Rebuild Christchurch

Rebuild Christchurch

March 25, 2014 Section D

A CITY RISES Commercial Building Cambridge Tce Tequila Mockingbird Victoria St

Tom Thumb Brewing Co Manchester St

Three years after the devastating February 2011 earthquake, a plethora of new buildings has begun to spring up in the heart of the Christchurch CBD. Over 1000 commercial buildings and 130,000 houses across Greater Christchurch were damaged by the 2010 and 2011 earthquakes. Sadly, 185 lives were lost. But 13,000 aftershocks later and after a great deal of work by the Canterbury Earthquake Recovery Authority (Cera)

Cardboard Cathedral Hereford St

and the Christchurch City Council there is now a sense of optimism that the city has turned a corner. Construction workers from as far away as Ireland and the The Philippines have come to NZ’s second-largest city to work on the $40 billion rebuild. Firms across the country are getting a financial boost by manufacturing and sourcing materials, constructing buildings and infrastructure and providing expert advice. It’s a great time to seize the opportunity.

Bridge Club Nova Place

Curator’s House Rolleston Ave

Commercial building Cathedral Square

Revival Bar Victoria St

D2

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

‘Christchurch will be a 21st century city with a beating heart; a green, connected hub in a thriving economic region.’

Gerry Brownlee

Lianne Dalziel

Roger Sutton

Ta Mark Solomon

Minister for Canterbury Earthquake Recovery ‘‘The New Zealand Government is committed to helping Christchurch and the Canterbury region reach new heights as a 21st century international powerhouse. Working in partnership with businesses, investors, and communities we invite everyone to come see the compelling opportunities available in the Garden City.’’

Mayor of Christchurch ‘‘The level of business opportunity is unprecedented in our history. We are building the newest city in the world and we invite you to be part of it.’’

Chief Executive, Canterbury Earthquake Recovery Authority ‘‘It’s extremely rare to take an established regional economy, with over a hundred years of organic growth, and have the chance to build a new city centre at its heart using best practice urban design and investment models. We are doing this. And it’s incredible.’’

Kaiwhakahaere, T Runanga o Ngai Tahu ‘‘Together we are remaking our city — in the process we are growing stronger and creating better relationships. As we look to the future we are guided by aroha ki te tangata — caring for the people. People, and our commitment to each other, are at the heart of our communities and our future.’’

The scale of what is happening in Christchurch is amazing. Nowhere else in the world is doing what we are doing The Christchurch rebuild after the earthquakes is a $40 billion opportunity that will drive decades of development and growth

Residential Commercial Infrastructure Government and community assets

D3

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Dunking the doughnut theory Fran O’Sullivan talks to Earthquake Recovery Minister Gerry Brownlee about the rebuild

Rebuild Christchurch 2014 Executive Editor: Fran O’Sullivan.

Writers: Bill Bennett, Brierley Penn, Alexander Speirs.

Subeditor: Isobel Marriner.

Photography: Simon Baker.

Advertising: Sandra Evans, Nancy Dudley. www.nzherald.co.nz

E

arthquake Recovery Minister Gerry Brownlee is up for the challenge to keep the momentum on the Christchurch rebuild going by constantly showing ‘‘flags of progress’’ because that ‘‘helps everybody keep buoyant’’.

Brownlee has crossed swords with Opposition politicians and local critics over the pace of the rebuild. ‘‘You would expect a degree of dynamic between elected people at local and central level,’’ he says diplomatically. ‘‘It would be a problem if it was not there. ‘‘It is a challenge to keep that contest in perspective.’’

The Government’s relationship with the Christchurch City Council now appears to be going from strength to strength as work on some of the Anchor projects ramps up as part of the Recovery Plan.

The Government is stumping up $481 million to build The Frame; a further $284 million for the Convention Centre Precinct and $89 million for the Avon River Precinct. Overall it will contribute $2.9 billion (including land).

But the council is taking the lead on other projects such as The Stadium ($253m); the Metro Sports Facility ($147m) and the Performing Arts Pre-

cinct ($158m). In all, council will contribute $1.9 billion.

The dollars involved are staggering.

But Brownlee cautions that getting the operating model right for some of these big-ticket projects is far more important than construction costs (‘‘once you have built it you are stuck with it’’). ‘‘You want to have usage from Day One when the doors open,’’ he says.

The Government has moved to mitigate risk by starting the operational side for the Convention Centre ahead of the build. ‘‘If they can start getting forward business or having an indication, then that will give private investors who might want to look at that site for a hotel a headsup that there is an opportunity and to come into town.’’

He says the same rule applies to the Metro Sports facility which is ‘‘probably, after the Avon River Precinct, the most important in the city.’’

‘‘It’s easy to go out and say we’ll have 10 pools and 10 courts but unless you know how it’s going to operate and what its potential cashflows are then I think you are stabbing in the dark. ‘‘One thing that happens in cities all around the world is that local authorities and governments build big projects and then ratepayers or property taxpayers struggle to pay for it.’’

Brownlee believes the city is now taking problems such as the increased vulnerability to flooding in its stride. ‘‘We’re well down the track on that to make the city a very liveable place.’’

What gives him added confidence is the increase in the number of residents in Christchurch. ‘‘Three years ago we were facing substantial depopulation in Canterbury, but the Census has shown us that far from that we’ve had a 2.6 per cent population growth.

That is 12 months ago and evidence is the city is growing at a faster rate.’’

CCDU boss Warwick Issacs has the tough job of ensuring the Christchurch Rebuild meets its deadlines. The complex role would have tested any manager. But Issacs relishes the challenge.

His CCDU team has recently run a series of workshops throughout New Zealand to alert businesses to the commercial opportunities from the rebuild. ‘‘So, if you have the economic stimulus for I believe over a decade out from the rebuild and you have an eye to the future for the economy of the region then I think that population growth will continue. That will secure the validity of the CBD.’’ To dispel any doubts, Brownlee flourishes a Cera map which illustrates the new commercial buildings springing up in the CBD as proof that the city

is not a ‘‘doughnut’’ with all the activity taking place on the outside.

Brownlee says he gets quite disheartened when he hears people say the Government doesn’t care about Christchurch. ‘‘We haven’t ‘nickelled and dimed it’ and don’t intend to,’’ he says.

He stresses that given the economic potential of the Canterbury Plains, ‘‘it is an absolute no brainer that this city has to be put back in as good a situation as possible. ‘‘I’ve had a real focus on that with other ministers on the agribusiness potential of the Canterbury plains. We have our irrigation fund. Nine of the 10 projects funded so far are out of Canterbury or South Canterbury.’’

As for business, he believes the opportunities are huge.. ‘‘You’ve only got to look at who’s operating in Canterbury and who’s coming in — particularly in services such as engineering and design.’’

It’s been a tough three years for the Cabinet Minister charged with the Canterbury Recovery. But Brownlee doesn’t believe there will be any huge change of emphasis if the Government changes at the September 20 election.

Back to business, let’s start with yours.

We’ve now got more business banking experts across the Christchurch area, including the CBD, to help businesses affected by the rebuild return to full operation.

To contact your ANZ Business Banker, please call us on 0800 269 249 or visit anz.co.nz/businessbanker

anz.co.nz/businessbanker ANZ Bank New Zealand Limited

ANZ1708NH

D4

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Into the swing of the rebuild Christchurch business is in good shape as the rebuild ramps up, says Peter Townsend

W

e are starting to see the ramp up of the rebuild in Christchurch really beginning to take effect.

The total damage in Christchurch is estimated to be $40 billion. However, that does not take into account cost escalation and betterment. Of that $40 billon, around $20 billion relates to housing damage and most homeowners as they repair or rebuild their houses are putting significant betterment into their properties.

For example significant repair of the core of the house usually results in a new kitchen or bathroom over and above the damage incurred.

Factoring in cost escalation and betterment probably means we are heading towards a $50 billion spend in the rebuild of our city.

It is a bit like tipping three years of Fonterra’s total export earnings into a population of less than 500,000. That has never happened before in New Zealand. It is probably understating it to call it the biggest ever economic development programme the country has ever seen.

After three and a half years we are about 8-10 per cent into the rebuild.

In our central city there are still a few buildings to come down, meaning that a total of 1100 commercial buildings will have been lost. Outside of the central city we have 400 commercial buildings destroyed. The key projects being attended to in the central city will cost billions of dollars and the rebuild of commercial buildings is estimated to be $10 billion.

In the core of our central city approximately 80 per cent of the commercial buildings have been destroyed. That means as we recreate central Christchurch we are going somewhere new; we are not going back to where we came from. The city is going to look different; exciting, eclectic and open.

The rebuild of Christchurch, however, will be led by housing repairs and rebuilds.

