Construction Strategy Group supports new rules

Construction Strategy Group supports new rules to help construction companies

Auckland, 29 September 2019 –The Construction Strategy Group (CSG) which represents a broad spectrum of leading companies across the construction industry sectors says that the 4th Edition of the Government Procurement Rules (https://www.procurement.govt.nz/procurement/specialised-procurement/construction-procurement/) which become operative on 1 October is a good example of the step towards collaborative working between Government and the construction industry to ensure better financial robustness, resilience and better practices including managing risk across the sector.

The Construction Procurement Guidelines were originally released in 2015 and have been updated following consultation with key industry organisations including the Construction Strategy Group. The 4th Edition update includes providing guidance related to the broader outcomes work programme, moving away from the primary focus on lowest cost and targeting new ways to promote better cultural, social, economic and environmental outcomes.

Gary Walker, the Chairman of CSG says he is pleased that the new approach to procurement better represents the views reflects the views of CSG and industry input over the last 18 months with the Ministry of Business Innovation and Employment (MBIE) to develop a more robust set of rules and guidelines.

“CSG members provided input and expert opinion to MBIE and it was clear that behaviours like passing on risk to those least able to manage it and an obsession with awarding contracts based on the lowest price led to the poor wrong sort of outcomes including project collapses which ultimately benefitted no one.”

“No one wants or expects to see corporate failures during a time of a building boom. When Llowest price and the unfair allocation of risk have been the primary are some of the main reasons that causing construction companies have failed. Entering into to agree to enter contracts where you they know they will lose money on or undercutting competitors just to for the sake of secureing work is not sustainable so wethen we knew it was time for major procurers to change their behaviour,” says Walker.

Walker adds that the Construction sector needs to promote and support a more robust and resilient vibrant industry where long term goals which ensure financial sustainability of companies together with the wellbeing of workers was fundamental.

“A ‘broader outcome model’ is much more likely to deliver the built environment with the quality infrastructure it deserves as well as promoting allowing for more trust and transparency in contracts which everyone can understand and benefit from. The Importantly the new rules mean that the ‘whole of life’ of a construction project is considered and not just the set upset-up costs. This gives a much better perspective to the long-term value of building projects correctly and with promotes the right approach from all parties at the beginning.”

The new Construction Procurement Guidelines now also require government departments to consider other factors when awarding contracts including the level of governance over a project, what degree of skills development and training will be delivered and if sustainable building practices such as using sustainable materials and minimising waste are included.

ENDS

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