CONTRACTOR PERSPECTIVES 2018
NEW ZEALAND CIVIL CONTRACTING
PERSPECTIVES 2018
JANUARY
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PERSPECTIVES 2018 FOREWORD
06 Infrastructure and transport T he Hon Phil Twyford, Minister for Transport Housing & Urban Development, NZ Government
GOVERNMENT AGENCIES + ASSOCIATIONS
10 Strengthening relationships
Fergus Gammie, chief executive, New Zealand Transport Agency
12 Review of 2017 – Mind the Gap!
Peter Silcock, chief executive, Civil Contractors New Zealand
14 Taking control of hazardous substances
Brett Murray, general manager, WorkSafe New Zealand
16 Change and challenge ahead for quarry sector
Roger Parton, chief executive, Aggregate & Quarry Association of New Zealand
18 Building resilience
Rob Gaimster, chief executive, Concrete New Zealand
20 Cranes and our economic environment
Rod Auton, chief executive, Crane Association of New Zealand
22 Pushing for the oversize industry in 2018
Jonathan Bhana-Thomson, chief executive, NZ Heavy Haulage Association
24 The water challenge
John Pfahlert, chief executive, Water New Zealand
26 In terms of industry equipment
Andrew Crane, president, New Zealand Equipment Suppliers Association
28 Reaching milestones
Peter Benfell, chief executive officer, Connexis
RESOURCES
34 Legal report B rendan Cash, partner, and Arie Moore, senior associate, Kensington Swan
36 Digitising the civil construction process
Ray Copeland, managing director, Global Survey
38 Stay agile – adapt, and adapt now
Emma Fisk, Andrew Paterson, Eric Whitfield and Richard Jenkins, Beca
40 The skill challenge
Jason Walker, managing director, Hays New Zealand
42 Tendering trends
Caroline Boot, Clever Buying, and Kerrie McEwen, Plan A
44 Connecting construction with technology
Jim French, heavy construction specialist, Teletrac Navman
46 Last word: Skill shortages – we have been there before
Alan Titchall, managing editor, Contrafed Publishing
46 Advertisers’ index CONTRACTOR PERSPECTIVES 2018
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The discussion for 2018 Welcome to the 2018 edition of Contractor Perspectives, our annual publication made up of commentary written by industry peers from government level to those associations representing every sector involved in making civil contracting in this country a success. Our contributors have provided a rich commentary with great insight into their respective industry sectors and we thank them very much for their wise words. Their brief was to look back on the past year and look into the crystal ball for the future, and take a broad look at the ‘state of play’. Over the years we will build up an annual, benchmark commentary on our contracting industry as a record of views and opinions as seen from the inside. We usually start with a foreword from the Minister of Infrastructure. Despite promises, Shane Jones didn’t make the deadline, but we have a ‘view from the top’ from the Minister of Transport and Housing, Phil Twyford. He promises, from the new government, “a fresh perspective on our transport system”. “This year will be a big year for transport, and we will be actively looking at transforming the transport sector. We will see the production of a new Government Policy Statement, and a review of the Auckland Transport Alignment Project.” Typical of previous transport ministers, Phil talks up a focus on a greener transport sector, but doesn’t mention the elephant in the room – the average age of the country’s vehicle fleet, which is 15 years. Vehicle age is the indicator of road fleet efficiency and safety, and you improve both by making the fleet as modern as possible. Our current warrant of fitness doesn’t even include an emissions’ test. You will read a number of very strong messages to the new government from various industry sectors, and I do hope it sits up and takes notice of them, as they represent the only resource that designs and builds this country’s essential infrastructure. And you represent the only resource we have for cleaning up after natural and man-made disasters. As Rob Gaimster, chief of the new Concrete NZ association says (on behalf of everyone no doubt), “A degree of uncertainty exists around the influence, intended or otherwise, of the new Labour led government’s policies.” Foremost is the Civil Contractors NZ perspective written by its chief, Peter Silcock. The change of government has seen the pipeline of work become murky, he says, 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. “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,” he says. “Quite simply the industry requires a constant level of work to maintain capability and capacity.” Roger Parton, the chief of the Aggregate and Quarry Association, represents hundreds of quarries from Te Hapua to Bluff that provide the foundations for every road, new home, factory, school, office and hospital, in ths country. “We will look to the Labour pragmatists in the Cabinet such as David Parker, Stuart Nash and Damien O’Connor, not to mention NZ First’s Winston Peters, Ron Mark and Shane Jones” to ensure this continues, he says. He also notes the Green Party is not seen as supportive of the quarrying sector. “That said, the AQA notes how one of its own core ambitions aligns with Green principles. We continue to fight for access to local resources, rather than being pushed further and further from urban centres. This reduces emissions and traffic congestion. We trust any MP, especially those committed to climate change, can see the benefits of continued access to urban/urban fringe aggregate.” Other sector perspectives in this publication provide valuable insights into the strengths and weaknesses of civil contracting in our nation, and raise many questions they trust will be read and acted on by government officials and those in power of deciding on our future infrastructure. This year will be another interesting one, so please read on. Alan Titchall, editorial manager, Contrafed Publishing.
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CONTRACTOR PERSPECTIVES 2018
FROM THE EDITOR
PUBLISHER Contrafed Publishing Co Ltd Suite 2.1, 93 Dominion Road, Mt Eden, Auckland PO Box 112357, Penrose, Auckland 1642 Phone: +64 9 636 5715 www.contrafed.co.nz EDITORIAL MANAGER Alan Titchall DDI: 09 636 5712 Mobile: 027 405 0338 Email: alan@contrafed.co.nz GENERAL MANAGER David Penny DDI: 09 636 5710 Mobile: 021 190 4078 Email: david@contrafed.co.nz ADVERTISING / SALES Charles Fairbairn DDI: 09 636 5724 Mobile: 021 411 890 Email: charles@contrafed.co.nz ADMIN / SUBSCRIPTIONS DDI: 09 636 5715 Email: admin@contrafed.co.nz PRODUCTION Design: TMA Design, 09 636 5713 Printing: PMP MAXUM Articles in Contractor Perspectives are copyright and may not be reproduced in whole or in part without the permission of the publisher. Opinions expressed in this magazine are not necessarily those of the shareholding organisations. www.linkedin.com/contrafedpublishing @NZContractormag nz contractor magazine
The official magazine of Civil Contractors NZ www.civilcontractors.co.nz The Aggregate & Quarry Association www.aqa.org.nz The New Zealand Heavy Haulage Association www.hha.org.nz The Crane Association of New Zealand www.cranes.org.nz Rural Contractors New Zealand www.ruralcontractors.org.nz The Ready Mixed Concrete Association www.nzrmca.org.nz Connexis www.connexis.org.nz
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Infrastructure and transport HON PHIL TWYFORD, MINISTER FOR TRANSPORT, HOUSING & URBAN DEVELOPMENT, NZ GOVERNMENT
The Labour-led government is looking forward to a busy year ahead, with new ideas and a fresh perspective on our transport system. THIS GOVERNMENT HAS some clear goals to achieve more out of our transport networks while delivering the infrastructure New Zealand needs to keep moving. We are focused on a resilient, low-carbon and balanced transport network that supports our country economically and socially.
Resilience More than a year after the November 2016 Kaikoura earthquake, work to rebuild the shattered road and rail corridor is proceeding. This tremendous effort serves as a reminder of how critical transport networks can swiftly and catastrophically be affected by natural disaster. It also showcases the ability of our infrastructure community to come together in times of disruption to ensure our transport networks get back up and running as quickly as possible. The Edgecumbe floods and the Auckland fuel pipeline disruption are two further examples that show the effects that natural and manmade incidents can have – disrupting transport for individual communities and the wider national economy. Ensuring appropriate investment in a resilient transport network will be important. We need to be able to quickly anticipate and adapt to these types of events, understand what effects climate change will have, and what part technology could play. Part of this is ensuring investment in each of our transport modes and ensuring they play to their strengths.
A low emissions transport network A move towards greater transport resilience is also an opportunity to look at reducing the environmental impact
To achieve our vision for transport, change is necessary. I am interested in how we can best use existing funding tools – like the National Land Transport Fund and the Government Policy Statement (GPS) – to support a more multi-modal approach.
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CONTRACTOR PERSPECTIVES 2018
FOREWORD
of the sector. We know that transport emissions make up 18 percent of our domestic greenhouse gas emissions and that 90 percent of these come from road transport. Making better use of rail and coastal shipping has a part to play in helping to cut these emissions. In addition, actively investigating the role technology has to play is equally as important. Electric vehicles (EVs) will continue to become more commonplace on our roads and this government is eager to support the uptake of EVs. EVs make good use of our abundant renewable energy and are easily capable of meeting the distance requirements of many urban drivers. We are also seeing advances in shared user concepts and driverless vehicles, each of which has a part to play in contributing to a more diverse transport network that helps to improve choice, efficiency and resilience.
Funding This government will be focused on ensuring that New Zealand enjoys a multi-modal, efficient, low-carbon transport system where all modes of transport are playing their part, and their potential contribution to the whole is realised. To achieve our vision for transport, change is necessary. I am interested in how we can best use existing funding tools – like the National Land Transport Fund and the Government Policy Statement (GPS) – to support a more multi-modal approach. The traditional way in which we finance and fund infrastructure needs to change if we are going to address the multiple challenges of urban growth, replacing ageing assets, meeting higher environmental standards and improving resilience. We believe we need to be smarter about how we use the government’s balance sheet.
Auckland Auckland and the wider ‘golden triangle’ of the Bay of Plenty and Waikato is part of the country that we know will continue to grow rapidly over the coming decades from both a population and freight perspective. This growth means that it faces significant transport infrastructure challenges that must be dealt with – for the welfare of residents and for the long-term productivity of New Zealand.
This growth means that it faces significant transport infrastructure challenges that must be dealt with – for the welfare of residents and for the long-term productivity of New Zealand. These challenges will not be solved solely by investment in the roading network. All modes can be complementary to each other. These challenges will not be solved solely by investment in the roading network. All modes can be complementary to each other. For example, the government is committed to implementing a rapid transit system for Auckland, which will include light rail from the CBD to the airport and to west Auckland. Such an investment will not only make it easier for people to get around town, but it will also free up our roading network to improve freight efficiency. As the largest economic hub of New Zealand, getting Auckland moving is critical to the success of our nation as a whole. However, this government recognises that to address significant transport challenges, Aucklanders need to help pay for vital infrastructure and services. This is why the government is committed to introducing a regional fuel tax for Auckland while also investigating whether some sort of charging for demand management is appropriate for Auckland. We know that Auckland’s population will continue to grow, so it is only appropriate that we investigate all the levers available to support passenger transit and enable easier freight movement to and from the Ports of Auckland, the airport and other regions across the country.