Already there are over 8000 homes with an excess of $100,000 worth of damage that have been cash settled. The homeowners now have their settlements and want to get on with rebuilding. Of the 80,000 with under $100,000 worth of damage about 55,000 have now been completed at a total cost of approx $1.5 billion. We have just under 10,000 houses that have been destroyed altogether and will have to be rebuilt from scratch. When that is combined with the numbers of people we ex-

Building numbers

3.5 8-10% 1100 $10b

years on, Christchurch is about

into the rebuild process

commercial buildings will have been lost

estimate for rebuild of commercial buildings

pect to come into our city to assist us with the rebuild a housing shortage is locked into our medium term future.

Unemployment in Christchurch is now at 3.4 per cent compared to the national average of 6 per cent. Our region has GDP growth of over 6 per cent and that is expected to increase as the rebuild ramps up. 2014 will be the year that we start to see resource constraints kicking in, in the context of human capital, materials and financial capital.

The business community of greater Christchurch is in good shape. It is an urban myth that we have lost a lot of businesses in a postearthquake environment. It is simply untrue; however the scale of the rebuild is beyond the capacity of local businesses to accommodate. We will need increased support from companies outside of Christchurch.

It is clear that we are working our way through the cascading constraints of construction. The first constraint was insurance, but with 45 per cent of house insurance now settled and nearly 80 per cent of commercial insurance claims agreed to, there is a wave of capital flowing into our economy.

The housing rebuild is expected to ramp up exponentially at the end of the first quarter of 2014 and with 25,000 having over $100,000 worth of damage and thousands of homes to be rebuilt from scratch, the opportunities are enormous. It is expected that the rebuild of commercial buildings will lag behind the housing rebuild by at least two years (apart from some streets in Christchurch which

Peter Townsend at the Christchurch Town Hall.

are already subject to serious commercial rebuild).

All of this means companies outside of Christchurch have the opportunity to make a significant contribution. From experience to date it is those companies that form collaborative relationships that make the most progress in the shortest time. Companies inside Christchurch have the ability to unlock economic opportunities and companies outside can assist those companies to build scale.

This is just starting to happen.

We should also remember the importance of our regional economy

and particularly the role that the sustainable harvesting and farming of water will play in Canterbury. Canterbury has 70 per cent of New Zealand’s irrigated land and with major schemes now in the pipeline that will increase by 100,000 hectares. This provides enormous opportunity, both in the projects themselves and in the subsequent increased wealth, that will be generated from the region in Canterbury. For the city and the region it is all about the sensible application of technology to our rebuild and to our natural capital.

We are tracking to a safe, modern,

recreated central city supported by an urban rebuild, and an already robust but rapidly expanding regional economy. The rebuild is underpinned largely by private insurance with material support from Central and Local Government in the key projects in the precincts within the central city. There is an absolute determination to make New Zealand’s second largest city one of Australasia’s best.

Peter Townsend is Chief Executive of the Canterbury Employers’ Chamber of Commerce

Let’s not go blindly into the ‘danger’ phase Dominick Stephens

The Canterbury rebuild is almost in full swing — construction work in the province is now running at 150 per cent of the peak pace reached during the mid-2000s building boom, and is still accelerating.

This rebuild is a huge task to be undertaken in a tiny economy. So it was always going to create waves.

At present the rebuild is acting like a giant economic stimulus. The influx of money from overseas reinsurers or released by the Earthquake Commission (EQC) is not only boosting the construction sector, but is percolating across the whole economy. Unemployment is falling, business confidence is at a 20-year high, consumer confidence is strong, and GDP growth has accelerated. The number of migrants coming into New Zealand has surged, and the number of people leaving the

country has fallen. All this extra economic activity has benefited the Government’s tax take, allowing it to potentially ease up on the spending side of the ledger.

This has been the ‘‘easy gains’’ phase. The economy was fairly depressed before the rebuild began, so there were plenty of spare resources to draw on — the unemployed could be brought back into employment, under-utilised machinery could be worked harder, and so on. Economic growth has been able to occur without much inflation or wage growth (aside from cost escalation in the Christchurch construction industry itself).

By our reckoning the economy and the rebuild are now transitioning to a more dangerous phase. The spare capacity has been used up, meaning further increases in economic activity are more likely to generate inflation pressures from here. Unemployment is

This rebuild is a huge task to be undertaken in a tiny economy.

Dominick Stephens

not far from its non-inflationary limit, below which wages really start to rise.

To keep inflation in check, the Reserve Bank is going to have to lift interest rates and this has already begun. We expect that the Official Cash Rate will have to rise by three percentage points over the next three years, which could take floating mortgage

rates to around 7 or 8 per cent. The Canterbury rebuild won’t be the sole reason for lifting interest rates, but it will probably be the single most important contributing factor. This serves to illustrate the downside of the rebuild. Canterbury is effectively hogging the country’s limited economic resources, leaving other regions and industries less to work with. Firms not connected to the rebuild — particularly exporters — will find they are facing higher construction costs if they want to expand, higher wages if they want to hire, and higher interest rates if they want to borrow. At the margin, some firms will find that they have to cancel investment projects that would have gone ahead had the Canterbury rebuild never happened. The rebuild will prevent New Zealand from investing as heavily in new infrastructure or export industries as it otherwise would have.

Perhaps the biggest danger of the

rebuild is that we set ourselves up for a boom/bust cycle due to overconfidence during the upswing.

New Zealanders might mistake this temporary construction boom for a new era of prosperity. Firms might base investment decisions on the rebuild economy, only to find they have overinvested for the post-rebuild world.

Employees may be surprised to find that their roles are not required when the rebuild is complete. People might overpay for assets in the mistaken belief that the economic good times will last forever. If we do go down this path of economic hubris, we may find the process of reorienting the economy away from construction more painful than it needs to be — something Australia is now experiencing as it comes to terms with the end of its mining construction boom. ● Dominick Stephens is chief economist at Westpac.

D5

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

A city shows its resilience Christchurch has learned some worthwhile lessons from the quake, mayor Lianne Dalziel tells Bill Bennett

T

here’s talk in Christchurch about the long-term legacy of the earthquake. What would be the city’s equivalent of, say, Napier’s Art Deco buildings?

Mayor Lianne Dalziel says people think in terms of assets, but she says she wants to think of a legacy in terms of the city’s future, which is why Christchurch is looking at the sensing city project — its contribution to the socalled ‘‘internet of things’’.

A ‘‘sensing city’’ means investing in embedded sensing and data collection points throughout the city as it is rebuilt. She says the council is looking at extending the network beyond the CBD over time so that, among other things: ‘‘We can measure in real time the impact of nutrients in the soil out on the Canterbury Plains. Then we can see straight away what happens when it rains. We can track parking spaces and see what effect they have on people coming into town.’’

The vision is to build a set of open source data that the world can study — it means people will come to Christchurch to test apps, ideas, concepts on a living laboratory.

To get a bigger picture view of the city’s future, Dalziel goes back to basics to ask why Christchurch exists. The main reason is its role as the service centre for what she describes as the ‘‘extremely productive’’ Canterbury Plains, with a secondary role servicing the entire South Island.

She says the region is a giant food bowl. This is important, as food and water are the most important international issues at the moment. She says this places the city as the gateway to an area with secure, safe supplies of food and constraints on water. This means it it has the potential to provide the world with answers to some of its most pressing questions. Lincoln University, the University of Canterbury and the local Crown Research Institutes all have parts to play.

The city has a coastline, it is one of five gateways to Antarctica, it is the nearest centre to an important dark sky reserve and there’s the rest of the South Island. All of these contribute to what Dalziel sees as the city’s potential to become a significant centre of excellence. And she says that means Christchurch has the ability to answer many of the questions facing other cities; not least how to bounce back after a destructive earthquake.

If one word could sum up the first

Lessons for businesses Even the best-laid business plans can fray after a disaster like the Christchurch earthquake. One lesson from the city is that business owners and managers probably won’t be able to get back into their business premises for some time after the event. Here’s how to minimise the disruption: ● Make sure you have offsite backups of all computer data. It’s no longer essential to operate onsite servers anyway ● Enable your people to work from home ● Take legal advice when you buy insurance

Lianne Dalziel believes the rebirth of Christchurch as a ‘‘sensing city’’ could be the legacy of the earthquakes.

six months of Dalziel’s term as mayor, it would be ‘‘resilience’’.

The word comes up a lot when she talks about the city. She says it means Christchurch has much to teach New Zealand and the rest of the world about bouncing back from a disaster and rebuilding a society that can take huge shocks in its stride.

Of all the examples of resilience, the most remarkable is the regional economy. Canterbury’s regional GDP barely flickered after the major earthquakes began in September 2010. Dalziel says despite the disaster the economic statistics are ‘‘in the realm of normal’’. The city’s port at Lyttelton has been upgraded and tourist numbers have improved.

Though the population has fallen in Christchurch City, Dalziel says the combined population of the three local authorities in the region, Christchurch, Waimakariri and Selwyn has remained stable. ‘‘People have simply moved to neighbouring areas, Selwyn is the fastest-growing local authority in the country’’. That process has been helped by development land being freed up for building.

