Guidelines signal new hope for construction industry

Connecting New Zealand

Guidelines signal new hope for construction industry

30 Sep 2019

The contracting relationship between government and the construction industry is set to be redefined, with new construction-specific guidelines created to accompany new government procurement rules coming into force tomorrow.

Civil Contractors New Zealand Chief Executive Peter Silcock said if the new Construction Procurement Guidelines and the new Government Procurement Rules 4th Edition were properly implemented with agencies held accountable, it could signal a new era.

“For a long time now, the focus has been on lowest cost. Agencies will now be required to change their procurement to focus on outcomes rather than cost, placing more emphasis on fair allocation of project risk to those best-placed to manage it.”

Mr Silcock said the new Guidelines required agencies to limit or justify any use of special conditions, a move away from lengthy additions to ‘standard’ construction contracts, which sometimes added hundreds of pages of special terms, requiring complex legal interpretation.

“Clients think they are managing risk by deviating from standard contracts. In some cases, they create it. Moving away from this should bring the costs down as clients, contractors and lawyers won’t have to spend time poring over hundreds of pages of special conditions.”

He said the new Guidelines aligned with principles of the Construction Sector Accord – a commitment between industry and Government to improve productivity and address challenges faced by the construction sector by building capability and resilience.

Because of this, interpretation was also important. The Guidelines provide agencies with practical interpretation for different business models, from strategy and market engagement to risk management and improved skills and training to ensure a skilled future workforce.

Mr Silcock said while the threshold requiring a specific skills and training development plan was potentially set too high, its inclusion placed greater emphasis on skills and could be adopted in smaller projects too. Factors such as involving contractors early in project planning to ensure a sound business case would also make a positive difference.

He said shifting the focus from cost-cutting would provide more value for money in the long run. For instance, greater emphasis on skills development planning, would improve project quality, potentially also reducing cost by making it easier to find skilled people.

Mr Silcock said many of the new rules were optional for local government, but he would like to see increasing uptake amongst councils. An increasing focus on partnership and a sustainable construction industry were in the interests of all parties involved and were likely to lead to better results for projects, companies and communities.

Some councils were already looking to implement the rules in their procurement policies, such as Auckland Council’s Healthy Waters department, which had used social procurement strategy to underpin its procurement approach and Sustainability Toolkit, he said.