The year ahead This year will be a big year for transport, and we will be actively looking at transforming the transport sector. We will see the production of a new GPS, and a review of the Auckland Transport Alignment Project. We’ll investigate how we can better incorporate other modes of transport such as cycling and walking, and place a renewed focus on public transport and rail infrastructure in both our urban and regional areas. We want to develop a balanced and resilient sector that plays to the strengths of all modes for the benefit of all New Zealanders. CP
CONTRACTOR PERSPECTIVES 2018
FOREWORD
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CONTRACTOR PERSPECTIVES 2018
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CONTRACTOR PERSPECTIVES 2018
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Strengthening relationships FERGUS GAMMIE, CHIEF EXECUTIVE, NEW ZEALAND TRANSPORT AGENCY
The year ahead promises to be one of challenges and opportunities for the NZ Transport Agency and the contracting industry, influenced by one significant government document. THE NEW GOVERNMENT Policy Statement (GPS) on land
transport will be released in mid-2018. The GPS sets out the Beehive’s priorities for expenditure from the National Land Transport Fund during the next 10 years and provides the framework for the Transport Agency to allocate funds between various activities such as local roads, State Highways, public transport, cycling, walking, road safety and policing. While priorities may change, there is no sign that investment to make land transport infrastructure safer and more reliable is going to reduce. Land transport will remain critical to connect communities, move freight, and allow people to get to and from work, school and social events and have a choice of travel options that includes public transport, walking and cycling. After the release last July of our new strategy, the Transport Agency will further develop and strengthen our relationship with contractors, consultants and other key partners. Our strategy now focuses on partnerships for the co-design and delivery of wider community outcomes, systems rather than networks, and people rather than vehicles. In fact, the customer is at the heart of our new thinking inside the Transport Agency. We have a vision of great journeys that are easy, safer and connected to keep New Zealand moving. We are living in times when our customers and businesses want faster, easier and more personalised transport. Partnership with the contracting industry will help us turn that vision into reality. But while we are changing, we will also stay focused on delivery and I do not anticipate that changes inside the Transport Agency will have an impact on our ability to work effectively alongside contractors and other partners to achieve the best possible outcomes for New Zealand. The past year has produced some great outcomes in terms of the Transport Agency’s objective to treat New Zealand’s transport system as a whole to tackle issues like resilience, congestion, safety and to keep traffic flowing and connect communities. • I would like to join with my Transport Agency colleagues in acknowledging the great work of contractors in restoring road and rail links between Picton and Christchurch as part of the Kaikoura earthquake rebuild. To describe the rebuild as difficult is something of an understatement but I certainly appreciate the way your industry has worked with the
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Transport Agency and KiwiRail and wider groups including local government and iwi to reconnect communities. Your support will remain critical during 2018. • The opening of the Waterview tunnel is not only a great outcome for Auckland but New Zealand too in terms of more reliable city-wide and inter-regional connections as well as extending the city’s walking and cycling network to give people more travel choices. Just as importantly, such a complex and outstanding project has lifted the bar in terms of skill and confidence in our construction and infrastructure industries. • Work started on extending Auckland’s SH1 motorway north from Puhoi to the Warkworth community – part of a wider programme of works to provide safer and more resilient community connections between the city and Northland. • The Rangiriri section of the Waikato Expressway opened in December. This was an important section because of our partnership with Waikato-Tainui, and the opening included a site recognising the Rangiriri battle fought during the New Zealand Land Wars. • New Zealand’s longest suspended cycle bridge was also opened in Waikato. The Te Awa Bridge, south of Ngaruawahia, is part of the Te Awa Great River Ride stretching 70 kilometres along the Waikato River. • As part of the Wellington Northern Corridor programme of works, the Mackays to Peka Peka section of the corridor was opened, and construction started on the Peka Peka to Otaki stage. • The last two stages of the Western Corridor in Christchurch were opened, completing the first of the Christchurch Motorways projects. • Two road improvements opened in Queenstown before Christmas to help with peak traffic during the holidays at the popular tourist destination. Road safety remains an important part of the Transport Agency’s agenda. The government has indicated that it is one of its priorities for transport. We will work in partnership with contractors and others to make the country’s roading network – 90,000 kilometres of State Highways and town and country roads – safer for the people using them. The Transport Agency will continue to refine a new digitalbased data harmonisation tool known as BIM (Building Information Modelling/Management). BIM will allow a
The past year has produced some great outcomes in terms of the Transport Agency’s objective to treat New Zealand’s transport system as a whole to tackle issues like resilience, congestion, safety and to keep traffic flowing and connect communities.
contractor using a tablet on the side of a road or someone sitting in front of a computer screen in a council planning office to have access at exactly the same time to the same real-time illustration of a section of road – the condition of the pavement, location of utilities hidden or visible and even a pot hole. When you consider that our roading network is managed by the Transport Agency, 67 local authorities with vital input from contractors and consultants, data harmonisation like this will be a significant and essential breakthrough if we are really to have one connected transport system. BIM underlines our working future – building and maintaining
our road infrastructure requires not just aggregate and asphalt but also truckloads of information and conversations. We are being driven in part by changes to the way vehicles are powered and vehicle ownership itself, and also by accelerating changes to digital technology. Our traditional ways of thinking and acting have to change too if we are to succeed. Not all innovation and change, however, is tied to digital technology and it is important that we integrate the digital and physical infrastructure to take advantage of what the future holds without losing sight of the commitment to put the customer at the heart of everything we do. CP
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CONTRACTOR PERSPECTIVES 2018
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Review of 2017 – Mind the Gap! PETER SILCOCK, CHIEF EXECUTIVE, CIVIL CONTRACTORS NEW ZEALAND
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. 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
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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
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!
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 Contractor_180x128mm_CompAirAd_GC_1017.ai
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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. CP 3:21:40 PM
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CONTRACTOR PERSPECTIVES 2018
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Taking control of hazardous substances BRETT MURRAY, GENERAL MANAGER, WORKSAFE NEW ZEALAND
Health and safety should be a core part of any business and not something you do once and file away on a shelf – it needs to be part of a daily routine. IDENTIFYING AND MANAGING the risks caused by hazardous substances is critical to preventing the deaths and injuries they cause in the workplace. New rules for the work-related use of hazardous substances were introduced on December 1 2017. The Health and Safety at Work (Hazardous Substances) Regulations 2017 target a reduction in harm through safer management of these substances at work. The need for this is clear when we consider the widespread use of hazardous substances and the harm they cause. About 150,000 New Zealand businesses use, manufacture, handle or store hazardous substances. That means about one-third of our workplaces deal with substances that can kill or harm workers. This ranges from manufacturers and farmers to collision repairers, printers and hairdressers. Each year, hazardous substances contribute to an estimated 600 to 900 deaths and 30,000 cases of serious ill health from work-related disease. This is in addition to the cases of immediate harm caused by accidents and improper use.
Managing risk The term hazardous substance refers to any product or chemical that is explosive, flammable, oxidising, toxic, corrosive or harmful to the environment. This includes commonly used products such as solvents and cleaning solutions, petrol, diesel, LPG, and agrichemicals. Used safely, they contribute to our economic growth and prosperity. But, poorly managed they can cause catastrophic accidents, and serious harm to people exposed to them – through inhalation, ingestion or skin contact. That’s why we need rules controlling how the substances are manufactured, used, handled, stored and transported. The duty to manage the risks arising from hazardous substances, as it is in the Health and Safety at Work Act (HSWA), rests with the person in charge of the business or undertaking (PCBU).
Regulatory reform Hazardous substances were identified as a key area for reform as part of the government’s response to the Pike River Mine explosion. The first step is to align the approach in managing the risk of hazardous substances by shifting the rules for the
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work-related use from the Hazardous Substances and New Organisms Act (HSNO) to HSWA. HSWA places the focus on proactively identifying and managing risks in the workplace to ensure that workers and others are kept safe and healthy. WorkSafe will now administer and enforce the rules for the work-related use of hazardous substances.
The new regulations The aim of the Hazardous Substances Regulations is to reduce both the immediate harm and longer term illness caused by the work-related use of hazardous substances. Accordingly, the Regulations establish new requirements aimed at improving how hazardous substances are managed in the workplace. The Regulations place an expectation on everyone working with hazardous substances to adequately know and understand what the substances are, the risks they pose and how to manage those risks. New requirements around inventories, safety data sheets, labelling, signage, risk management and emergency planning will help to achieve this. There are also specific obligations on PCBUs to ensure that workers have the information, training and supervision to do their jobs safely. To be consistent with HSWA, in many cases the duty to ensure the operation complies with the rules for the substances it has now rests with the PCBU, rather than the person in charge. A key element in ensuring safety is to involve those who do the work as they are best placed to help manage the risks from the work and the substances. They will have the best understanding of what measures will be most practical and effective.
Information and guidance WorkSafe has useful information and guidance on its website which is focused on the new requirements. Now is a great time to review the measures you already have in place to make sure you are protecting your workers and others from harm. Remember, if you comply with the existing rules, you will be well on the way to complying with the new Regulations that came into force in December. CP
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Change and challenge ahead for quarry sector ROGER PARTON, CEO, AGGREGATE AND QUARRY ASSOCIATION
A new year, a new government, a half century celebration and potentially for the quarry sector, a change in structure; that’s how 2018 is shaping up.
THE NEW LABOUR-LED government is now in place and the AQA is already putting in its bids to engage with Ministers. At the very least we should acknowledge that changes of government in this country take place democratically and that life continues, albeit with some new directions and dimensions. Of course, the new administration is built around the Labour Party which is a centre-left party made up of a mix of idealists and pragmatists. It is a government committed to economic development, notably in the regions. With hundreds of quarries dotted from Te Hapua to Bluff, providing the foundations for every road, new home, factory, school, office and hospital, we trust the quarrying industry is able to provide the rock and stone required to keep the country growing. We will look to the Labour pragmatists in the Cabinet such as David Parker, Stuart Nash and Damien O’Connor, not to mention NZ First’s Winston Peters, Ron Mark and Shane Jones to ensure this occurs. Nash certainly impressed the quarry sector by being the only MP from any party to accept an invitation to attend last year’s QuarryNZ conference; he gave a supportive and well-received speech on the importance of the sector. It would be something of an understatement to say that the Green Party is not seen as supportive of the quarrying sector. That said, the AQA notes how one of its own core ambitions aligns with Green principles. We continue to fight for access to local resources, rather than being pushed further and further from urban centres. This reduces emissions and traffic
The government, in concert with the Auckland Council, needs to think very carefully about how to balance its housing ambitions with retaining local sources of the very material that will allow new houses (and the connecting roads and infrastructure) to be built.
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CONTRACTOR PERSPECTIVES 2018
GOVERNMENT AGENCIES + ASSOCIATIONS
congestion. We trust any MP, especially those committed to climate change, can see the benefits of continued access to urban/urban fringe aggregate. A related issue that will present potential challenges for us is the Labour-led government’s wish to build 10,000 more houses, notably in Auckland. This is seeing the current urban/ rural boundary coming under pressure. Much of Auckland’s remaining locally-produced aggregate is sourced from the rolling pastures to the north of the Bombay Hills. These are still zoned rural. If housing is allowed to spread into adjoining areas, you can imagine the difficulty in getting a quarry consent renewed, let alone a new one approved. The government, in concert with the Auckland Council, needs to think very carefully about how to balance its housing ambitions with retaining local sources of the very material that will allow new houses (and the connecting roads and infrastructure) to be built. On a wider front, the AQA would look to the new government for a share of the promised $1 billion a year spend in regional New Zealand. While it is not yet clear how this regional development funding is to be spent, it would be hard to overlook improved roads, bridges, new public buildings and rural broadband infrastructure, all of which will require increased volumes of aggregate. We hope also that the government will address some of the fundamental issues that are plaguing our industry’s attempts to meet new health and safety requirements. There is a considerable gap between the training currently provided and what is actually fit for purpose for the quarrying sector. We are not training professionals, but we see everyday examples of mismatches between what’s needed by quarry staff and what they are being required to learn. Our ITO, for one, is proving to be deaf to our pleas but the issues are not limited to this organisation. All power to any reforms that align the needs of practical, often rural/regionally-based quarry workers with the new health and safety requirements. In July, the AQA in conjunction with the Institute of Quarrying NZ (our industry’s professional body) will mark 50 years since the first quarrying conference. Of course, quarrying has been an activity since the first European
settlers arrived and needed stone for buildings and later roads, but we took quite a while to formalise ourselves. The capacious and well-appointed Claudelands event centre in Hamilton has been booked for what promises to be a memorable event to mark 50 years since our industry came of age. If you are a potential attendee or visitor, mark July 18-20 in your calendars and look at the QuarryNZ website for registration details from April. By the time of conference, or perhaps at it, we will know the
The capacious and well-appointed Claudelands event centre in Hamilton has been booked for what promises to be a memorable event to mark 50 years since our industry came of age. If you are a potential attendee or visitor, mark July 18-20 in your calendars and look at the QuarryNZ website for registration details from April.
future of the AQA. For the past year we have been engaged in a review process about the possible creation of what’s become known as a ‘peak organisation.’ There’s no mountain-climbing involved. Some major players in the quarry sector have made it clear they would like serious consideration of the idea of creating a new, extractive sector grouping. Straterra, to which AQA is already aligned, has driven the review process. Most AQA members were interviewed and it’s fair to say there was a mixed response. Some like the idea of a bigger organisation with lots more resource; others see the association with mining, which Straterra principally represents, as a negative for quarrying. There is general acceptance that MinEx, which operates out of Straterra’s Wellington office, is working extremely well under its new CEO across the quarrying and mining sectors. Perhaps that presents a possible model. The final decision will fall to the AQA membership. That’s what is demanded in a democratic body. Whether we are part of a new organisation, merged with an existing body or maintained as we are, the quarrying industry will continue to provide New Zealand with the very foundations of continuing growth. For at least another half century – though let’s get through this year first. CP
AQA works for the quarry industry – join us today 04 568 9123 l 021 301 522 l office@aqa.org.nz l www.aqa.org.nz
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17
Building resilience ROB GAIMSTER, CEO, CONCRETE NEW ZEALAND
A bird’s-eye view of the country’s essential concrete industry. CONSTRUCTION IS BOOMING, and concrete has never been in
such demand. Most industry metrics, backed-up by a range of forecasts, indicate that the overall buoyant mood and level of activity across most of the country in 2017 will be replicated in 2018.