Dalziel praises the Government’s employee subsidy introduced after the quake as one of the best things that

happened. This single initiative did much to help get the city’s economy back on its feet by helping small businesses keep employees on the payroll through uncertain times. ‘‘That will be one of the key lessons we can pass on’’.

Some organisations were more resilient than others. Dalziel singles out the Canterbury District Health Board, Orion Energy and the University of Canterbury as examples of those who coped well with the disaster. ‘‘They stand out for having preexisting plans, they each made a relatively seamless transition.’’

Among the failures she lists the Earthquake Commission and Christchurch City Council — she says it was the latter’s performance that prompted her to run for mayor. She says organisations that attempted to move through the earthquakes and the aftermath on a ‘‘business as usual’’ basis struggled to make sense of the way things changed around them. ‘‘There’s a need to constantly learn and change, to test new ideas and take them on board. You have to plug in to the natural responses and, where possible, make them work for you’’, she says. To illustrate this Dalziel points to the shortcomings in the response to flooding in Christchurch earlier this

month saying new lessons were learnt: ‘‘We can do better next time’’.

One lesson that rankles with Dalziel and many Christchurch business owners and managers is the way people were locked out of the CBD for weeks after the February 22, 2011 earthquake. Some companies ground to a halt because managers couldn’t access important data stored on servers inside condemned buildings.

Dalziel spoke about this with former San Francisco mayor Art Agnos when he visited Christchurch to give a talk at the TEDxEQChCh event in May 2011, shortly after the earthquake. Agnos told her the same criticism applied after an earthquake struck San Francisco in 1989.

Says Dalziel: ‘‘Authorities want to keep people out of the buildings because of the risks, but no-one understands risk better than small business owners. We need to trust them to understand the risks and act accordingly. That’s why we changed the rules.

Now we explain the risks, get people to sign a waiver and make their own decisions’’.

Another lesson from the earthquakes is that though businesses did a reasonable job of buying insurance cover, they found their policies

didn’t cover business interruption. She says that’s something companies need to plan for in the future — and take legal advice when buying insurance to make sure they are buying exactly what they think they are buying.

Almost all the necessary demolition has now been completed in the city centre. Anchor building projects are only now getting under way. This means the city still has a stark look.

There are large areas of bare land including the green frame surrounding most of the CBD. Dalziel points to developers like Antony Gough. She sees his The Terrace development as a huge vote of confidence in the city centre and says after council hold-ups, the redevelopment is now gearing up although there have been frustrations. ‘‘Capital requires certainty. There’s a sense that things aren’t joined up. ‘‘Take parking. Investors in the retail precinct need absolute certainty about the location of car parks. We need to know where we are investing our ratepayer’s money because we haven’t got our insurance settlement yet. This means we have to make decisions before we can sign off. This means we have to look at wider options and go down tracks that perhaps we wouldn’t normally choose’’.

Christchurch City’s debt is constrained — Dalziel describes the council as ‘‘maxed out’’. She says by 2017 it will be within 3 per cent of the maximum permissible. More debt isn’t an option, but there are options for public private partnerships and what the mayor calls public iwi partnerships drawing on Ngai Tahu resources. ● Updates at www.ccc.govt.nz/ bcactionplan ● Newsletter: www.ccc.govt.nz/ goahead

Christchurch joins a group of the chosen Christchurch is poised to benefit from the opportunities afforded by the ‘‘100 Resilient Cities’’ initiative after being chosen as one of 33 cities from 400 applicants to pilot the introduction of the network, ‘‘Post-disaster, the focus on resilience is a given in the hard infrastructure — pipes, roads and buildings ,’’ says Christchurch Mayor Lianne Dalziel. ‘‘But it’s not necessarily a given in terms of what makes a city a city — namely its people.’’ ‘‘The 100 Resilient Cities Network gives us a framework for combining both. When we look at pipes, buildings and roads, we can see what a more resilient infrastructure looks like — it will readily absorb the impact of a future event, maintaining essential functions and will more easily restore to full functionality. A resilient community or series of communities is not so easy to define.’’

The Rockefeller Foundation sought cities facing unique threats and challenges, from climate change impacts and natural disasters, to public health threats and housing crises. Defining resilience as ‘‘The ability of a city to withstand chronic stresses and acute

shocks while still maintaining essential functions and recovering quickly and effectively,’’ it is clear to see why Christchurch was a leading candidate. Winning cities receive membership in the 100 Resilient Cities information-sharing network, along with a $1 million grant to hire a Chief Resilience Officer and to create a resilience plan, along with tools for implementation. ‘‘The focus of Rockefeller is really to create a community of practice among cities globally around how we can improve resilience,’’ explains Michael Nolan, Technical Director of Sustainability and Climate Change at Aecom. ‘‘There may be opportunities that link cities around the world with regard to how insurance is considered, or how investment is encouraged to support resilience. It’s a very powerful programme in terms of its potential for influence, but also to be involved in that network from its first foundation group, which will expand out to 100 cities over the next few years.’’

Featuring cities ranging from Melbourne, Los Angeles and Rome, to Dakar (Senegal) and Ramallah (Palestine), the breadth of knowledge

100 Resilient Cities

Michael Nolan

Last August, the Rockefeller Foundation called for cities to apply for their new 100 Resilient Cities initiative, providing a $1 million grant to support the chosen cities in increasing their focus and activity on resilience.

The project was inspired by the increasing concentration of populations in urban areas, coupled with greater social, environmental and political instability. A hundred years ago, only 10 per cent of humanity lived in cities. By 2050, that number is poised to increase to 75 per cent.

and experience encapsulated within the participating cities is clear. ‘‘They’ve all got a different range of hazards and risks ... and they’re all at different levels of progression in responding to those, so there is good learning.’’

Nolan is confident of the benefits for Christchurch. ‘‘The programme is pioneering. It has a very good framework, very attractive financial and network support, and I think the establishment of a Chief Resilience Officer ... is a really smart way to engage and increase activity in these cities.’’ ‘‘Being part of the RC100 Network is

critical both in sharing our lessons learned and learning from others,’’ Dalziel adds. ‘‘There is no need to reinvent the wheel. ‘‘Some of the principles around building resilience are universal, even though the application may vary from culture to culture. NZ of course has devised some of the resilient technologies — e.g. base isolation — and we send Canterbury engineering graduates throughout the world. The access to international strategic partners is invaluable. Once the platform is established we will have full access to all the

tools to assist in our resilience strategy.’’

A workshop is being held in Christchurch today, bringing together key players to set an agenda for the future of the Rockefeller Foundation process in the city over the next few years.

Nolan says the workshop’s purpose is, ‘‘To get that conversation and the guidance from all different players, so that it’s very much a focus on co-creation.

We actually are not as self-sufficient as we once were as communities, nor are we as connected,’’ Dalziel says. ‘‘If we have learned anything from the earthquakes it is actually how much we can do for ourselves for a reasonable period of time depending on how quickly we can access all the resources within our own communities.’’

Nolan is confident the project has the strong local government and community support to make an impact. ‘‘There’s a really good steering committee for the project, involving universities and key players within the council and external to support this. But more broadly, there’s been a very positive response to being selected, and the benefits will flow for Christchurch.’’

— Brierley Penn

D6

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Developers working on a A wave of new bars and restaurants smack in the middle of Christchurch will be open by Christmas, thanks to Antony Gough and Nick Hunt. Bill Bennett talks to the developers bringing new energy back to the city

A

ntony Gough says as a firstmover developer he will get first pick of tenants as businesses move back into Christchurch city centre.

The bones of Gough’s $150 million project, The Terrace, are already poking out the ground. It’s an upmarket hospitality, retail and office development overlooking the River Avon.

Part of the development is in the same spot as Gough’s The Strip on Oxford Terrace. But he says The Terrace will be four times the size of the earlier project and designed for a more sophisticated crowd.

Gough says his builders tell him the first stage — exclusively restaurants and bars — will be open in time to catch revellers celebrating this Christmas. And that will see nightlife return to the city centre.

Next-door builders are laying down foundations for Nick Hunt’s Cashel Square development. Work on Hunt’s project, which shares a prime CBD block with The Terrace, is not far behind Gough’s. He says retailers will be trading in the first phase by October 2015. Between them Gough and Hunt plan to complete their projects by Christmas 2016.

Like Gough, Hunt also talks of having a first-mover advantage.

Both say they see a strong demand to be back in the centre. Hunt already has commitments for 11,500 square metres of office space— there are reports of a government department

Antony Gough beside the bones of his new development. He says the first stage will be open in time to catch Christmas revellers.

PIcture / Simon Baker

moving in. He says well-known names are penciled in against many of his street-facing retail sites.

Gough says he can put names against 80 per cent of his space.

