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The Construction Sector Accord – a high-level partnership agreement between the government and the construction industry – was launched on 14 April by Prime Minister Jacinda Ardern

New accord set to change ‘rules of the game’ in the construction industry

Building industry leaders have welcomed the signing of an agreement with government that provides a platform to reinvent the construction sector, and improve its ability to contribute to the economic prosperity and wellbeing of New Zealanders.

The Construction Sector Accord calls on the industry, its clients and the government to change the way they work together so they can jointly tackle systemic problems that have led to high-profile building company collapses, poor-quality builds and skills shortages.

“This accord provides a platform for change,” says Peter Reidy, chair of the accord development group, which is made up of construction industry leaders and which drafted the agreement with the government. Mr Reidy is also CEO of Fletcher Construction.

“The accord recognises that the way the construction industry, its clients and government have behaved in the past has created systemic problems that are having an impact on the New Zealand economy and the wellbeing of New Zealanders. It commits those working in, and with, the industry to start treating each other differently, so we can replace the current adversarial culture with one based on respect, trust and shared responsibility. We’re agreeing to uphold new standards of behaviour and to be held accountable if we don’t.”

Priority areas

The agreement was launched on 14 April by Prime Minister Jacinda Ardern. In addition to outlining new ways of behaving, it identifies priority areas for government and industry to work on, including the way government agencies ‘buy’ construction work, the need to invest in upskilling the workforce and the need for the industry to improve its financial resilience.

Mr Reidy says construction employs 250,000 people and is New Zealand’s fourth-largest employer. It accounts for 7% of GDP, contributing nearly $15 billion to the economy in 2017 – a figure expected to reach $41 billion in 2023.

However, the approach taken by the industry, its clients and government has led to systemic problems – like a focus on lowest cost over quality, uncertainty about the pipeline of upcoming work, and a culture of shifting risk rather than managing it. These, and other, problems have played out in things like construction company collapses, issues with building quality and skills shortages. They have left individuals within the industry struggling to cope with the pressure, and likely contributed to the relatively high rates of suicide and injury in construction.

“New Zealand is not alone in having these problems – these are big issues in the construction industry globally,” Mr Reidy says. “Changing that picture will require us to work together and to focus on the shared outcome we’re trying to achieve – which is a high-performing construction sector capable of delivering great homes, buildings, infrastructure and jobs for New Zealanders. This accord is a vehicle for us to start doing that.”

Second phase

The agreement will build on existing industry and government initiatives. These include the establishment of the New Zealand Infrastructure Commission, which will help improve procurement practices and will encourage long-term planning.

Mr Reidy says now that the accord has been formally launched, the second phase of work will begin – to explain its purpose and goals to others in the industry, and to encourage them to sign up.

Leaders from across the industry will also come together to start work on a more detailed plan to transform the sector and to put the accord principles into action. The plan is expected to be published by the end of 2019. Information about this second phase will be sent to industry participants soon. The group will also work with government to define how to deliver on the behaviour and practice changes outlined in the accord.

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