Construction metrics The continued growth in work across wider Auckland was a stand-out during 2017, as it was in the Waikato/Bay of Plenty region, which is now clearly leveraging the activity taking place to its north. National ready mixed concrete production figures show most quarters reaching over one million cubic metres, with most regions enjoying growth or sustained high levels of output. There were, however, some indications of growth levelling off, with the value and volume of all building work put in place, along with the value of non-residential building consents, reaching a plateau. A clear softening of construction activity across the Canterbury region was again evident in 2017.
Notable projects A range of exciting concrete-based projects were unveiled during 2017, outstanding in terms of their intricacy, size, sustainability and aesthetics. For instance, the Waterview Tunnel opened to universal acclaim, with Auckland motorists grateful that the concrete lined piece of roading infrastructure delivered on its many promises. Another important roading project that opened in 2017 was the Mackays to Peka Peka Expressway on the Kapiti Coast. The Expressway’s complex geometry, the site’s high seismicity and its extremely compressible and potentially liquefiable soils, were among the unique challenges overcome using concrete.
Material supply Following on from the ‘settling-in’ of a new national cement supply network in 2016, which saw GBC Winstone and Holcim New Zealand move to new storage and distribution models, 2017 witnessed the wider concrete industry demonstrate a strong commitment to increased capacity. Additional ready mixed concrete plants were established in Christchurch and around the Auckland region. Most recently Firth Industries opened its $30 million Hunua masonry block plant west of Papakura, which will go a long way to meeting strong
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demand for housing and infrastructure in the Auckland region.
Standards development The Canterbury earthquakes showed that some aspects of the current design standards needed updating. The Canterbury Earthquakes Royal Commission of Inquiry made several recommendations to amend NZS 3101:2006 Concrete structures standard following the quakes. Similarly, a recent investigation into the performance of Wellington’s Statistics House following the November 2016 Kaikoura earthquake recommended some actions specific to NZS 3101 – namely the impact of beam elongation on precast floor systems, maintaining composite connection of the precast flooring to the in-situ topping, and precast floor support details. Both sets of recommendations were addressed with the August release of NZS 3101 Amendment 3, which will be cited shortly. The Cement & Concrete Association of NZ (CCANZ) has a long involvement with the NZS 3101 Standards Committee.
Association activity The New Zealand concrete industry came together in 2017 to promote concrete as the resilient construction material of choice for a modern New Zealand with the launch of a consolidated industry association, Concrete NZ. Founding member organisations of Concrete NZ are the Cement & Concrete Association of NZ (CCANZ), the NZ Concrete Masonry Association (NZCMA), the NZ Ready Mixed Concrete Association (NZRMCA), Precast NZ (PCNZ) and the NZ Concrete Society (NZCS). Concrete NZ aims to be a highly respected and valued association, supporting industry to position concrete as the resilient construction material of choice for a modern New Zealand. This will be achieved through a consolidated voice that brings confidence, knowledge and leadership to members, industry and regulators.
Opportunities (and threats) 2018 High-level forecasts Despite a softening of the Canterbury construction market, the National Construction Pipeline Report, commissioned by the Ministry of Business, Innovation and Employment (MBIE) and jointly prepared by Pacifecon NZ and the Building Research Association of New Zealand (BRANZ) makes for encouraging
reading once again. Key findings in the report are that the national building and construction forecast shows a higher peak with a longer duration than previously forecast, that growth in nonresidential buildings is forecast to continue for longer and to a higher level than previously forecast, and that growth in building and construction in Auckland is expected to be sustained for a longer time than in other regions.
Government policy After nine years of stable government under various Nationalled coalitions 2017 saw power shift to the Labour Party. While the Labour election platform was relatively clear, there is uncertainty about the practicalities of policy implementation and how NZ First and the Green Party’s demands will be met. For instance, Labour has declared that it “will take a breather on immigration”. This will involve “making sure that work visas are not abused to fill low-skill, low-paid jobs”. While there is talk of introducing ‘Exceptional Skills’ and ‘KiwiBuild’ visas, the construction industry should be concerned as to where skilled workers, required to meet current and anticipated demand, will be sourced from. Further details are also required from Labour around its Forestry policy, and its ‘wood first’ procurement strategy for government buildings. While the concrete industry appreciates the important role forestry plays in our economy, as well as the characteristics of wood as a building material, there is serious concern as to the unintended consequences of a ‘wood first’ policy. The policy would create instances where the government’s building programme is disadvantaged by excluding safer, more cost efficient, and more durable material options. In addition, the policy would lead to a commercial advantage for one construction material over others. Materials should be selected on their own technical, cost, aesthetic and sustainability credentials. Questions also need to be asked around whether the ‘woodfirst’ policy will be applied to the KiwiBuild initiative. The concrete industry applauds KiwiBuild, and its pledge to deliver 100,000 affordable houses over 10 years for first home buyers. However, if the decision is made to arbitrarily specify timber over other materials, then New Zealand may be short changed. Another potential unintended consequence of government
The New Zealand concrete industry came together in 2017 to promote concrete as the resilient construction material of choice for a modern New Zealand with the launch of a consolidated industry association, Concrete NZ.
policy could be the decision to provide “one year fees free full-time equivalent for everyone starting tertiary education or training for the first time from 1 January 2018, and extending this to three years’ free by 2024”. Industry training organisations have been quick to point out that while well intentioned, this policy could encourage students away from trade training towards university study.
Skills shortage As with 2017, there is a concern that a construction skills shortage could threaten the industry’s ability to maximise opportunities. One strategy to address this is to have more people enrol in qualifications. The Building and Construction Industry Training Organisation (BCITO), in collaboration with industry, has been implementing Workforce Development Plans to help create a workforce that has the capability and capacity to meet current and future needs. Another skill-related concern that impacts on the haulage industry and therefore the ready mixed concrete sector, is the lack of Class 3 and 4 drivers. This has been an issue for years, particularly in Christchurch, and is now becoming a limitation in Auckland.
Moving forward The 2018 year looks to offer growth opportunities for the concrete and wider construction industry in a similar manner to the past several years. This activity will focus predominantly on the Auckland, Waikato and Bay of Plenty regions, with growth most evident in non-residential buildings. However, a degree of uncertainty exists around the influence, intended or otherwise, of the new Labour led government’s policies. CP
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Cranes and our economic environment ROD AUTON, CHIEF EXECUTIVE, CRANE ASSOCIATION OF NEW ZEALAND.
The average nominal GDP growth is forecast to accelerate from 3.6 percent to 5.6 percent in 2018, before declining to 5.1 percent in 2019, and this will impact the crane sector. NATIONAL NON-RESIDENT building, previously reported to peak in 2018 has now been forecast to grow by 29 percent to a higher level of $9.6 billion peak in mid-2019. All national non-residential construction is forecast to increase by 24 percent before levelling out in 2020 at $25 billion. Financially significant national infrastructure projects include: transport projects (roads, rail, bridges, tunnels, harbours, marinas, parking and lighting); groundworks (residential, commercial, and industrial subdivisions); amenities (telecommunications, water and energy services); mining and energy (wind, thermal, hydro, oil, gas); heavy and civil (parks, landscaping, landfills, dredging and flood control). This growth brings its own set of problems. Booming activity levels, lengthening lead times, shortages of resources including staff, rising costs and some concerns about the viability of some projects are all indicators of a constrained sector experiencing capacity strains. The RLB Crane Index for the fourth quarter 2017 states that residential construction has taken up 45 percent of the country’s cranes and the commercial sector has 22 percent. Wellington, Auckland and Queenstown all recorded crane increases, with falls in Christchurch, Dunedin and Hamilton. Tauranga recorded a net crane movement of zero.
Advances in crane technology Crane technology is getting smarter as manufacturers introduce technological and innovative crane concepts. Restricted working spaces has meant the adoption of individual crane support systems allowing crane support to extend to arbitrary distances that then allows higher load capacities. Intelligent control technology has advanced to the point that the cranes can operate in extreme conditions and still provide the safety controls required on the job. Boom technology has changed with proven telescoping boom techniques and advances in control systems that combine to form powerful, flexible boom systems. The advances in boom technology include improved lifting capacity resulting from reinforced lattice booms for crawler cranes that enable cranes to lift weights normally reserved for the next higher class of crawler crane. New crane development by the manufacturers is catering
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for specific needs in the construction industry, like cranes that can climb wind turbines, advances in synthetic rope, and cranes specifically designed for working indoors, or in the tight confines of a city’s CBD.
Moving forward There is a constant battle to ensure best practice is followed in the industry and that the operators realise that undertaking best practice will reduce compliance costs and reduce regulatory oversight. The Association is constantly adding and updating information on the Safecrane website for owners, users, hirers, operators and dogmen. Many have found it too difficult to look through the myriad of websites seeking crane-related information, and we have put together this repository that contains most of the information and links to many of those sites that relate to the crane industry. You can view it at www. safecrane.nz. The targeted review of qualifications is now complete. Skills and the industry are now working on the programme material as we move from nine qualifications down to four qualifications. This process now identifies a pathway for crane operators and dogmen from Level 3 to Level 5 qualifications. The Pressure Equipment, Cranes and Passenger Ropeways Regulations 1999 and the Approved Code of Practice for Cranes, are up for revision, and this will be carried out in the next 12 months. WorkSafe NZ is instituting a move away from Approved Codes of Practice to Good Practice Guidelines. This enables amendments to be made to good practice in a more timely manner as technology and legislation changes. Other sectors such as Pre-cast Concrete and Steel Erection will also be making changes to their training, legislation, regulations and best practice and the Crane Association will support these initiatives. The economic outlook bodes well for the crane sector, but more work means more staff who are trained and competent, and we see a shortfall that is going to be an issue for the industry moving forward. This year is going to be a year where the construction sector will continue growing, and cranes will continue to be a vital component of our nation’s infrastructure and building sector. CP
GOVERNMENT AGENCIES + ASSOCIATIONS
Pushing for the oversize industry in 2018 JONATHAN BHANA-THOMSON, CHIEF EXECUTIVE, NZ HEAVY HAULAGE ASSOCIATION
It’s the NZ Heavy Haulage Association’s aim this year to get issues of concern on the agenda of the decision makers and push to get resolution of them in a timely manner.