On his list is Westpac. The bank has taken the upper levels of The Terrace for a banking chamber, which Gough says, resembles a big cafe more than a traditional bank branch.

He says having first choice of tenants is one advantage of being ahead of the pack. Another is that making an early start means you get to set some of the ground rules and continued on D7

Biggest supporter?

We continue to back Canterbury every step of the way - here’s how we’ve been helping: • Giving over $2 million to local community organisations through our Canterbury Care Fund • Opening a 2600m2 Business & Community Hub, giving people the technology that businesses need to function - free of charge • Working with Lumley Insurance to be the first major NZ financial institution to break the insurance deadlock for new residential builds in Canterbury • Making Canterbury a priority by bringing the latest in banking innovation with our St Martins HelpStation branch • Committing to moving more than 450 staff back into the new Christchurch CBD by mid 2016 • Providing more banking centres for Cantabrians – our next centre opens in Rolleston in May 2014

Go to westpac.co.nz/canterbury to find out more Westpac New Zealand Limited.

D7

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Xmas present for the city continued from D6

standards as investors move back into the CBD. You also get to set the tone.

The pair are banking on the city returning to life — something that’s still not necessarily a given.

Many of Christchurch’s retailers and hospitality entrepreneurs have decamped for the suburbs and are doing fine. In fact, it is said more people work in hospitality in the city today than before the 2010 earthquake. If they are working in that industry, few are in the city centre, where at times it can be difficult finding a cup of coffee.

Gough is optimistic the suburbs will lose their attraction once the centre warms up and its magnetic pull returns. He points to the huge city centre office developments springing up along the banks of the Avon within walking distance of his development, saying people working there will want somewhere to go after work. He also talks of the enormous amounts of money coming in to the city. ‘‘There are a lot of well paid people in town for the rebuild. They work hard, they have loose wallets and they eat out a lot. If Aucklanders are thinking of expanding, they might want to consider that.’’

Hunt is equally confident. He says the Restart Mall — a temporary retail centre immediately next to his site — has given people a taste of going back in to the central city: ‘‘They like the open-air feel. We’re going to give them the same feel.’’

Hunt says as many as 1500 people will be working in the offices on his site. A further 1000 or so will be in Westpac office next door.

If that’s not critical mass, one side of his retail development is directly opposite the Ballantynes store — a major drawcard — while the other side faces hotels and Cathedral Square.

Both CBD developments are designed to be airy. Gough and Hunt stress they are not using all the space but want to let light and air in. The Terrace will feature two stories of bars and restaurants connected on both levels. There is a central lane open to the sky. Cashel Square will have an open lane, covered arcades, and a large central courtyard.

Much of the city centre rebuild is financed by insurance money.

Gough says there’s talk of $30 billion of identified insurance funds entering the city. However, he says

that is only the start and as much as $60 billion is earmarked for the rebuild. In his case he says he is spending three times the amount he received from insurers and his new development amounts to four times as much space as his previous CBD holdings.

Much of the extra money pays for the additional engineering required to meet new building codes. Gough talks of steel wires with springs so buildings can move, and of low damage designs with two-way hinged joints designed by University of Canterbury engineers.

Some of the money is being spent on architectural features; Gough is determined to remake his part of the city in a distinctive contemporary style, complete with wisteria-covered walls, pickled pine claddings and folded steel exteriors.

Nick Hunt says his new Cashel Square development will have the same open air feel as the popular nearby Restart Mall (below).

A new start The iconic Re:START Mall — a symbol of Christchurch citizens’ desire to reclaim their CBD — will be around for a bit longer yet.

Earthquake Recovery Minister Gerry Brownlee says ‘‘with its clever use of brightly coloured freight containers it has become an icon for the recovery in Christchurch, a place for locals to gather, shop, and be entertained, and a very popular destination for tourists.’’

A partnership between the Crown and the private sector will ensure the mall continues operating with the use of another central city location.

The arrangement will see Re:START Mall retailers located on the northern side of Cashel Mall shift to a combination of Crown-owned and private land in the area of the Retail Precinct bounded by Oxford Terrace, Cashel St, Plymouth Lane and Lichfield St. This will allow permanent Retail Precinct development to take place in the existing mall area. The Crown is providing support for the relocation of the mall in the form of a grant of $1.27 million to the Re:START the Heart Trust. ‘‘As the new Retail Precinct develops and permanent buildings are built on space Re:START Mall currently occupies, there is a need to find a new location, and I’m thrilled the Government could play a big part in making this happen,’’ says Brownlee. ‘‘This arrangement means the mall will initially be able to operate for a year on the Crown-owned land, with potential for it to be extended to a second year.’’

D8

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Opportunities for investors T

he Canterbury earthquakes have provided an unprecedented opportunity to remake an international city.

Christchurch is a world-first combination of blue skies development in an established, redeveloped region; the chance to combine rich natural and cultural heritage, a deep economic base and best-practice 21st century urban design.

The people, industry and government of New Zealand are committed to making this happen. The unique nature of the earthquakes and the response has created an investment environment with a compelling range of ways to participate.

The Canterbury Earthquake Recovery Act provides special powers to fast-track the recovery. An enabling framework of specific planning provisions has been set up, unique to Christchurch. That includes a fiveday approval process for central city resource consent applications, as well as the Economic Recovery Programme — a strategic work programme of 20 high priority projects.

This programme aims to revitalise greater Christchurch as the heart of prosperous region for business, work and education.

Created collaboratively across organisations and agencies, the programme is about increasing investment in new activities.

Beyond Christchurch, the Waimakariri and Selwyn districts of Canterbury are home to vibrant towns and breathtaking rural working environments. The many competitive advantages to investing in these areas include skilled labour forces and cheaper electricity and other infrastructural services.

In Waimakariri, 440 hectares of land are zoned for business activity with another 17 hectares in the pipeline. More than 90 hectares of current business land is available now — in town centres and surrounding areas suitable for larger-scale activities.

The Selwyn District hosts IZONE, the largest business park in New Zealand. Selwyn also had the strongest economy in NZ according to the 2012 BERL rankings.

It is this regional strength, along with all that Christchurch has to offer, that makes the Canterbury economy the fastest growing in New Zealand.

Canterbury’s skills base is constantly replenished by world-class tertiary institutes. Innovation drives new opportunities.

Manufacturing and services sit alongside agriculture and horticulture. Transport links take goods to market across New Zealand and the world, and integrated technology platforms connect talent with information.

With historic roots in agriculture, the business base has broadened to embrace information and communications technology, food innovation, nutraceuticals, all types of agribusiness, tourism, light engineering, and niche-market manufacturing with the support of high-quality education and research facilities.

Sectors are well connected via technology platforms and highly adaptable.

The region is well-connected for goods and services. The awardwinning Christchurch International Airport runs a 24-hour international operation and is just 15 minutes’ drive from the central city. The deepharbour inland port at Lyttelton

Key Contacts Investing in Canterbury ● Christchurch Central Development Unit — the specialist unit within Cera leading the rebuild of the central city. info@ccdu.govt.nz or invest@ccdu.govt.nz www.ccdu.govt.nz ● Christchurch City Council — the city’s civic authority. info@ccc.govt.nz www.ccc.govt.nz

102 private sector sites have already been reinstated, built or are building in the city; local investors have confidence and are committing their capital; unlike the experience of other natural disasters there has not been significant capital flight.

Murray Cleverley, Cera General Manager Greater Christchurch Investment Strategy

offers marine, container and port services. Interconnected road, rail and coastal sea links fan out from the port, perfect for imports and exports.

There is ease of movement throughout the South Island for goods, through bulk freight rail and the State Highway network.

These many and varied highlights

● Canterbury Development Corporation — CDC oversees the long term economic development strategy for Christchurch, working with industries, government agencies and private sector experts for implementation. cdc@cdc.org.nz www.cdc.org.nz ● Canterbury Employers’ Chamber of Commerce — CECC works nationally to ensure a strong, networked business environment , providing business advice, support and services. info@cecc.org.nz www.cecc.or

of Canterbury’s economic landscape means there are opportunities for investment across all areas, but most excitingly in the unprecedented CBD redevelopment.

For developers, there is land to acquire or lease, and for investors the ability to fund new development outright or in partnerships.

And for retailers there is excellent choice of location, with the ability to target their own preferred market.

The development of the CBD is such that the compact core gives close contact with office workers, the transport hub, inner city residences and sports facilities.

The first port of call is Cera’s Investment Facilitation Team.

Cera works collaboratively with all relevant central and local government agencies, as well as economic agencies and the private sector.

The aim of the Investment Facilitation Team is to provide information on investment opportunities, identifying who potential investors should be connected with, making introductions and connections, removing roadblocks, providing one point of contact across multiple agencies and relationship management.

Early engagement will include connecting with existing Canterbury businesses or well-informed agents or presence on the ground, understanding normal business conventions apply, attention to detail of procurement processes, grouping and developing before opportunities are formally in the market and looking at what will work for the private sector.

