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The KiwiBuild Unit will be looking for a different approach from developers – one which might save costs, accelerate timetables, or make greater use of prefabricated and modular building methods

KiwiBuild – building on your proposals and making it work for you – By Duncan Halliwell and Joe Bergin

Last month, the government’s first round of invitations to participate on the KiwiBuild ‘Buying off the Plans’ initiative (the ‘KiwiBuild ITP’) closed after its release in early May.

This was the first of what are anticipated to be a number of rounds, or, as the invitation documents suggest, what might eventually be an open-ended submission process moving forward where qualifying developments can be submitted at any time.

With that in mind, and with more time to prepare for the next rounds, here are a number of important policy considerations and observations for those interested in participating to consider in order to stand out to the KiwiBuild Unit (currently a division of the Ministry of Business, Innovation and Employment, but from 1 August the responsibility of the new Ministry of Housing and Urban Development).

Development credentials

With the KiwiBuild ITP came a breakdown of the weighting that the Ministry of Business, Innovation and Employment will be applying to various criterion when scoring responses: 

The most significant single score is for the ‘respondent credentials’. The specific questions that fall under that portion of response set high financial and experience expectations which fall broadly into the ‘make’ or ‘break’ categories.

If prospective future applicants do not consider that they have adequate coverage in this area, then the KiwiBuild ITP does accommodate consortia or joint venture bids.

The message here is to check that all the boxes are ticked and that robust partnerships are established early with the right mix of market experience, funding and demonstrable good character.

Innovative building focus

The press releases and commentary accompanying the KiwiBuild ITP use the term ‘innovation’ liberally and without making it all too clear precisely what fits within its generally broad definition.

From the context, the logical interpretation is that the KiwiBuild Unit is looking for respondents to identify ways in which they can drive greater efficiency in the construction and product supply chain, or present a different approach which might save costs, accelerate timetables, or include novel urban design responses that achieve more vibrant neighbourhoods.

The other clearly implied answer to what kind of ‘innovation’ the KiwiBuild Unit is looking for is that of greater use of prefabricated and modular building methods. In his speech to Prefab New Zealand’s annual CoLab event this year, Minister for Housing and Urban Development Phil Twyford said that without prefabricated building methods, the KiwiBuild programme could not be delivered.

Use of innovative techniques is a core component of the ‘proposed solution’ score and so deploying it adequately critically impacts on a third of the scores rendered by the KiwiBuild Unit.

The key here is to show how the earlier iterations of your proposed development have been improved by the prospect of KiwiBuild support or to demonstrate how a proposed development deploys unique and/or cutting-edge construction techniques.

Environmental and building quality

The 10% ‘additional benefits’ criteria, which has the potential to be the difference between a successful proposal and the alternative outcome, is for what can broadly be called the ‘over and above’ component.

The KiwiBuild ITP states that it is the expectation of the KiwiBuild Unit that ‘qualifying developments’ will also deliver on community, social, environmental and economic outcomes – not dissimilar to the wellbeings said to underpin local governments’ powers of general competence.

When it comes down to the detail under this category, the examples that are provided are for proposals to include skills development through worker training, introducing sustainability measures that exceed the Building Code, or follow international best practice, adoption of universal design principles that allow for all-abilities access, and the ability to ‘showcase’ specific areas of practice to the wider construction sector. In general terms, this section of the score attempts to quantify the ‘public good’ elements of each proposal.

At the end of the day, when a development is already planned, introducing a number of features that respond to these ‘additional benefits’ do have costs attached to them and can chip away at the contractor margin (given the KiwiBuild price points are fixed) and add to the upfront build costs. Early incorporation can in some cases reduce the cost and compliance, but planning is key.

Overall, the KiwiBuild Unit needs to see how the houses constructed under the scheme are affordable to buy and run over the long term.

Where to next?

The next round will be unlikely to commence before the respondents to the first round have been fully examined – which at this stage is anticipated to be September 2018. From there, depending on how many qualifying developments come through the process, there may still need to be a few more yet to achieve the government’s goal of 1000 houses this year, 5000 next year, 10,000 the year after, and 12,000 by midway through 2022.

Duncan Halliwell is a special counsel and Joe Bergin a solicitor in Kensington Swan’s national construction law team; Kensington Swan regularly provides comment on the construction industry on its blog site – check out nzconstructionblog.com kensingtonswan.com

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