TOO OFTEN WE find ourselves responding to problems and issues that are forced upon the industry. While we are very keen to resolve these for members of the industry, we want to progress and resolve projects that make it easier for our members to operate in this highly regulated industry. It always brings satisfaction assisting members with problems that they come across in the everyday operation of their business. Members of the oversize industry are “cando” men and women who are used to coming up against problems, being asked to undertake load movements that can be challenging, and finding ways to undertake this efficiently and safely. So when a member does raise a problem with the Association, then rest-assured that they have already tried many options to solve it, and need the Association to take it on to get it fixed. However, in 2018 we want to progress projects, and longer term, issues that we want to get the agencies that regulate our industry to respond to and find ways to solve or implement them together. In general the oversize transport industry has been busy the past 12 months, and what this means is that operators do not often have the time to work through the detailed process of finding solutions for the problems that they come across. It would be fair to say that a lot of “extra load” that was demanded by clients on members was driven by various natural disasters such as earthquakes and infrastructure reconstruction, but also ongoing demand for roading construction and development. One example of this was the transport of 135 bridge beams from various places around New Zealand to the Irongate bridge project north of Kaikoura. This was led by an Association member, HEB Construction, which coordinated the effort of five other member companies to undertake this work over a two-month period. While we are not wanting to predict that 2018 will also include disasters that require the same kind of response, we do expect that the demand for the transport of large oversize items will continue. What then are the kinds of projects that this Association
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wants to progress in order to make the transport of large items easier, more efficient, and with high levels of safety.
Efficient regulation Permit and Approvals are what the industry lives and breathes by. With any freight item, that is overwidth, overheight, overlength, overweight or otherwise exceptional, it requires special permission from often many different organisations. The Association’s aim is that these permitting systems are as efficient as they can be while at the same time ensuring that the risks are managed to a high standard. For many years the Association has been pushing for using technology for making and managing permit applications, as well as notifying load movements. To date each one of these permit issuing authorities wants processes that suit their individual operation. We aim to make each one of these processes as painless as possible for our industry members, but we looking to progress the idea that there can by synergies in bringing together these permit application processes so that one application can be made to many authorities simultaneously.
Access to the best and safest roads So often when a new roading project or a new stretch of road is opened, we find that one of the last things to be considered is access to it for permitted loads. New bridge structures have to be analysed and the routes entered into the appropriate permitting analysis programmes. Often this is not done (or perhaps able to be done) until well after the road is opened to public traffic, but permitted loads are left in a no man’s land. We aim to get NZTA better at having all this in place on day one. In addition we have the ongoing battle of access to toll roads for oversize loads on permits. They are the best roads for transporting large loads, given that they are dual lane, median divided and have very good rearward visibility for traffic approaching. However NZTA is still sitting on the fence for providing that definitive answer to fully open these roads up so that they can be utilised on the same basis as other state highways. We want to get this sorted.
Better information There is a plethora of information out there, about what works are happening on which roads, what is changing in the industry, and a key role for the Heavy Haulage Association is the delivery of key information to our members that helps them carry out their jobs efficiently and effectively. We are in the process of scoping options for different ways of providing this info so that it is able to be accessed in easy and relevant ways. Technology is a key means of delivery that we are factoring into this project and we are learning from other similar organisations about how this information can be delivered.
... we have the ongoing battle of access to toll roads for oversize loads on permits. They are the best roads for transporting large loads, given that they are dual lane, median divided and have very good rearward visibility for traffic approaching.
Having a relevant and responsive voice There does seem to be an increasing requirement that the consultation of stakeholders is an important part of any process, and this association is very keen to engage with this. However, the key point of this is the “closing of the loop”, so that those engaging in consultation are required to report back to their stakeholders – not just at the formal stage – but also if there are important changes made that stakeholders must know about.
From our perspective, these decisions need to be transparent and open to scrutiny. In our experience, this is not often the case. Between these proactive aspects that we intend to be focusing on, we will continue our mantra of putting forward the interests of the oversize transport industry in this next 12 months, and amongst the challenges that we are sure will be a part of this coming year. CP
CCNZ wishes you all a healthy and prosperous 2018
We are here to help you keep your business safe, viable and compliant in this ever-changing industry Make the most of your CCNZ membership by being involved and staying connected
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The water challenge JOHN PFAHLERT, CHIEF EXECUTIVE, WATER NEW ZEALAND
Drinking water, and in particular the Havelock North Inquiry, was a key focus for the water sector in 2017. THE LONG AWAITED second stage of the government inquiry into the Havelock North Drinking Water contamination was released in December and the government is signalling that we are likely to see major reform in the sector. This is something that we at Water New Zealand are welcoming and we are strongly urging the government not to delay. Many of our submissions to the inquiry have been reflected in the 51 recommendations. It is clear that unless there are significant changes to the way drinking water is regulated, there is a serious risk of another contamination outbreak on the scale of Havelock North. While many councils do a good job providing safe drinking water, the Inquiry clearly identified systemic problems in the regulation and supply of safe drinking water. Its report provides a blue print for the government to move forward to ensure that our drinking water meets the needs of what New Zealanders and visitors should expect from a modern 21st century developed world water supply. In particular, we support the Inquiry recommendation that the government create an establishment unit to oversee the creation of a new drinking water regulator and that all public water supplies have mandatory treatment of drinking water, including the use of a residual disinfectant. The report accurately identified the lack of competence and training in the sector – something that the industry has known about for some time. It has called for a mandatory training and qualification regime to be established for all operators, supervisors and managers working in the sector. This is an initiative Water New Zealand is already acting on. See more on this further down. The Inquiry included recommendations in relation to the aggregation of water suppliers. Given that it has observed this would lead to improved compliance, competence and accountability, Water New Zealand is urging the government to urgently investigate this recommendation.
While many councils do a good job providing safe drinking water, the Inquiry clearly identified systemic problems in the regulation and supply of safe drinking water.
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The preparation of agreed industry submissions and attendance at the Havelock North Drinking Water Inquiry in Hastings occupied a great deal of both staff and board time at Water New Zealand. Reflecting the need to ensure industry is well informed about what’s expected of it post the Inquiry reporting, Water New Zealand has recruited additional expertise in water quality, and will be providing a more coherent industry advisory service around water treatment and water safety plan development starting in 2018. The focus on treating ratepayers as customers has been an increasing focus in 2017. After all, many water customers are not ratepayers. It was a subject that Raveen Jaduram from Watercare addressed at our Annual Conference in Hamilton, noting that the customer should be at the heart of all that water suppliers do. As part of that focus, Water New Zealand undertook a major public opinion survey of attitudes towards water. The report, which was presented at the conference, is really the start of a work plan for Water New Zealand in seeking to understand what customers really want from the industry. For example, the survey suggests 60 percent of the ratepaying public want to be charged directly for the water they use, rather than having water service charges buried in their rates bill. That result was a surprise, as water metering always seems to be a focal point for opposition within communities. Industry training has been a big emphasis in 2017. The board of Water New Zealand has asked staff to take a greater leadership role in the organisation around industry training. New qualifications will start to be delivered in 2018, and there is a strong industry desire to modernise the traditional block courses offered to the sector towards a world of blended learning. This involves the ability to do distance/e-learning and more on-job training. It will require Water New Zealand to be more directly involved with Connexis going forward, and in the arrangement of training delivery. The other big piece of work started in 2017 has been establishing a system of industry certification for operators, supervisors and managers involved in water and wastewater treatment. It has become very apparent through the Havelock North Inquiry that the sector needs much better systems to train staff and demonstrate their competence to do the job
The survey suggests 60 percent of the rate-paying public want to be charged directly for the water they use, rather than having water service charges buried in their rates bill. That result was a surprise, as water metering always seems to be a focal point for opposition within communities.
being asked of them. This is a significant change for the sector that will probably take two to three years to implement. It involves defining a body of knowledge that staff need to be able to demonstrate, arranging a system of competency assessment, and ultimately a system of continuing professional development to maintain that competence. Another initiative started in 2017 was work by the Department of Internal Affairs on a three waters review. The focus of the review on financial incentives, asset management practices, and compliance and monitoring appears to miss an opportunity to address more fundamental issues facing the water sector. This review was started by the last administration, so perhaps there will be an appetite by the new government for a more ambitious work programme. For example, issues that might be examined in more detail include whether the time is right to establish an economic regulator for the sector, or perhaps ask the question whether the existing industry structure in terms of the number of entities is actually capable of delivering safe drinking water to all communities. We know the financial and technical capability issues faced by many small councils. At some stage the government needs to address that issue.
Water New Zealand has a wide variety of projects underway. Of significance is the rollout of the metadata standards developed over the past two years. An industry working group has been established to oversee this task and I anticipate good progress in 2018. This speaks to our strategy of getting councils to operate in a more consistent manner. Another big issue facing the industry is development of a sector workforce capability strategy. A large cohort of older workers is due to retire in the next 15 years and we need a strategy to deal with workforce planning. Too often the people who work in the sector just “end up” working in the water business, rather than us attracting them as part of a deliberate plan. We need to recruit, train and retain staff better in the years ahead. Finally, we all need to be aware that we have a new government. With the Green Party in government for the first time (with Labour and NZ First) there are likely to be considerable changes in emphasis around their desire to afford greater protection for freshwater resources. That will undoubtedly be reflected in government policy via the Ministry for the Environment. While the water tax is currently off the table for farmers I suspect plenty of other ways to improve water quality will be under consideration. CP
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In terms of industry equipment ANDREW CRANE, PRESIDENT, NZESA
The New Zealand Equipment Suppliers Association (NZESA) represents 11 full member supplier companies as well as a further eight associate member companies. OUR FULL MEMBERS are made up of companies that sell, service and hire well-known brands of construction, forestry and mining equipment. Our associate members include both locally owned and international suppliers of attachments for construction equipment as well as other service providers. Following on from a record year of equipment sales in 2016, sales of equipment in 2017 once again were very strong with 2804 units being reported by the NZESA from January to September 2017. This is around 30 percent higher than the total number of units sold in the same period in the previous year, which is predominantly as a result of our members supplying equipment for the large number of building and infrastructure projects as well as demand from the forestry sector. Internationally demand for construction equipment was also very strong in 2017 as rising commodity prices brought forward customers’ investment plans. Commodity prices have been particularly positive for sales of mining equipment which have increased from their very low levels of the past few years. In March we held the T.H.E EXPO (Transport & Heavy Equipment) at Mystery Creek, which is held every four years in Hamilton. With it being the only show of its kind in New Zealand, it gives contractors the opportunity to touch and feel the latest construction equipment and technology and interact with equipment and truck suppliers all in one place. Overall the feedback from NZESA members was that there was still a good number of genuine inquiries from the show, but we could always welcome more visitors given the costs that go into making displays, having staff on site and transporting equipment. We know there is a lot of competition for time and attention as buying rationales change and the use of online information continues to grow as well as people’s interest in travelling to the many international shows there are on the calendar. So we are looking at ways to raise the awareness of T.H.E Expo to more industries with the possibility of combining it with a future trip or conference. The next Expo is scheduled for March 2021. Information and technology on construction equipment has grown steadily as we see more and more machines being
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specified with GPS machine guidance and control systems. More projects are requiring these systems to be fitted to machines so the operator can see on a screen in the cab where to cut to grade. Or on some machines the operator simply has to steer or digs the machine in the right area and the software controls the hydraulics of the machine. With the shortage of operators, reduced surveying requirements and overall productivity gains the number of machines being fitted with guidance or control technology will only continue to increase. In addition to machine guidance technology, most modern machines have some level of on-board and web-integrated Fleet Management System that can bring real gains to a contractor’s business. Many owners and fleet managers who are engaged with these systems are able to view critical and timely information about their machines, move data wirelessly and effortlessly, as well as being able to receive remote support tools from their local dealer to keep their machine running. This increase in on-board technology is seeing manufacturers and suppliers up-skilling and employing specialists in order to pass on the knowledge to the machine’s owner so that he or she can receive the real productivity gains that new technology can provide. There is also strong collaboration between equipment and technology suppliers to ensure the fit outs are done to the highest possible standard and ongoing support for the end user is provided. The NZESA continues to see the importance of having our input into the International Standards Organisation (ISO) as more ISO standards become adopted here. The NZESA has continued to review and adopt the latest International Standards. One such standard that we established a working group on in 2017 is ISO 13031 for Quick Couplers which covers quick couplers, installation and operating systems for all machines. The prime purpose of ISO 13031 is to improve the safety of machines fitted with quick couplers and reduce the number of incidents where attachments have been dropped, causing serious and fatal injuries. Currently this country has no formal standard for the manufacture, supply, installation or operation of quick couplers, so we are looking to address that with this new standards implementation. CP
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HOW HAWERA GOT A NEW HEART Inside the town centre upgrade p32 ALL YOU NEED TO KNOW About NZTA’S procurement manual update p35
More muscle to move The Revital Group has invested in new machinery to do its heavy work.