It is the silver lining of a devastating and tragic natural disaster, but Christchurch is now a land of opportunities. As a great place to live, work and play, the region offers many ways to prosper. Investment is welcome, businesses thrive, and there is a vibrant workforce holding advanced skills across diverse sectors.

Young and committed, with a highly collaborative culture, Christchurch’s emerging leaders want to help build the future.

D9

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Unity will build confidence

R

ebuilding Christchurch is New Zealand’s biggest-ever construction job. The Government has estimated the cost at $40 billion — two thirds of which will be borne by private insurers and investors. For Christchurch to fulfil its potential and become a dynamic vibrant city there needs to be the right conditions for private investment to occur and thrive.

Entering the next phase of the Christchurch rebuild, it will be essential the Canterbury Earthquake Recovery Authority (Cera) and the Christchurch City Council work closely to effectively execute shared common goals underpinning the rebuild. Consensus on key projects, how to deliver them and effective and transparent communication with the private sector will be essential to attract and maintain private capital and experience through the rebuild process.

The new council has publicly stated several priorities. These include meeting the needs of the people, ensuring the financial strength of the council, catalysing growth in affordable housing and fixing transport issues. The upcoming announcement of the Christchurch Housing Accord is an example of the Council and Cera collaborating and bringing to the private sector an opportunity to participate in the delivery of infrastructure that meets the core needs of Christchurch residents.

However, Cera’s special powers will expire in two years and it is not yet clear what approach or role central government will take in Christchurch over the longer term. A number of the anchor projects underpinning the rebuild are yet to come to market and will not be completed within that timeframe. In the absence of certainty, it may require a stronger voice from council to inform the

Karen Silk, General Manager of Westpac Institutional Bank, is well placed to understand the challenges and opportunities of the Christchurch rebuild given her responsibility for managing Westpac’s relationships across the infrastructure, property development and investment and corporate business sectors private sector and community of the roadmap ahead.

Some investors and interested parties looking at the rebuild from afar have criticised a lack of progress in implementing the agreed blueprint (in particular the procurement of the anchor projects). Though there may be some justification in their viewpoint, they may not be aware that other similarly critical work has occurred across the city. This includes residential housing repairs, horizontal infrastructure repair and replacement, implementation of region wide land use master planning, acquisition of land to facilitate implementation of the CBD blueprint, and even the work continuing through the Canterbury Water Management Strategy.

Looking forward, a platform is needed that enables the acceleration of procurement and execution of the anchor projects and drives investment into high-needs areas such as new large scale housing projects and retail and commercial developments in the CBD. Westpac was the first corporate to formally sign up to a return to the CBD (as an anchor tenant within Anthony Gough’s ‘‘The Terrace’’ CBD development). We are very aware of the challenges that developers/investors and tenants are facing in making decisions to commit to the CBD, when faced with escalating land prices, construction costs and rentals. Given these challenges, we believe that Gov-

ernment and council will need to continue to focus on tools to assist the redevelopment. In addition however there is also a need for pragmatism and a long term approach to investment by the private sector if the new Christchurch CBD is to achieve the standard outlined in the CBD blueprint.

Westpac is regularly engaged with local and offshore investors and suppliers considering Christchurch rebuild opportunities. There are several challenging themes that consistently emerge for private sector participants when considering opportunities in Christchurch: ● Scale — the opportunity pipeline for infrastructure investors, developers, and builders across Australasia is

The blueprint ... should always be considered a living, working document that can adapt as the rebuild of the city gathers pace and the community continually reassesses its needs and desires.

the highest it has been for the last decade. As a result the ability to attract innovative investment into Christchurch is facing competition and therefore only projects of sufficient scale and quality will be able to attract that capital. ● Procurement certainty — both domestic and international parties that may consider bidding on Christchurch projects will have a focus on return versus risk. Bidding processes, whether for ‘‘public private partnerships’’ or government procured ‘‘design and build’’, are long and expensive processes. To be comfortable in deploying people and finance to fund these bid processes, the absolute requirement is certainty of the procurement process and the capability of the procuring agency to execute.

To date, key projects that have been signalled and brought to market in Christchurch are yet to reach execution — perhaps reflecting overly ambitious timelines. The private sector is signalling that in future it will require greater confidence in timelines, process transparency, consistency in information flow and, most critically, demonstrable ability to execute on procurement, to be willing to invest the time in assessing and bidding for these projects. ● The future — any new investor to Christchurch is aware that asset liquidity in market will be constrained by size. So while project scale

will attract developers and contractors from offshore, the size of a project may potentially dissuade end investors who need to ensure that secondary market liquidity is available. Understandably, end investor focus has therefore been on existing Cantabrian investors and new parties that are prepared to adopt a substantially longer term investment horizon.

Canterbury’s recovery is complex due to the technical issues, social impact, and the number of governing and procuring agencies involved.

There is a need for a greater unified governing overview as well as assurance of professionalism in procurement, execution and communication if the private sector is to maintain confidence in participating in the rebuild.

The blueprint created the basis for strong master planning and community engagement, but it should always be considered a living, working document that can adapt as the rebuild of the city gathers pace and the community continually reassesses its needs and desires. However, any change also needs to reflect consensus in governance and procurement and needs to be clearly signalled to the market. Where information gaps are allowed to exist, markets will inevitably seek to fill those information gaps themselves and create their own certainty where they can. Such outcomes can lead to erroneous perceptions such as ‘‘the rebuild has stalled’’, ultimately leading to poor private sector engagement and diversion of investment funds elsewhere.

Westpac is committed to the Christchurch rebuild. As construction activity picks up the next phase is an exciting one. If the right conditions are created for Government, council, procurement agencies and the private sector to work together then the enormous potential of the Christchurch rebuild will still be realised.

D10

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Second wave of staff shortages What effect is the Christchurch rebuild having on the job market? Bill Bennett talks to the recruiters

‘‘I

t’s not rocket science to know that we are short of tradespeople and construction professionals in Christchurch’’, says Randstad general manager Penni Hlaca. ‘‘What isn’t well known is that there’s a lot of business-as-usual going on in the city and employers are finding shortages in many areas that aren’t normally a problem’’.

Hlaca puts this down, at least in part, to people switching to more lucrative work options. To illustrate she says university students who might once have found part-time employment working in bars are now earning better money labouring on construction sites.

She points out information technology, warehousing and distribution as areas with shortages and says there’s a huge, unmet demand for skilled salespeople: ‘‘Sales and marketing are among the most sought-after categories.’’

Brannigans’ partner Nick Carter echoes Hlaca’s comments about business-as-usual and staff retention.

His company specialises in executive recruitment and human resources consultancy. He says Christchurch is seeing its second wave of postearthquake recruitment. ‘‘After dealing with the immediate impact, employers are now focused on filling the gaps at the coalface.’’

One of the hottest areas for executive recruitment in the city is in professional services. Carter says there’s a need for lawyers, accountants and finance experts.

He says there’s also an unmet demand for skills across most of the South Island’s rural belt. That’s only partly because Christchurch is sucking in regional talent. This is particularly acute in the dairy sector with large dairy groups competing hard for talent. There’s a need for skilled hands-on workers, but even experienced truck drivers are in short supply.

Hlaca and Carter both say retention is a challenge. In the executive sector that’s partly about carrying out regular salary reviews. Carter says though that might be an annual exercise in normal times, under current Christchurch conditions it needs to be more frequent.

At Randstad Hlaca says she has seen employers offer silly money, especially for construction professionals, and that some semi-skilled workers have done well in the recent past but that things have flattened out.

She says turnover rates are high by the city’s long-term standards and with local unemployment hovering

Penni Hlaca (left) and Nick carter (below left) believe retention is a key issue facing Christchurch employers.

Work it out

3.8% % 41 % 63

unemployment rate in Christchurch

of NZ workers intend to look for a new job this year

of those want to move to advance their career at around 3.8 per cent it becomes more important to keep people.

Carter agrees: ‘‘A lot more companies are waking up to retention as an issue. It’s putting inflationary pressure on wages, but there are other ways of keeping people; investing in leadership development courses; giving greater responsibility and moving people up. The simple matter is that people already inside a company tend to be better than bringing people from outside.’’ Fast-tracking promotion is made possible because many companies in Christchurch are going through a rapid growth cycle as the city rebuilds.

Accelerated promotion also works as a drawcard. Hlaca says: ‘‘Someone sitting at a desk in Auckland might

have to wait five years before there’s a promotion slot to move into. They may find there’s a vacancy at the next level in Christchurch they can move into and advance their career.’’

She points to a recent Randstad World of Work report which found 41 per cent of New Zealand workers intend to look for a new job this year.

Of these, 63 per cent say they want to move to advance their careers.

Hlaca says that’s good news for Christchurch employers, but there’s more to it than a one off step-up, She also says the experience taking part in the city’s rebuild is something really special to put on your CV that may pay dividends for years.

