of survey respondents expressed confidence in the ability of New Zealand’s infrastructure to cope with the impacts of climate change, including erosion and severe weather events. At the same time, confidence in industry outlook and future pipeline of work declined, with 56 per cent expecting no turnover growth in the next 12 months (compared to 48 per cent in 2022).
Continued uncertainty has a major impact on the ability of the industry to deliver the infrastructure the country needs. The definition of a clear, committed and funded pipeline of work remains the issue likely to have the most positive impact on the industry, increasing in importance from last year (now 84 per cent vs 71 per cent in 2022). Close to half of businesses (45 percent) view increased funding for infrastructure and maintenance projects as the most important initiative from an incoming government following the 2023 election.
Civil Contractors New Zealand Chief Executive Alan Pollard says we need to build more resilience in the country’s infrastructure to protect our country’s social and financial wellbeing.
“Infrastructure investments are long-term. Sometimes the benefits of urban planning, water management and transport investment are not felt for decades. This timeline doesn’t align with our three-year political cycle of the governments who makes the decisions around infrastructure development.
“Furthermore, if we talk about pipeline, we can’t forget the easiest thing to scale up is maintenance. As a country, we have not invested enough in maintenance or projects to retrofit existing infrastructure over past decades to make infrastructure resilient in the face of extreme weather events. We must work smarter, and technology enables this,” adds Mr Pollard.
Industry Outlook
Optimism in the sector is decreasing, with only 34 per cent confident in the civil construction industry outlook (declining from 41 per cent in 2022). Furthermore, significantly fewer will be looking to increase staff in the next 12 months (54 per cent vs 63 per cent in 2022) and 56 per cent expect no turnover growth in the next 12 months. These numbers tell us that without this committed and funded pipeline of work, businesses don’t have the confidence to continue to invest in people and technology.
To improve optimism in the industry, Mr Pollard says proactive planning is needed: “The country’s civil contractors need to better understand what will be built, and where. Contractors need project certainty to invest in people and equipment, so it’s important projects proceed when planned.
“Funding announcements are one thing, but for real industry confidence, we need to know when physical construction will happen, so those who can build the infrastructure that the country needs, can invest in the people and equipment they require to get the job done.”
Climate Change Resilience
This year, climate change has started to pose a major threat to the physical and financial resilience of the civil construction industry. Contractors are often first responders in a natural disaster, working to repair and restore damaged infrastructure. 47 percent of respondents had been directly involved in emergency or disaster response over the past year, with 69 percent saying ongoing projects have been impacted by extreme weather events, with project delays, insurance claims and the need to renegotiate contracts being the main resulting outcomes.
Only 7 percent are confident in New Zealand’s infrastructure’s ability to deal with extreme weather events – a 10 percent reduction from last year’s report. This shows an urgent need to invest in maintenance, renewals and resilience to future-proof at-risk infrastructure.
Sustainability is inevitably an important topic for civil contractors. 45 percent of contractors say clients have indicated sustainability practices will impact procurement decisions, and 31 percent have won a contract based on broader outcomes, including sustainability and innovation. Technology will also help improve reporting requirements – in particular sustainability reporting.
Contractors also see technology as a key tool to improve disaster recovery efforts, and 36 percent expect that recovery work from major weather events and climate mitigation efforts will create opportunities for their businesses over the next three years. There has also been an increase this year (27 percent) in contractors looking to innovative technologies like AI to help solve industry challenges.
Working Smarter with Technology
One of the few areas where confidence has increased is in the ability of new technology to improve business efficiency and overcome challenges. The survey found that utilising existing technology to its full extent will help future proof the industry, and 52 percent of businesses report that they need on-site tech to win work.
“Technology plays a vital role in emergency situations and challenging working conditions like disaster recovery after severe weather events. Features of existing technology can be put to use in such situations to support workers and improve safety and efficiency”, says Jim French, Construction Industry Specialist at Teletrac Navman.
“It is also reassuring to see more contractors are looking into innovative technologies like AI, as it has the potential to not only help improve business operations but also help solve current industry challenges. We’re seeing an exponential growth in the possibilities of AI technology, and as the industry grapples with more complex infrastructure projects, the insights and analysis AI provides will prove to be invaluable.”
The results of the survey and the civil construction industry’s response to these challenges will be further discussed by a panel of senior construction industry leaders at The Civil Contractors Conference in Auckland on 1 September.
The 2023 Construction Industry Survey is available for download on the CCNZ publications webpage.