HEARTY APPETITE
Growth from adversity
FOR CHANGE
Councils’ urgent need for new recipes p16
Bond Earthworks’ new Vo¨gele Super 1703-3 paver on the job in Christchurch
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Kaikoura rail – a collaborative contracting job well done Harrie Harris pays tribute to the industry association Heavy hauling beams over the challenging Arthur’s Pass Motu bridge – a lesson in bridge building innovation
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New water intake plant built on the mighty Waikato river Supply risks prompt new water treatment plant for Fonterra New research looking at affordable water proofing for roads Looking back to 1820 and the construction of our first road
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Reaching milestones PETER BENFELL, CHIEF EXECUTIVE OFFICER, CONNEXIS
The industry view from the industry training organisation for infrastructure industries, which provides recognised qualifications for civil contracting. I THINK, in the future when we look back at 2017 and what
it meant for the infrastructure sector in this country, it will stand out as a watershed year, particularly when it comes to Civil Trades certification. Though it was launched in December 2015, 2017 was really the year Civil Trades truly gathered momentum. After some tweaks to improve the flow of the certification process early in the year, we finished with well over 100 civil infrastructure workers fully certified and now have more than 300 enrolled and working toward completion. Reaching that 100 milestone and seeing the programme
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begin to flourish has been hugely gratifying for all those who have been involved in the planning, and launching of Civil Trades. And, though I took up my position with Connexis only in September, I too have found it immensely rewarding on many levels. Not only are we, as an industry and a country, finally able to formally acknowledge the incredible skills and experience of our civil construction workers, we can also see the flow-on effects in terms of the increased pride those people take in their work, and how their successes go on to inspire and mentor co-workers as they too complete certification. As that happens, our workers themselves will become our best recruitment tool; the best advertisement for the advantages of choosing a career in civil infrastructure. That is vital, because it is in that area that there is still much work to be done. Demand for skilled workers is at an all-time high, with a forecast of an additional 49,000 people required by 2025 to deliver on the planned $110 billion government investment in infrastructure. To find those tens of thousands of workers we must compete with other industries, such as construction, also battling a skills shortage. We must continue to ensure we are doing everything within our power to make civil infrastructure an attractive proposition with a clear, rewarding career path. Civil Trades is obviously at the very core of that, but we have other ammunition in the arsenal as well. Our New Zealand Apprenticeship programmes now have a clear pathway into Civil Trades, which will hopefully satisfy the understandable desire of today’s youth to be able to see opportunities for advancement through a career from the outset. The 2017 year also saw the launch of the Transition to Work pre-employment programme, which provides workers for big new contracts requiring large-scale employment. The basic premise of the programme is to take people with no industry experience and put them through two weeks of training, equipping them with the skills they need to be workready and of value to employers. Each programme is set up to meet a pre-agreed requirement for a specific contract (usually 10 to 20 people) and is facilitated by Connexis. After a strict recruitment process, those selected attend a
To find those tens of thousands of workers we must compete with other industries, such as construction, also battling a skills shortage. We must continue to ensure we are doing everything within our power to make civil infrastructure an attractive proposition with a clear, rewarding career path.
residential training course at Waiouru military camp, which focuses on compliance training, technical training and life skills. On successful completion of the course, participants are placed in full time employment where they will work towards a Level 2 New Zealand Certificate in Infrastructure Works. So far several Transition to Work programmes targeting Maori and Pasifika, currently funded by the Ministry of Social Development, have already been run successfully around the country and, as an example, allowed us to supply two groups of nine workers to Wellington’s Transmission Gully motorway project. Funnily enough, the other benefit we are now able to offer workers considering a career in civil infrastructure is job security. While the government’s works programme has thrown the skills shortage into sharp relief, it also means potential workers know there is plenty of demand for our industry in the foreseeable future. It’s difficult to think of another industry in the country able to predict that kind of security. All this means our focus in the civil infrastructure space for 2018 is engagement. That’s engagement with our employers and employees making sure they are all familiar with what Civil Trades offers them and the industry. It’s engagement with our stakeholders in government departments to make sure they too are committed to Civil Trades and ensuring this is reflected in contract tenders. And, of course, it’s engagement with the wider community to ensure all jobseekers, whether they’re studying or fresh out of school, or considering a change of career, or a way out of unemployment, know about the diversity of careers available in civil infrastructure and what it can offer them in terms of a path to success. We’ll be hitting the road with Civil Contractors New Zealand (CCNZ) in 2018 with a series of roadshows promoting our industry and the career pathways available to all of those jobseeker groups. We’ll also be continuing with other initiatives such as the annual Girls with Hi-Vis event, driven by Ultimit – Women in Infrastructure. The event aims to address the gender imbalance in infrastructure by offering women a hands-on experience of the different jobs and aspects of an industry they may not have ever previously considered. And we will again be holding Annual Connection, scheduled
for Christchurch in October, the yearly public showcase offering our workers in electrical supply and telco the opportunity to compete and demonstrate their skills. Again it represents a chance for those considering or not overly familiar with the industry, to see just what our people are capable of, and what a career in Infrastructure is like. All of this means it’s an incredibly exciting time for the industry and I am thrilled to be a part of it. There are plenty of challenges on the road ahead, but also plenty of plans in place so that we may continue to evolve and grow as we meet those challenges. CP
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Longburn Shingle Co. – scales safety and systems solutions The Longburn Shingle company has been producing crushed and washed aggregates from its plant at Palmerston North for more than 30 years.
Longburn specialises in washed sand and gravel products – offering a range of more than 30 aggregate products – and has been using a trade-certified weighbridge for the past 25 years. Recently, the company decided to automate its weighbridge, and company director Phil Gordon says they wanted only the best, cutting-edge technology to do this. Longburn needed weighbridge software that could satisfy three criteria: 1 Execute an unmanned weighbridge with clear and concise instruction between truck drivers, even nonaccount customers and the loader(s). 2 Create efficiency by reducing load times, work smarter not harder, and enable access to key operational data, easily, from anywhere. 3 Integrate our Quarry Management Software of choice with existing accounting application, Xero.
WrightZone installed the computer hardware (a point of sale terminal and a server) to Longburn Shingle’s existing weighbridge, along with a wireless network throughout the quarry.
“We had a demo of the WrightZone weighbridge software, which ticked all the boxes,” says Phil. WrightZone provides a commercial software solution for the weighing industry. Offering a significant break-through for Industry 4.0 with its loader scales software. It’s hardware independent, meaning it’s plug and play into new and existing loader/ weighbridge scale hardware. It offers a safe, electronic method of collecting and tracking materials demand in real-time. At Longburn Shingle, customers arrive at the weighbridge, entering their details, the product they’re after and the volume they want; this data is sent wirelessly, to the tablet in the loader. The operator meets the customer at the correct stockpile and gets down to the business of loading – no unnecessary
driving around the quarry, no one out of their vehicle, no wasted time, and no paperwork. “Previously, the customer would have to search the quarry for the loader, or vice versa,” says Phil. “Now the loader knows the customer name, the time they entered the quarry, the tare weight of their truck, the product they want and how much of it. And once it’s loaded, the info is exported and synchronized into our accounting system, with Xero ready for invoicing.” WrightZone installed the computer hardware (a point of sale terminal and a server) to Longburn Shingle’s existing weighbridge, along with a wireless network throughout the quarry. It supplied two tablets which the loader operators drop into cradles in the cab of whichever of the company’s three loaders they’re using – they turn them on, and it doesn’t matter where the operators go in the quarry, they’re still connected to the weighbridge system. They go about their business, and when a customer arrives at the weighbridge and initiates a transaction, the necessary information appears on the tablet screen, and the loader heads off to meet the customer and fill their truck and/or trailer. “Aaron and the team at WrightZone have been great,” says Phil. “They were always available – either on the phone or on-site – and did everything they could to make the rollout easy. Their support has been fantastic. “They wanted to deliver a really good solution for us – they asked us what our
“On the technological side, this has taken our business further ahead than we could have ever imagined – we’ve gone from somewhere where there’s been no change in process for 35 years, to having one of the most sophisticated, user friendly, weighbridge systems in the country.”
best-case solution would be, and never said it couldn’t be done. WrightZone enhanced their product over and above the standard software to give us exactly what we wanted.” Outside of the already feature-rich, turnkey solution that WrightZone provides, the wish list included: • That the tare weight of the truck would show on the tablet in the loader • That the amount of product the customer wanted transmits to the loader • The actual weighbridge scale reading is available when the customer arrived at the quarry. “We can also see the vehicle weight when it goes out the gate,” says Phil. “This gives us a full 360-degree overview of the transaction.” The standard features of the WZ Loader Scales tablet software include online and offline entry and exit processing for loaders – well suited to remote locations – and of course interoperability for manned or unmanned weighbridge operations, where the full solution comes into play. The software provides more than data and analysis between weighbridge and loader scale devices, but real-time instruction of product, order, and target weight per truck, trailer, or both, direct to the loader’s tablet.
Phil can’t speak highly enough of the new system, saying that while it was a significant investment for the company; “It was a no-brainer really. “It’s saved a lot of our time – there’s less aimless travel by the loader, less data entry, no hand-written dockets, no waiting for order numbers… “It’s saved us money, and made everyone’s life so much easier – not just ours, but the customers’ too. The whole process is enjoyable, as well as being more efficient and safer. “We’ve got more than we hoped for,” says Phil. “On the technological side, this has taken our business further ahead than we could have ever imagined – we’ve gone from somewhere where there’s been no change in process for 35 years, to having one of the most sophisticated, user friendly, weighbridge systems in the country.” The technologically-superior WrightZone weighbridge software turnkey solution is ideal for the mining, metals, quarry, waste, and agricultural weighing industries. • Copy supplied by WrightZone International Ltd
(m) +64 21 978 963 (m) +61 420 978 963 (o) +64 9 834 8340 support@thewrightzone.com
www.thewrightzone.com
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Legal report BRENDAN CASH, PARTNER, AND ARIE MOORE, SENIOR ASSOCIATE, KENSINGTON SWAN
A report card review of 2017, with general comment on the industry and a look into the crystal ball for 2018. THE 2017 YEAR came and went in a flash. In this article we take a look at notable industry events over the past 12 months and then turn our collective minds to what might lie in the year ahead. Before we get into a recap of 2017 let’s look at what we predicted last year. In the 2016 legal report we took a stab and said that the following areas were going to feature in some manner in 2017: a. resourcing constraints will continue; b. t he industry will need to grapple with the retentions trust regime; c. the RMA reforms will finally be passed into legislation; and d. focus on larger developments due to low interest rates and housing shortage.
So how did we go? Resourcing – It appears that resourcing continues to be a major constraint and there is no shortage of work for civil contractors. Despite this growing demand there is still competition in pricing and it is more important than ever that projects continue to be resourced and managed effectively. Retentions and RMA amendments – These were relatively safe bets and both pieces of legislation came into force. We discuss the retentions trust regime below. The majority of the RMA reforms have only recently come into effect so it is too early to see the scale of effect that these might have (there are also whispers that Labour may look to undo/amend some of these changes over time). Larger developments – There has continued to be large developments, although the increase we were expecting did not quite materialise. There continues to be dialogue around the ‘housing shortage’, but aside from promises of satellite cities as part of mayoral campaigns, significant large scale development has not really materialised. We comment further on this below.