Carter says companies often underestimate the role their culture

plays in staff retention. He says his business has HR consulting clients that want to better understand their culture. They are asking questions like ‘‘what do we stand for’’ or, more importantly, ‘‘what do our employees think we stand for’’?

Hlaca says low unemployment rates means people are getting jobs who might have struggled to find work at other times. She says that in the past, Christchurch employers have taken a conservative approach to hiring. They were inclined to shy away from workers from different cultures or from certain age groups.

Much of that is breaking down.

At the same time, local bosses are more open to using part-timers to fill gaps. These can be older workers who don’t want to work a full week or it could mean mothers with family responsibilities.

Beyond those sources, employers are looking further afield. That means the North Island, Australia, Asia and even Europe. Hlaca says there are many overseas New Zealanders looking to come home. A particular source is Australia — now that country’s economy is winding down, there’s something of a reverse tide of transTasman migration. And then there are the Irish, British and Filipino accents turning up on worksites across the city.

Some of these groups, especially young men without families, are transient. Hlaca says they are here for a purpose and prepared to work hard,

but they may not stay long-term.

Even more transient are the backpackers pouring into the city to fill temporary vacancies for a matter of months.

Helping Carter to find the right migrants to fill local gaps is Glenn Davis, who is in charge of New Zealand Skills In Demand’s Christchurch operation. The business works to place skilled migrants from Britain and Ireland in New Zealand — at the moment that mainly means Christchurch.

Davis says there’s a certain kind of migrant who slots quickly into New Zealand. They have done their homework and may have previously visited the country. In many cases they may have a New Zealand partner. Davis says he is mainly looking for people who plan to settle here.

He says his strategy with overseasborn migrants is to sell New Zealand first. That’s relatively easy, but once they are interested, Christchurch is then often in their sights.

Hiring talent from the UK can fill some short-term gaps, but Davis says he prefers to take a long-term view and sees his role as opening up a recruitment pipeline to deliver skilled people over the next five to 15 years — which he says is how long local executives expect tight labour conditions.

All three mention accommodation as being a barrier for inbound workers. That’s hardly surprising in a city where many local residents still struggle to find adequate housing.

The good news is that just as employers are more flexible about who they employ, workers are more flexible about where they live. Christchurch people are not generally known for long-distance commuting, but for people from more crowded home nations, an hour-long drive into town from a neighbouring community is rarely an issue. On the flip side, Hlaca says employers are learning to be more flexible about starting times.

Despite the earthquake, Christchurch is a relatively easy sale to certain types of migrants. Hlaca says: ‘‘Everyone has their own story, but you hear talk of being able to go to the beach in the morning and ski in the afternoon. I hear many talk of it being a great place to bring up kids’’.

It’s easy to dismiss the lifestyle story as just marketing, but Carter says he also finds the word crop up when talking to candidates. He says it applies as much to returning Cantabrians as to people from elsewhere in New Zealand or from overseas. ‘‘The city has a magnetic pull, one of our biggest strengths is that people decide they want to live here’’.

Work flows from good relationships Invercargill-based Nind Electrical jumped at the opportunity to establish local operations in Christchurch and secure work in the rebuild by leveraging existing relationships with partner firms. ‘‘We knew the opportunities were there, but the timing for any move into Christchurch was critical because the rebuild took some real time before it got going,’’ says Nind director Steven Winter. ‘‘There had to be a critical mass of work there before it even looked like something that could work. The motivation for us going there was knowing that we had five or six clients going there who confirmed to us that they’d be interested in working together if we chose to enter Christchurch.’’

The market has been up and down says Winter, who identifies inconsist-

ency of demand as a significant risk factor for businesses working on the rebuild. ‘‘There’ve been companies that have gone broke up there in the past two or three years with the high costs needed to set up and then finding that the work was coming in too spasmodically. I don’t think we would have gone up there if it wasn’t for existing relationships.’’

Winter stresses that ‘‘keeping within our capabilities and sticking to what we know’’ is at the core of the firm’s Christchurch venture.

The Christchurch base will be a permanent part of Nind’s business.

The company is there ‘‘for the longhaul,’’ with a steady flow of work expected over the next 10 years. ‘‘We’ve built a team of 12 electricians over the past 12 months and the work that we’ve picked up

There had to be a critical mass of work there before it even looked like something that could work.

Steven Winter Nind Electrical

on has come from existing clients who we have good working relationships with,’’ says Winter.

That guaranteed work minimised the risk of entering the market that accompanied the required investment. ‘‘Some of them we still haven’t done any work for but we know that it’s coming,’’ Winter says. ‘‘Others have been pretty good particularly on the commercial side where we’ve picked up some good jobs.’’ ‘‘On the residential side which is primarily EQC work, we’ve been proactive in getting in touch with the Fletcher hubs and we’re doing EQC work for three or four hubs around the Christchurch area.’’

The Fletcher hubs oversee reconstruction and repair work throughout the rebuild area, where teams of building managers and advisers assess and co-ordinate work.

‘‘What we’re doing there is inspections initially and then coming back later, sometimes as long as 12 months afterwards, when the work which has been agreed on is coming through. ‘‘We haven’t ventured into the big government projects or anchor projects at this stage because I personally don’t think we have the capabilities to handle that size of work on our own.’’

Continuing to partner with larger organisations and getting work within those big projects is certainly a possibility for Nind as they continue to grow their Christchurch operations.

But the growth will be monitored and restricted, as it would be funded completely with cash flow instead of utilising debt finance to curtail the risk of growing too big too fast in Christchurch.

D11

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Plan for coming constraints The impact of the rebuilding of Christchurch will be felt nationwide

Sinead Horgan says normal bankimg rules might not apply when dealing with businesses rebuilding in Christchurch.

A

cause Christchurch’s need is ramping up just as Australia’s economy is ramping down. ‘‘We’re going to see a large migrant flow. The key is making it easy for migrants to move here. ‘‘That also means finding accommodation for them. We’ve noticed a trend for ‘tradies’ to fly in to the city from the North Island to work for just a few days at a time. ‘‘Once you have staff, you need to treat them well. If they get the impression they aren’t valued, there are plenty of other employers to choose from.’’

Business constraints r Employment It’s not just a question of finding the right people, there’s also the question of keeping them.

Building Supplies The city is drawing on the entire South Island with many suppliers running close to capacity.

Cash ‘‘I have all our best minds thinking about how to free up working capital’’.

Horgan says there is also a constraint on the supplies needed to fuel the rebuild, especially with building materials.

The city is drawing on the entire South Island with many suppliers running close to capacity.

A number of North Island businesses are already setting up to service the city.

Cash is Christchurch’s third looming constraint.

Horgan says the issue for businesses in the city is that often they are growing faster than their ability to finance their growth.

(4196)

s Christchurch gets back on its feet, BNZ Canterbury and West Coast managing partner Sinead Horgan, says business owners need to prepare now for inevitable constraints.

Horgan says after three years of planning and reflection there’s a citywide mood that ‘‘now is the time to get on with the job’’.

Though the rebuild is most visible in the central business district with city centre developments now getting out of the ground, crews are everywhere with projects covering industrial, commercial and residential construction. ‘‘It’s going to take at least 10 years and the impact will be nationwide.

Getting in early will help. ‘‘It’s not just about construction.

We’re giving advances to businesses so they can buy timber and paint, but we’ve also made loans for high visibility jackets and road cones’’, she says.

But Horgan warns Christchurch businesses will soon rub up against three constraints. In fact some may already have done so.

Employment sits at the top of Horgan’s list. ‘‘It’s not just a question of finding the right people, there’s also the question of keeping them. ‘‘The problem is made easier be-

‘‘Companies find that all the profits and cash generated from one job are often not enough to pay for the materials to work on the next job.’’

She calls this problem overtrading and says it isn’t something banks are generally geared up to deal with. ‘‘Normally we deal with term loans. Businesses come to us looking for funds over the next five, 10, 15 years. ‘‘In most cases we secure loans with assets. None of this works in Christchurch at the moment. ‘‘We hear from companies that need loans over, say, 10 to 30 days.’’

BNZ has mandated Horgan to be as flexible as possible with businesses facing these conditions and that means relaxing some of the normal banking rules.

It also means less bureaucracy than normal.

She says the BNZ has lined up its resources and told bankers working on the ground they are able to make on the spot decisions about finance: ‘‘When necessary we can make decisions about business finance on the day’’.

She says as far as the rebuild is concerned, the policy is nationwide.

So these looser rules apply as much to companies in, say, Rotorua wanting to sell products to Canterbury as much as to local firms.

To cope with the additional workload BNZ has increased the number of staff in Christchurch — many of them in specialist roles.

There are business specialists, private banking specialists, property advisers and others. ‘‘I have all our best minds thinking about how to free-up working capital’’.

Wherever you are, you can play a part in the regeneration of Christchurch.