2017 – Head down, bum up This year has been particularly notable for the lack of significant events. We believe the real hero of 2017 would have to be the effort that has occurred down in Kaikoura, where amazing work has been put into getting the road and rail system operational. This has largely occurred out of the spotlight of the media and without significant issues. There were also some large scale
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infrastructure projects that were completed and which are now in use. The benefits of this investment by the government quickly became clear, the Waterview tunnel and Mackays to Peka Peka are the first two that spring to mind.
Retentions trust regime Retention money under any (commercial) construction contract entered into, or renewed on or after 1 April 2017, is required to be held on trust or be covered by a complying instrument. This change will have capital constraints at the upper levels of the contractual chain, as parties are now required to hold retention monies in a form that is readily convertible to cash (and are not able to use these as working capital). The Act also prescribes a number of other requirements that contractors will need to comply with. The frustration with this change is that there are still a number of legal grey areas and questions around how to achieve compliance. It appears that a number of the provisions in the Act have been added at the 11th hour as almost an afterthought, with the result being that the current regime does not fully address the problem. We expect that clarity will come over time and remain hopeful that regulations will be issued clarifying some of these questions. We have had discussions with a number of different stakeholders who are all interested in how they can comply with the new obligations. While it is not a requirement of the Act, we have been discussing the merits of establishing a separate bank account to hold retentions as a means of complying with the Act and clearly tracking the money held on trust. Over time the impacts (and compliance costs) are likely to flow through into contracts as well.
Change in government Following the election there was a change in government, with the new government formed by Labour and New Zealand First (with some help from the Greens). There were a lot of election promises from both sides of the fence and the effect this will have on the construction industry remains to be seen. It is clear that there has been a noticeable shift in emphasis from road to rail in and around Auckland. The Christchurch rebuild is also likely to be a big focus, with Labour’s policy to have a global settlement between the government and Christchurch City Council.
The priority area for the new government will be housing, with significant focus already occurring in this area. Ministers Jenny Salesa and Phil Twyford are responsible for Building and for Housing and Transport, respectively. Throw Shane Jones (Minister for Infrastructure, Associate Minister for Transport) into the mix and we are likely to see some significant policy shifts in the industry over the next term, particularly once details of the regional development fund are confirmed. In that regard a shift of some of the government’s infrastructure spend to the regions is likely on the cards.
Direct agreements and other legal issues The courts got their fair share of the construction action in 2017. There have been a couple of cases which have paved the way for claimants to bring a representative action against building product suppliers, with the Supreme Court recently confirming that representative actions provide greater access to justice and are permissible in New Zealand. 1 The Court of Appeal also got a rare taste of 3910 when it heard a case on the entitlement to terminate and the implications that flow from termination.2 This will provide rare judicial comment on the 3910 form of construction contract and the decision is expected sometime next year. In 2015, the High Court held that in the case of developer insolvency, a liquidator could recover payments made to a contractor under a direct agreement. This would have had far reaching constraints on the manner in which a number of construction projects are funded and earlier in 2017 the decision was appealed to the Court of Appeal, which overturned the High Court decision.3 The Court of Appeal held that payments made from a bank/financier pursuant to a direct obligation under a funding agreement are not payments ‘by’ a developer and so these payments are not able to be clawed back by a liquidator following insolvency. This will be a welcome decision for contractors who now have certainty that payments under properly structured direct agreements are not subject to claw-back.
2018 – The crystal ball Each year we like to have a look at the tea leaves and predict some events or trends that may occur over the next 12 months. Our predictions for 2018 are: Continued capacity constraints in the industry – As resourcing continues to be stretched and the impacts of the retentions trust regime sink in. It is only natural that the costs of operating in the construction industry will increase; there will also continue to be significant resource constraints that will present challenges to delivering successful projects. Overall, as some economists have noted, capacity, cost and capital constraints are acting as caps on growth in the industry. Technology will have a larger impact – Technology is already a major part of the construction sector, although to date we have seen this focused on the direct works themselves. Over 2018 we expect to see technology enter more of the ancillary services; think Tinder to find digger drivers, Air BnB for spare yard space and electronic monitoring for security and QA processes; some of these are already under way. Increase in housing, decrease in PPPs – Labour has indicated that it wants to build 100,000 homes over the next 10 years
and if it is going to have any chance of achieving this goal it better get started in 2018. Further, its past rhetoric towards public-private partnerships means that it is unlikely that new housing projects (or any other projects for that matter) will be constructed under a PPP. Focus on regional infrastructure – Along with housing we expect that the government will push through some larger scale infrastructure projects aimed at connecting the regions and boosting economic activity. The election has produced the first minority government New Zealand has seen for a number of years. It is likely that we will start to see the real impact of the election promises start to come through in 2018. We expect 2018 will present a number of different opportunities for those involved in the civil contracting space and it will be important that the industry is able to adapt in order to meet this demand. We look forward to seeing a busy 2018. CP References: 1. Studorp Ltd v Cridge [2017] NZSC 178 2. The appeal from Custom Street Hotel Ltd v Plus Construction NZ Ltd [2016] NZHC 2011 was heard on Thursday 19 October 3. Ebert Construction Ltd v Sanson [2017] NZCA 239
Kensington Swan offers 15 minutes of free advice on construction issues to CCNZ members. Kensington Swan regularly provides comment on topical construction issues, visit www. nzconstructionblog.com to keep up to date.
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Digitising the civil construction process RAY COPELAND, MANAGING DIRECTOR, GLOBAL SURVEY
Boom times, skilled labour shortages, higher job complexity and ever-increasing client expectations have meant the civil construction industry is increasingly looking toward technology to improve productivity, solve skills and resource issues and improve profitability. INTERNATIONAL STUDIES, such as the McKinsey Global Institute Industry Digitisation Index, show that the construction industry has one of the lowest rates of technology implementation and sits well behind industries like mining and manufacturing – ranking 15 out of 16. The opportunity exists for significant gains in productivity and efficiency via the adoption of technology and through digitisation of construction processes. Traditionally construction has been very much a manual process whereby projects are surveyed, designed and then paper plans generated for construction. Talk to any contractor and they will tell you horror stories of incomplete plans, design errors, misinterpretations and costly rework which the contractor often ends up having to cover. Given that all design is done digitally nowadays the current manual construction process is inefficient, costly and carries high risks for the contractor – especially when errors are not discovered until part way through construction. Taking a higher level overview of this process, many of the issues that are regularly seen can be mitigated or eliminated through digitisation and empowering people onsite. The engineering and construction industries have made significant progress in the past 10 years with digital design, however we are only at the beginning of a journey which will, in our lifetimes, radically change the way our industry operates. Globally the divide continues to widen between constructing using traditional techniques (2D plans) and constructing via technology using 3D models utilising modern construction surveying and machine control systems. Each year the technology advances further, becomes more powerful, generates higher levels of productivity and is easier to implement for business managers and staff, as well as being more affordable in terms of its return on investment. The construction industry is following global trends with the rapid adoption of machine control technology. Whether used for bulk earthworks or final pavement layers, virtually all major capital projects employ some form of machine control technology today as a core part of their construction methodology.
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The tight tolerances on many of these projects necessitate the use of machine control as it’s simply not possible to meet the requirements without it. On smaller projects, where the tolerances aren’t generally as tight, the productivity benefits, savings through minimising rework and ability to self-manage the construction process are the main drivers behind the rapid adoption of the technology. Within the construction industry most business owners list a lack of skilled staff in their top three current business challenges. Increasingly contractors are looking toward technology to help solve some of those challenges. Younger people entering the industry have grown up in a digital world and easily embrace new technology and working in a digital environment. Companies embracing a digital construction process are able to take lesser skilled operators and make them highly productive in a short period of time and therefore gain a competitive advantage. This is a way of not only coping with labour and skills shortages but can also assist with retention of key staff and providing career development and opportunity. The construction industry has also become smarter in the use of GPS rovers, robotics and drones, which enable the contractor to easily quantify their work on measure and value contracts to ensure they get paid for the work completed. By moving to a digital process the contractor doesn’t have to rely on an often inaccurate schedule of quantities or load counts. Tools are now readily available for contractors to manage all their set-out, as-builts, volumes and quantities on projects with full reporting in the field. This allows contractors to manage the entire project and make decisions without being reliant on external surveyors and engineers. At the same time design software has evolved significantly over the past 15 years making the production of 3D models a relatively easy task. Whilst the use of 3D models and machine control technology is now commonplace in New Zealand there are benefits to all parties (clients, designers and contractors) through full digitisation which are not yet being fully realised. The client and contractor stand to benefit the most in
moving to a digital workflow as contractors are able to deliver projects more cost effectively, to higher construction tolerances and quality in a shorter timeframe. The industry would benefit further if 3D models and designs became integral parts of the contract documentation for use by the contractor. This adds a higher level of accountability on the designers to ensure their design is correct which should be the ultimate goal of any efficient industry. This digital construction process is well established internationally with machine control and construction survey technology a prerequisite on most major projects. Whilst it’s not mandated in New Zealand, it’s commonplace and those trends will continue.
The construction industry is following global trends with the rapid adoption of machine control technology. Whether used for bulk earthworks or final pavement layers, virtually all major capital projects employ some form of machine control technology today as a core part of their construction methodology.
For people working in the construction industry this shift in the way we construct brings with it exciting opportunities. Our industry is often not seen as the most exciting choice for younger people despite the excellent career and opportunities. The trend toward digitisation allows people to put themselves at the cutting edge of the industry and keep up with the latest developments in technology. I truly believe it is something we, as an industry, should be actively promoting when trying to attract younger people into construction. Looking into the future I expect the technology to develop further around measuring plant efficiency and productivity to optimise the best use of both plant and resources. Similar industries overseas, such as mining, are significantly further
ahead than construction on the technology curve and are reaping the rewards. It is commonplace for mine sites to quantify machine downtime, dynamically reschedule the use of machinery in the event of breakdown and optimise haultimes etc to ensure the mine site is working at its optimum. In building construction, BIM (Building information Modelling) is re-shaping the way we construct and maintain buildings and facilities. Like building construction, the civil construction process is complex with decisions being made on a daily, if not hourly, basis which can affect the construction process. The BIM process empowers people onsite by putting information and decision-making tools in their hands. Many of the learnings from the BIM process are transferable into civil construction and as the digitisation of the industry accelerates we can expect to see the way we construct and manage assets evolve with it. Looking further ahead into the future, and on a larger scale, we are seeing the concept of digital cities evolve with CIM (City Information Modelling). CIM is a process whereby every asset above and below ground is precisely mapped and attributed including all the structures, material types, services etc and can then be used by a wide range of industries including construction, facilities management, emergency services, planning and design, etc. In a challenging labour market, contractors are increasingly looking to use technology to increase productivity, resolve skills and resources issues and gain a competitive edge. In the digital world we now live in, there is significant scope for our industry to benefit and gain efficiencies through the digitisation of our construction processes. We find ourselves in exciting times, on the brink of realising significant change in the way the industry constructs and delivers projects through digitisation. CP
Reference: McKinsey Global Institute Industry Digitisation Index Report 2015. bit.ly/McKinsey_Global
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Stay agile – adapt, and adapt now EMMA FISK (AUCKLAND), ANDREW PATERSON (TAURANGA), ERIC WHITFIELD (WELLINGTON) AND RICHARD JENKINS (CHRISTCHURCH), BECA. Emma Fisk
Four of Beca’s senior leaders reflect on the year that’s been and what 2018 has in store for the civil contracting sector. How would you sum up the year that has been? Emma: Everyone in the sector has been under pressure with numerous big projects starting or continuing. For some, it’s meant they’ve needed additional resources which itself has created a challenge with a limited pool of good people available. The 2017 year also saw overseas construction companies settling in, making work more competitive for local contractors and introducing new ways of doing things. Andrew: Two cyclones passed through the Bay of Plenty in 2017, generating a lot of remedial work and challenging the programme of various roading contracts. However, the industry remained competitive with large projects in the region generating interest from outside; prompting strategic thinking around rates and resourcing. Eric: Technology is shaking up how things are designed and constructed eg, contractors are building from digital models, forcing many to adapt. There were also changes within some of the big contractors (ie, mergers), which could challenge competitors and procurement methods in 2018. Richard: The South Island experienced more investment in infrastructure spend, especially in central Otago due to growth in residential and commercial development, and in tourism. Many consultants and contractors were committed to rebuilding Kaikoura. And while commercial developments in Christchurch are starting to settle down and affecting some workloads, councils are still spending and providing more opportunities than many can service.
How has health and safety – particularly psychological wellbeing – become increasingly more important? Emma: Up until now we never really talked about fatigue, despite more people experiencing it as a result of the pressures the industry is facing. But the industry no longer thinks like that.
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Over the past year I’ve seen a promising shift in contractor and consultant duty of care to people. Andrew: Health and safety has gone up a level! Everyone has become extremely proactive, especially Tier 1 contractors, which is having a positive effect on the rest of the industry. Eric: People are thinking more about health and safety, and also psychological wellbeing. Contractors are investing in innovative methods to manage safety and risk, like mobile apps. Richard: Everyone is starting to understand the impact work has on people’s lives, especially the effect prolonged work pressures have on mental wellbeing. We’re all ensuring we’re taking care of our most precious resource.
The big elephant in the room was the introduction of the new government and what changes it will bring. All indicated some element of uncertainty, but were positive about the forward workload and the opportunities in 2018. Emma: We know we’re going to be doing more multimodal projects and refocusing on different areas eg, light rail. In terms of resourcing, I think we’ll start to see a bit more flexibility, but not so much that the bottom drops away as other projects will start up. The key for 2018 will be to stay agile in where the sector goes looking for partners and skills. Andrew: This year (2018) will probably get more competitive for those in the Bay of Plenty. Tauranga continues to grow, generating lots of development work but it’s not clear what work will progress and how much there will be. While there are still some big projects on the horizon, the increased interest from those outside the region will continue to make it difficult for local contractors to win work. Eric: Infrastructure is still a big item for the new government. They highlighted a focus on regional development which
Emma Fisk s a technical director of civil engineering who focuses on the delivery of efficient design solutions on complex multidisciplinary projects. Andrew Paterson manages the Beca infrastructure team in Tauranga and, for the past 17 years, has been involved in construction observation management. Eric Whitfield is Transport and Infrastructure’s commercial manager – leading the operational and strategic business planning processes. Richard Jenkins has over 20 years’ experience in civil engineering and leads Beca’s South Island infrastructure team. Andrew Paterson
Eric Whitfield
is likely to create opportunities for players not in our big centres. Light rail is on the table for Auckland; we may see some development work on this and contractors thinking strategically about how to do projects they haven’t done before. Richard: For those down south, I expect our workload and investment in regional projects will continue – we still need to finish rebuilding Christchurch and Kaikoura. The new government brings both risk and opportunity, particularly around sustainability policies where it is unknown what impact their changes will have on projects already underway.
With a new government and rapid changes in technology, the general consensus is that we need to be doing more to build a more resilient future. The results of a Beca poll undertaken at Infrastructure New Zealand’s Building Nations Symposium in October revealed an appetite for change. Emma: Standardisation of design is becoming increasingly important. Technology will evolve how we approach projects
Richard Jenkins
The worst thing we can do is stand still. We need to adapt to the market and to people demands. To build a resilient future, the biggest leap should be around how we care for our people and what ‘care’ means to them. and keep people safe – we need to continue to adapt. Eric: There will be ongoing challenges around sustainability and environmental impact, and we need take action now and think about how these changes could affect construction. Andrew: Ensuring engagement with clients will be key, as will be retaining good resources. Maintaining continuity of work and keeping people engaged, goes hand-in-hand with building a resilient future. Richard: The worst thing we can do is stand still. We need to adapt to the market and to people demands. To build a resilient future, the biggest leap should be around how we care for our people and what ‘care’ means to them. CP
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CONTRACTOR PERSPECTIVES 2018
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The skill challenge JASON WALKER, MANAGING DIRECTOR, HAYS NEW ZEALAND
This year is set to be an active year for our engineering, construction and contracting businesses – provided they can find suitably skilled jobseekers to fill the industry’s swelling staffing gap. IT’S AN INDICATION of just how wide the civil construction and
engineering talent gap has become that despite promising to reduce net migration by between 20,000-30,000 people, the government is working with the construction industry to attract suitably skilled workers to New Zealand from overseas. With more than $125 billion of infrastructure works planned, these professionals will certainly be needed as vacancy activity soars across the country’s civil market. This comes off the back of an active 2017 which saw an improving economy, sturdy inflation, net migration growth, positive GDP forecasts and a flow of government and private projects. Naturally then, in 2018 the country’s biggest ever infrastructure and housing programme will add significantly to staffing requirements. However, the civil sector is already experiencing substantial labour shortages. The Transmission Gully project absorbed a lot of workers, making it more difficult for smaller firms to attract the skilled workers they require. A growing population led to an increased number of projects in Auckland and Queenstown while Central Otago is booming. Meanwhile the last of the anchor projects have started to gain momentum in Christchurch, earthquake repairs are underway in Wellington and infrastructure recovery work in Kaikoura and North Canterbury is adding to activity. No wonder then that skill shortages are a growing concern. This is supported by findings from our recently released 2017 Hays Global Skills Index, which highlights the country’s struggle to keep pace with labour demands. The report, published in collaboration with Oxford Economics, shows that despite an existing pool of labour, employers still find it difficult to fill jobs that require highly-skilled professionals. In the civil engineering and construction sectors this includes civil engineers. Land development, especially in Auckland in response to the Unitary Plan and housing crisis, the busy roading and three waters sectors, and the development of existing infrastructure in order to keep up with and support new developments are fuelling this demand, especially at the mature graduate level through to senior technical delivery candidates.
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Land surveyors remain in demand too, especially licensed surveyors. These professionals are needed on a wide range of projects across New Zealand, from roading and highways to commercial and residential land development. As is the case for civil engineers, demand exists at the mature graduate level through to senior technical delivery candidates. Bridges and civil structures engineers are also needed as New Zealand looks to upgrade existing infrastructure. This is creating more demand for professionals with experience in bridges and civil structures. We are also seeing a significant number of new developments across the country to support our growing towns and cities. Transport engineers and planners are required too in response to upgrades and growth of the infrastructure network, which includes an increasing number of roads and highways projects. Candidates with large-scale project experience and experience in seismic strengthening remain at a premium also. Drafters with Civil 12d, Civil 3D or Revit experience are in high demand too, as are machine operators (excavators, diggers and drivers) in response to the amount of land development and subdivision work underway. The shortage of jobseekers with the appropriate qualification adds to this requirement. Given demand, it should come as no surprise that staff turnover has risen as workers actively seek better opportunities in a dynamic market that requires their skills. They’re not always on the move for money though, with improved working conditions or more exciting and challenging projects sought for career development purposes. Jobseekers have also started to think more about a role’s longevity. It has become more important to jobseekers that a contracting business has a sustainable future project workload. For their part, employers want to see jobseekers who are genuinely interested in working for their organisation. However, they are going to need to relax their requirements around wanting candidates with local experience and knowledge of local projects. Given the campaign to attract thousands of construction workers from overseas, employers need to be willing to utilise those without local experience. Thankfully, most are.
In other trends, employers are creating positions for quality talent since the forward workload is promising. This is a sensible strategy, particularly as 2018 will only see skill shortages intensify. Meanwhile temporary assignments are growing in popularity and are now viewed as a viable career option rather than an occasional opportunity. Jobseekers are attracted to the wider range of experience, new contacts and exposure to different solutions and ideas that temporary assignments offer. For employers, temporary and contract staff provide a flexible workforce that can be released at short notice without financial penalty. The on-demand and as-needed nature of temporaries is also far more cost-effective than keeping skills unessential to the day-to-day operation of a contracting business in-house. As a temporary employee is only paid for the hours worked, employers keep a tight control on their staffing costs while maintaining productivity at optimum levels. In a final trend, and as we are seeing across all industries, 2018 will see additional digital transformations. Many contractors are already using mobile technology to access information and collect and review data to make better and faster decisions onsite.
We expect to see more organisations – driven predominately by the large engineering, construction and contracting businesses – looking at how artificial intelligence, robotics and autonomous vehicles can increase delivery and save costs on projects.
We expect to see more organisations – driven predominately by the large engineering, construction and contracting businesses – looking at how artificial intelligence, robotics and autonomous vehicles can increase delivery and save costs on projects. While there are clear benefits, the cost of implementing such technology remains a major hurdle for most. Still, it will be interesting to watch what technologies the larger industry businesses invest in. CP
CONTRACTOR PERSPECTIVES 2018
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Tendering trends CAROLINE BOOT OF CLEVER BUYING AND KERRIE MCEWEN OF PLAN A TENDER SPECIALISTS
A review of the key influences on tendering in 2017, and a look ahead to what the bidding landscape might look like in 2018. WHAT A YEAR! A change in government; over 1000 opportunities
released on GETS across all sectors; the rise of prequalification; and a move away from the traditional physical ‘tender box’.
2017 in review 1. I ncreasing call for government procurement practitioners to be trained and qualified The launch in 2016 of a revitalised and broadened NZQA Procurement Qualification has been welcomed by both suppliers and clients. The combination of best practices from NZTA and NZ Government Procurement within that qualification, together with its accessibility for full-time procurement staff, means there is now a practical solution to address the skills gap across all government procurement agencies. Traditionally, this NZQA Level 6 qualification has applied only to transport projects – but its extension into other contexts is welcomed by suppliers who have been frustrated by poor procurement practices in other sectors. As awareness of the usefulness of this qualification to ministries, departments, DHBs and other organisations grows, suppliers will be heartened to see practical improvements to tendering practices that will drive better value for money. 2. The continued rise of (multiple) H&S prequalification systems A major impact on many contractors over the past year is that an increasing number of clients now require suppliers’ health & safety systems and practices to be assessed by external parties. There’s no denying the importance of robust H&S practice to keep everyone safe, but with a number of different prequalification providers available – domestic and international – this can mean extra costs for suppliers to keep up with multiple assessment requirements. For example, Auckland Transport uses ISNetworld (ISN) as the provider of its Health and Safety Prequalification system. On the other hand, all Housing NZ tenders now listed on GETS include a pre-condition which requires respondents to have registered and completed an Impac PREQUAL health and safety assessment.
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Contractors may do well to factor in budget/resource to account for these increased requirements. 3. Prequalification and Supplier Panels The release of prequalification panel RFPs has been a definite trend which has continued into this year. Auckland Transport, the Ministry of Education, Housing NZ, and Wellington City Council amongst others have been active in this space. Some panels remain ‘open’ for evaluation over the course of the coming year or longer, but others had strict submission deadlines. Suppliers need to be nimble and quickly understand submission requirements and respond accordingly, or face missing out on future opportunities. 4. Increasing focus on social outcomes and sustainability Thankfully, price is becoming less and less important as the key factor in winning a tender. There’s a sensible shift towards quality-based attributes and balancing risk and opportunity to deliver true value for money. While some suppliers have been unprepared and inadequately resourced for the tasks involved in researching and preparing high-quality attributes, others are relishing the greater opportunities they have to win contracts based on clever, well-planned responses. Cutting prices to unsustainable levels is no longer the only way to win work. That’s cause for smart companies to celebrate. Local and central government clients are also increasingly aware of the need to meet their social obligations. The recent Auckland Transport Physical Works Supplier Panel ROI is a case in point: respondents were asked how they would support AT’s sustainability objectives in future physical works projects. Areas for respondents to address included reducing greenhouse gas emissions, improving water quality outcomes during construction, valuing Maori, supporting Pasifika development, and supporting local business. With social outcomes likely to remain important in the future, contractors might be well-advised to seriously consider their policy in these areas and capture relevant case studies as part of their attributes library.