The Christchurch rebuild will play a major part in this country’s future, generating jobs and opening new doors of opportunity. At BNZ Partners we’ve made it easy for your business to get involved. We’ll put you in touch with our team of experts who’ll remove the uncertainty of doing business in the city and help you overcome any challenges.

To talk to our experts in Christchurch, contact your BNZ Partner or call us on 0800 273 916.

D12

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Business – better than usual A once-in-a-lifetime opportunity to be part of the central Christchurch rebuild is available right now.

25,000

2,000

8,000

Government office space in the core of the city

Jobs provided by local and national government

People employed in the Health Precinct

m2

1,100

$ 40billion

Staff in the Justice and Emergency Services Precinct

Investment opportunity

Opportunities abound.

To take part, contact us: investchristchurch@ cera.govt.nz +64 3 352 0636

Central Christchurch Anchor Project sites Private Sector sites

designedbyinsight.com

CERA077

Over 100 private sector sites finished or underway

Follow the progress at: progressmap.ccdu.govt.nz

D13

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

S

tudents are back in force at the University of Canterbury.

Earlier this month the university announced an increase in first year enrolments.

Almost 10,900 equivalent full-time students have signed up to study in 2014. The number of full-time students is up 3 per cent on last year.

Engineering is proving particularly popular with first year enrolments up 14 per cent. The enrolments are the fruit of a strategy that began within days of the February 2011 earthquake.

Vice-Chancellor Rod Carr says the undergraduates’ biggest fear is interrupting a course of study so it was important to act quickly putting minds to rest. ‘‘We were teaching within three weeks of the February 2011 earthquake. Classes took place in homes, in school rooms, even in tents.’’

Carr says his staff played an important role as the university got back on its feet. He praises them for their persistence and loyalty. Before the earthquake staff turnover was running at about four per cent, the number is the same today. ‘‘The academic staff stuck with us, they want to stay and they are hugely engaged with their research and teaching’’.

That persistence doesn’t just apply to the staff. Says Carr: ‘‘We graduated our largest graduating class in 2012.

They were the students who stuck it out and completed their programmes of study’’.

In the first quarter of 2011, Carr spoke to the student body saying: ‘‘Trust us, we will deliver you a full academic programme this calendar year’’. He admits that at the time he didn’t know exactly how the university was going to do that with closed buildings, students in tents and so on.

But he says ‘‘we knew that was what we had to do. And we did it.’’

The university was well-prepared.

An emergency operations centre had been established before the earthquakes. Carr says there had been many fail-over exercises for the various computer systems preparing for power cuts and other disruptions.

In July-August 2010, just months before the initial September 2010 earthquake, a training exercise workshopped strategies for coping with the effects of a major earthquake on the nearby Alpine fault — previously thought to be the biggest risk to the city.

Carr says this meant the university worked through questions like ‘‘what do we need to know’’ and ‘‘how do we activate the emergency operations centre’’.

When the September 2010 earthquake hit it caused relatively little damage to the campus, but it acted as an effective trial run to test the strategies. Carr says the campus closed for two weeks — but that proved to be relatively difficult on an open site. One of the lessons learnt from the trial run, was the need for closed signs and barricades to put across the roadways accessing the campus.

Another lesson was that when power failed, the electronic doors across the campus opened by default.

University learns from its lessons The University of Canterbury was well-prepared to deal with the 2011 earthquake. Bill Bennett talks to the vice-chancellor

We were teaching within three weeks of the February 2011 earthquake. Classes took place in homes, in school rooms, even in tents.

Rod Carr

This allows people to get out quickly and safely but leaves a security problem with buildings and equipment unprotected. ‘‘We learnt a whole bunch of things that we were then able to activate in February,’’ says Carr. So though the February 2011 events were traumatic across the city, they were by then ‘‘somewhat routine’’ on campus.

Shortly after the February 2011 earthquake, the University Council delegated authority to Carr as the single decision-maker. They effectively said to Carr, ‘‘Stop doing everything else, focus on whatever is needed to protect the university so long as it is within the law.’’

This shortened the lines of communication and meant decisions could be made quickly leaving debate for later.

The physical damage to the university’s Ilam campus was rela-

tively slight. Carr says no buildings fell down; there were no fires on the campus and no injuries. Since the earthquake four buildings that were not worth remediating have been demolished and a total of 50,000 square metres of space have been remediated. ‘‘We’ve spent about $200 million of insurance money so far’’, he adds.

By March 2014, there were 11 active construction sites on the 76-hectare campus. Within four months of the February 2011 earthquake the university had built 16,000 square metres of new teaching space on land that was previously athletics and rugby fields. Over the following summer an additional 60 beds of student accommodation was built in just three months.

When the university closed in February 2011, it gave students the option to study elsewhere for a semester.

Tertiary numbers

10,900 3% 14% $200m equivalent full-time students have signed up to study in 2014

increase on last year

rise in engineering enrolments

of insurance money spent by the university so far

Carr says this was partly in response to an offer from the University of Adelaide which said it would teach up to 500 students free for a semester: ‘‘All you have to do is get them here’’.

He says 172 students went to Adelaide, but they only had five days to prepare. This meant they had to be a New Zealand resident holding a passport and ready to get on a plane.

Any courses were recognised and cross-credited. Oxford University saw that and took a further 38 undergraduates and 10 postgraduates. Carr says negotiating these kinds of arrangements during a crisis is hard, but having them in place is sensible.

If he could do things again he’d have more of these agreements in place before an emergency.

Things are more nuanced for postgraduate students. Though many of them are independent enough to move around quickly, many lost six months or more of their work because experiments were interrupted.

This in turn meant negotiating additional funding for the students.

The university has since attracted considerably more postgraduate students wanting to study the effects of a major earthquake.

Christchurch Mayor Lianne Dalziel singles out the University of Canterbury as an institution that showed resilience in the face of the earthquakes. She says the university stood out for having a pre-existing plan that meant a relatively simple, although not painless, transition through the crisis. Carr says part of this has been learning that ‘‘institutions like ours have had to become more flexible and responsive. In our case that has seen us put the student at the centre of our endeavour rather than at the periphery’’.

Though 2011 was mainly about coming to terms with what happened and thinking about immediate survival in the wake of a disaster, by 2012 it was clear the university needed government support. The quid pro quo for additional resources meant changing the focus of the university.

Carr says the Government initially wanted the university to focus more exclusively on science, maths and engineering. He says there is an acceptance that this is what the University of Canterbury is known for. But what is less well known is that these three disciplines only account for about 40 per cent of students. ‘‘For many of the disciplines outside science and engineering, the university is in the top 100 worldwide: education, law, history and geography among others.’’ Many of these drive applications from overseas.

Significantly, that world-class reputation for engineering has been strengthened since February 2011.

In terms of global rankings, the university has dropped from 212 to 238 in the QS World University Rankings, but it is still number three in New Zealand and just outside the top 10 for Australasia.

Carr says 16 University of Canterbury disciplines rate in the top 200 globally and the College of Engineering has gone from somewhere in the 50s, to number 19 in the world today.

Dairy boom helps boost confidence Bill Bennett

ASB Bank’s rural general manager Mark Heer says while investment activity in Christchurch is ramping up after a post-quake pause, things never really slowed down in the hinterland.

He says although it took a long time to get under way, there’s been a noticeable lift in confidence in recent months. ‘‘People are getting comfortable, critical decisions have been made, business owners are signing leases.’’

It’s not just the bank’s customers.

Heer says ASB Bank recently committed to a major new city centre regional office on the corner where Colombo and Hereford Streets meet Cathedral Square. The bank is due to move around 100 employees into the new premises in early 2016. He says the

bank’s decision is an example of renewed confidence in the city.

The wider ramp-up means ASB has poured resources into the region. ‘‘With increased activity coming on-stream, we’ve needed to put more skills in place to meet the demand from Christchurch businesses. That means commercial bankers, corporate finance, property finance and asset finance specialists’’.

For the most part the additional staff have been pulled from other parts of the country. ‘‘There’s a mix of existing staff and new people — there’s an element of New Zealanders coming back from overseas,’’ says Heer.

The bank has had little trouble getting people to move to the region.

Some look forward to the challenge and want to be part of the reconstruc-

Mark Heer

tion effort while others see it as an opportunity to advance their careers.

Much of the confidence in Christchurch is based on the dairy boom

across the region. Although country areas shook as much as the city during the earthquakes, Heer says production wasn’t affected. ‘‘While there will always be exceptions, in general rural Canterbury wasn’t heavily impacted by the earthquakes. The key infrastructure on farms — mainly milking sheds — was largely unbroken. The farming sector, sheep, beef, dairy and cropping has continued more or less as it was doing before the earthquake’’.