5. S harper procurement and increasing use of GM–RFx templates RFT documents continue to improve – the era of recycled RFT documents with generic questions is definitely on the wane. But, unfortunately, many RFTs still ask irrelevant questions, allocate weightings and risk without proper planning, and bear little or no regard for value for money or sustainability. So there’s a continued need for a tighter focus by buyers on questions that reflect the differentiators for suppliers, based on the risks and opportunities of each specific project. That said, MBIE’s suite of Government Model RFx Templates has seen plenty of use during 2017 by government agencies since their introduction in 2016 (and even some local councils have adopted them). They’re identified easily enough by the heading ‘This opportunity in a nutshell’ near the start, and the templates aim to provide practical, easy-to-navigate, plain English templates for routine types of procurement. The best examples focus on questions which are targeted and specific, so suppliers can be evaluated and differentiated according to quality, risk and value-for-money. Even better, some RFTs are providing clear information for respondents on the specific elements of each attribute that will be scored highly, as well as the minimum conformance standard. These innovations have been introduced by Plan A’s sister company Clever Buying, and they are rapidly being adopted by many local authorities around New Zealand. The pleasing effect is that unsuitable suppliers are unlikely to bid; and those suppliers that are well suited have the transparency and understanding they need to put forward as compelling a case as they can, to win the contract. On the flipside, we’ve seen some organisations releasing RFx documents to market using these templates with almost no customisation. The worst offenders have released a mishmash of confused instructions and irrelevant questions – needing effort on both sides of the procurement table to deal with extra Notices to Tenderers and Clarifications, which adds unnecessary time and cost to bidding. 6. Litigation and court cases In February 2017 we saw the country’s largest bribery case conclude and two prison terms handed down; and several months later a supplier won a legal challenge to a council’s tendering processes. Both are sobering lessons for local authorities to get their processes and their paperwork right – and for tenderers to make sure they’re also playing by the rules. 7. Continued use of online response platforms More and more government agencies are now using online ‘portals’ to manage their tenders. Their advantages include that they provide a convenient audit trail for recording the submissions received; reduce the chances of a tender getting ‘lost’; eliminate geographic barriers that impact on tender delivery timeframes and costs; and enable streamlined communications with suppliers. While online submissions reduce costs associated with graphic design and printing of bids, there’s a catch for tenderers if they haven’t taken the time to prepare properly and
There is likely to be a hiatus in infrastructure construction while the new government assesses priorities and goes through the extensive detailed feasibility and planning processes that are needed in the lead-up to breaking ground. understand what’s required before uploading their response. Many tenderers will be familiar with RFTs which limit the number of pages in the Non-Price Attributes section of a bid. In some online portals this goes a step further with very tight restrictions on character count. At its strictest, we’ve seen a 2000-character limit per question. In this situation, every word counts. For bid managers, the time required to distill responses down to essential but compelling content can often be underestimated. It’s no easy task, and for those that are facing a tight deadline and trying to get on with their day jobs, it’s another hurdle to overcome.
A look ahead to 2018: in a word, politics The key question on everyone’s lips is what will the new Labour government mean for tendering in infrastructure (and other sectors)? A shift away from Roads of National Significance projects in favour of public transport links and housing, via KiwiBuild for example? At the time of writing, there is still much discussion about various infrastructure projects – but the new government has indicated a preference for diverting funds into light rail (with the $1.85 billion East-West Link being a casualty of that decision). Rail to Auckland airport appears to be a priority; and rail to Northland and/or moving Auckland’s port are also currently being debated. Although those all may well be worthy projects, a re-prioritisation on infrastructure projects would be a case of ‘back to the drawing board’. There is likely to be a hiatus in infrastructure construction while the new government assesses priorities and goes through the extensive detailed feasibility and planning processes that are needed in the lead-up to breaking ground. In the interim, the announcement of increased investment in our regions will be welcomed by many. This brings consideration, though, of how the substantial funds to be invested regionally will be prioritised; and what will be done to ensure those funds are spent wisely. Many smaller provincial towns and regions struggle to attract and retain procurement professionals; so we hope our new government will underpin their regional investment initiative by supporting development of procurement skills in those areas. CP
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Connecting construction with technology JIM FRENCH, HEAVY CONSTRUCTION SPECIALIST, TELETRAC NAVMAN
Productivity gains through embracing technology to improve efficiency is the way of the future for smart contractors. WE ALREADY HAVE the technology. The next step is putting it
all together. Technology that was only possible in science fiction films is common and completely normal nowadays. We use highly sophisticated technologies on a daily basis, without much thought. Treadmills monitor heart rates through handle bars, cats and dogs are tracked by microchips, and cars have reversing cameras, remote keyless systems and adaptive cruise control. What this means for construction is that much of the technology that will be commonplace is already available. We will increasingly see the adaptation and combination of current technologies to specific industry needs. Individual technologies will be brought together into singular solutions.
Biometrics for security and safety Biometrics are a key technology for tracking employee time, controlling access to sites, and for monitoring worker wellbeing. The UK and EU are driving the trend of biometrics use in construction, as Europe has a tighter regulatory framework governing how its construction workers are controlled, compared to other regions. Large scale projects are the starting point of this technology’s use in the industry. The 2012 Summer Olympics venues in London took around 81,000 workers five years to build. With multiple access points and various subcontractors, the planners developed an access control system powered by biometric hand reading technology to secure the worksites.
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In terms of safety, we’ll see biometrics being used to monitor machine operators to create a full profile of that person. Cameras that monitor for rapid eye movement alongside joysticks or handles that measure pulse, much like those on treadmills, will create a real-time health profile of the operator. The profile can be used to alert managers when an operator is showing signs of fatigue or stress that could lead to accidents. In a similar vein to child locks on appliances, machines will have a biometric testing of the operator to ascertain that they are fit to operate before allowing the machine to work. Biometric technology has been developed and implemented for years – it’s more mission possible than mission impossible. It has reached a point of affordability and reliability, and will disrupt industries like construction. According to research company Stratistics MRC, the global Biometric Technology market is predicted to grow from US$3.24 billion in 2016 to around US$12.22 billion by 2023.1
Peer-to-peer contact The connectedness of technologies will enable better communication between workers on a site, making the site safer and more efficient. Machines and vehicles will use technology such as GPS tracking and radio-frequency identification (RFID) to gain a greater spatial awareness of the other bodies on site. Collisions and accidents can be reduced by smarter peer-topeer connectivity. For example, drivers of large, heavy vehicles will be alerted to smaller vehicles approaching or operators exiting their cabs.
The real-time information feeding back to the site managers and the surrounding workers will drive efficiency within the industry, as managers will no longer have to make multiple radio calls to know who and what is ready for a task. Asset tracking is a major use case for RFID. Using tags on underground pipes for gas, water, internet cabling and electricity means that they can be easily located in future – saving time and reducing potential damage. A large-scale construction project in Western Australia used RFID tags on tools, materials and components during construction to better manage and track the project and the resources.
All the information in one place This year Teletrac Navman, CCNZ and Contractor magazine conducted the New Zealand Construction Industry Survey to gauge attitudes of industry peers on a wide range of issues. Investing in technology to measure and monitor daily performance was seen as a key opportunity by 38 percent of respondents, along with 20 percent noting new design and build technologies and modelling. The respondents highlighted a range of different technology they used on a regular basis from project and fleet management, to machine control and guidance, to financial management. With the integration of multiple technologies and staggering amounts of data, the software will become more sophisticated. Managers will need to review and analyse both historical and real-time data into one central portal. Data from operators, machines, vehicles and external sources like climate monitoring services will integrate to create a highly in-depth overview of a work site. How will the growing interconnectedness of technology further change and affect the construction industry?
Projects become more predictive As the wealth of historical data builds up for the industry, the ability to predict details around a future project will become accurate and streamlined. Businesses will be able to analyse data from previous projects to make estimates on timing, resources needed, costs and more. These data-driven predictions will be used to draft effective project proposals for large projects and give greater visibility into the planned project and costs. The data will further aid businesses in their management of projects from planning right through to completion.
Collisions and accidents can be reduced by smarter peer-to-peer connectivity. For example, drivers of large, heavy vehicles will be alerted to smaller vehicles approaching or operators exiting their cabs. New jobs and skillsets required Technology changes the careers available in all industries and construction is no exception. The wealth of information produced by monitoring technology is just white noise without the correct management and analysis of the data. Which means that new jobs will be created to interpret data, and we’ll also see current jobs needing different skillsets based around the technology that needs to be used and understood in their role. There is a sense of hesitancy around automation; people are concerned that jobs will be lost to machines. I think the direction towards semi-automated machinery and remote control is a more likely scenario than total automation. The applications of automation will change the job skills required and improve the safety of operators. For example, instead of placing the operator in the cab of a heavy excavator on a steep hill, the operator will be on site at a distance using remote controls to complete the task. The human component is still needed, but the process eliminates the risk to operator safety. Look at the technologies that you rely on every day. These were not around 50 years ago, or even 10 years ago in some cases. The future trends are continuums from where we are now. The focus will be on the adaptation of existing technology to address business needs and the connecting of sites, fleets, personnel and assets. CP
Reference: 1. Statistics MRC. (2017). Biometrics Technology Global Market Outlook (2017 - 2023). Gaithersburg, MD, USA.
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Skill shortages – we have been there before ALAN TITCHALL, MANAGING EDITOR, CONTRAFED
AS JASON WALKER, managing director, Hays New Zealand iterates in his Perspective on page 38 the industry’s swelling staffing gap is a major concern. With more than $125 billion of infrastructure works planned, he says, professionals are needed as vacancies soar across the country’s civil market. And this year our country faces its biggest ever infrastructure and housing programme, which will add significantly to staffing requirements. However, it’s not as if this country hasn’t faced this challenge before and the first skill crisis came after our first Governor William Hobson, had the task of choosing a capital for the colony in 1840. He picked a site on the edge of the Waitemata Harbour and called it Auckland – payback to George Eden, Earl of Auckland who, as First Lord of the Admiralty, had given Hobson his commission as captain of HMS Rattlesnake. He urgently need skilled labour to build houses and he was up against stiff opposition. A year before, in 1839, the privately chartered New Zealand Company had made large land purchases around the Cook Strait. From the start of 1840, waves of British settlers came ashore at Pito-one (Petone) and built a settlement in the south-western end of Port Nicholson harbour they called Britannia. Later on that year the company directors changed its name to ‘Wellington’ in gratitude to one of their big supporters back home, the Duke of Wellington. Hobson and the free colonists in the south had already clashed. Before Hobson declared sovereignty over this country on May 21, 1840 the Wellingtonians had formed a republican
council. Hobson had it disbanded by force. Later he sent agents down to Wellington to poach skilled settlers to build his capital. After the New Zealand Company protested to Hobson’s superiors, he recruited housing builders from Australia. There hasn’t been much love shared between the two cities since, nor between private contactors and government agencies such as the NZTA when it comes to poaching skilled staff. We had another huge skill shortage in the 1970s during the Government’s Think Big projects. My dad, a manager with the Ministry of Works, was on the Tongariro Power Scheme back then. Living in Taupo and driving to work at the southern end of the lake, he used to pick up every hitchhiker he could and asked them if they had any skills he could put to use on the scheme. He found quite a few engineers that way. Even today, many industries, such as hospitality, are very reliant on young tourists coming here on one-year working holiday visas. When you look at the current skill gaps we haven’t got a lot of options. It is not sustainable to offer more remuneration; recruiting from overseas is up against competition from other countries with better employment conditions; it’s a bit late to start promoting the industry to young school leavers; and investing in apprentices is a long-term solution. That leaves us with the old Kiwi art of people poaching, and upskilling and making better use of the resources you have. And maybe you can pick up that young backpacker ¬– they might be just the person you need for the job? CP
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