Overlaid on this is what Heer describes as a realignment of farming in the region, with farms being converted from beef and sheep production to dairy. Economic factors have played a part: the milk payout levels have remained strong during this time, commodity prices in general are strong and interest rates are still low by historic

standards. And there has been good luck. ‘‘It also helps that in general the climate has been favourable; there was some snow and wind, but not enough to affect dairy production’’.

This all adds up to reasonably prosperous times ‘‘inside the farm gate’’.

That has a flow-on effect in the wider community. Dairy farming is more labour intensive than other production — farmers need help with milking. So the average number of jobs per farm has been steadily rising from the one or two on sheep, beef or cropping farms to three or four people.

There are also more jobs in processing and distribution. Dairy means more trucks on the roads, more containers through the port, more air freight. And the increased use of technology creates more employment.

D14

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Putting the pieces back Fletcher EQR director Michelle Creagh talks to Alexander Speirs about the huge repair job

‘‘T

his is unlike any other project we’ve ever done,’’ says Michelle Creagh, Managing Director of Fletcher Earthquake Recovery. ‘‘It’s not something that New Zealand has experience in dealing with — earthquakes of that magnitude let alone the rebuild required.’’

Getting the repairs programme started and under way was one of the most difficult challenges faced by Fletcher. The scale of the operation was the first task to overcome.

Once Fletcher was announced as the successful project manager for the Canterbury Home Repair Programme, a number of people were seconded from other activities. ‘‘That was a challenge in itself really, to extract resources from any operation has a cost to that operation, but of course it was all necessary,’’ says Creagh. ‘‘Our intention has always been to make sure we have local Cantabrians working on the programme because I think that’s helpful in terms of their commitment to the project and it is certainly something Fletcher as a brand can be seen giving back to the community by creating jobs. ‘‘A project team was created and outside people were brought in just to get it moving. You start in a place where you’re in crisis and the priority is managing day-to-day issues after earthquakes, which is far different from where we’re at today.’’

From there it has evolved substantially over the past three years.

So far 52,000 substantial repairs, 48,000 emergency repairs and 19,000 chimney replacements (which in many cases is a heat pump installation) have all been completed.

Says Creagh: ‘‘Because of the nature of the programme and how it’s been planned and delivered as it’s progressed, one feature has been that targets have evolved. We know where we need to be and we’re managing to those targets.’’

When it first got under way, the project was estimated to entail 50,000 houses at $25,000 a repair.

But the rolling aftershocks took a toll and the workload escalated to be possibly as high as 100,000 houses at $35,000 each.

Creagh says there were further challenges as EQC had to assess the claims, match claims to eliminate duplications and figure out which claims need to be settled in alternate ways. ‘‘The need to move as quickly as possible while also delivering on quality, and the need to ensure that the money and resources available to the programme are used with care were both challenges,’’ Creagh adds. ‘‘These are major priorities that homeowners, workers, taxpayers and the other stakeholders in the programme expect to be delivered. ‘‘As a company we have needed to work with other entities — particularly our client EQC — each of which has its own challenges and priorities.

It has been a unique experience for all concerned.’’

Environmental factors contributed to uncertainty, making the ability to adapt integral to the success of the

We’ve got about 20,000 houses to do between now and the end of the year. We know where we need to land and we like that number.

Michelle Creagh, Fletcher EQR

project. The team was already dealing with continuing aftershocks prior to the second major earthquake. ‘‘It was definitely compounded by the February 2011 quake, which obviously magnified the damage and the social stress,’’ says Creagh. ‘‘They also created a massive requirement for emergency repairs and particularly for the repair or replacement of chimneys, often through the installation of heat pumps so people wouldn’t go cold over winter. ‘‘Both of these were major programmes in their own right.’’

The significant resources required for those projects meant substantive repairs didn’t get under way until late in 2011, because of the compounding effect of the February 2011 earthquake.

Creagh indicates that because Fletcher EQR was up and running quickly, it didn’t face too much competition for resources such as skilled tradesmen. ‘‘I don’t think there’s been too much competition as we’ve been by far the leaders in terms of getting out and getting started. The other project offices weren’t under way and we were able to attract some highquality resources.’’

Some roles were more challenging to fill and these extend to today with very specific roles are required as the end of the project nears. continued on D15

Safety drill There has been a concerted drive to improve the health and safety culture for contractors and tradespeople working on repairs to Christchurch homes damaged by the earthquakes.

Fletcher EQR and EQC committed substantial resources to improve the safety performance of the residential construction and repair sector. The sector has a high proportion of small and independent contractors, many of whom had not previously worked under rigorous safety controls.

Many had a low perception of risk, aversion to investment in safety and a low acceptance of compliance measures.

The programme has targeted a long-term behavioural change and shift in attitudes towards safety.

Among measures: ● An initial review of safety performance as part of the accreditation process ● Mandatory project and safety inductions for contractors ● Compulsory engagement of safety specialists to ensure standards are met ● Compulsory safety courses for contractors ● Compulsory safety inductions for contractor staff ● Preparation of a Site Specific Safety Plan for each repair contract ● Preparation of a Task Analysis where a specific danger exists.

These measures are supplemented by frequent communication on risks, incidents and other topics of relevance to staff and contractors. A separate agenda which focused on six potentially fatal risks — known as safe6 — addresses: ● Falls from height ● Working in confined or restricted spaces ● Electrical danger ● Using motor vehicles ● Personal threat ● Asbestos exposure,

D15

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

together continued from D14

‘‘Some of the subcontracts are becoming more challenging as the market starts to pick up, but we’ve managed ourselves pretty well in that area. In fact, one of the significant benefits around the project has been our ability to manage inflationary pressures — and that’s been a success story for the whole community.’’

Holding inflation was seen as a major achievement, as there was a risk for there to be an inflationary creep in the labour market if a programme like EQR didn’t emerge. ‘‘We’ve got the right people in the right place at the right cost, which benefited against inflationary labour pressure.’’

The Canterbury Home Repair Programme is set to wrap up at the end of this year, with an estimated 72,500 homes having been repaired. ‘‘We’ve got about 20,000 houses to do between now and the end of the year. We know where we need to land and we like that number,’’ says Creagh.

The hub-structure EQR implemented has been a major factor in the programme’s success. ‘‘There’s nothing globally that we’ve seen that we can compare this to. It’s a model that has worked here,’’ says Creagh. ‘‘There would have been no other way to manage a project of this scale.’’

There are now six area-specific hubs with an average staff of about 120 each. Six months ago there were as many as 21 smaller hubs but a ‘‘mammoth’’ restructuring has seen them compressed. ‘‘Over time they’ve certainly be-

come far more consistent in the way in which they’re managed and deal with the homeowners,’’ says Creagh. ‘‘It requires suppliers to think differently about what some of the solutions might be in terms of even thinking about fixing housing stock.

I think Christchurch certainly has some stories to tell about innovation

Fletcher EQR ● Fletcher EQR won the tender for the Canterbury Home Repair Programme, which is responsible for managing the repair of properties where the damage falls between $15,000 and $100,000. ● Fletcher EQR, a business unit of New Zealand’s largest listed company Fletcher Building, was established following the September 2010 Canterbury earthquake. and adaptability.’’

As a secondary benefit, Creagh points to the visible presence of the hubs within the community being a positive. Those affected by the home repair programme are able to talk with someone and find out how their own situation is progressing. ‘‘The real story is that the various challenges, along with the extraordinary volume of work put in place, have been met through the efforts of dedicated people who wanted to make their contribution to putting things right after the earthquakes. ‘‘The goodwill and co-operation of others particularly our repair customers has been a critical element.’’

Michelle Creagh Michelle Creagh came to Fletcher EQR in early 2014, taking over from David Peterson.

Previously she was General Manager of Fletcher’s Golden Bay Cement, the country’s largest cement manufacturer. ‘‘This is my home town so this is really important to me personally. But really it’s no different from running any other business because the same principles apply, there’s just

If you have one of us, you get all of us

different challenges to work through operationally and then some of the strategic challenges which may arise. ‘‘Every day is different. There’s never a dull day. We’ve got highly committed individuals here and I’ve been really impressed by that. The number of people who are fully engaged and want to deliver on the commitments we made is really positive.’’

Creative people striving together to transform our world

Our 300 people based in Christchurch are backed by a 3000-strong global team of engineers, architects, planners, project managers, valuers, costmanagers, scientists, software developers, surveyors and management consultants.

That’s a lot of skill, talent, connections and experience to support your next project.

www.beca.com

D16

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

From survival to opportunity ANZ’s Fred Ohlsson explains how banks are assisting SMEs to gear up for new opportunities; how they see commercial prospects and why they are supporting the city’s growth

Business owners tell us the experience of facing up to and overcoming the challenges has left them stronger and better able to respond to future shocks.

T

wo years ago few could have predicted that confidence among Canterbury’s business community would now be at historic highs, well above the national average.

At that time many business owners were on their knees. Like others in the quake aftermath, they were in shock and dealing with unthinkable challenges in their personal lives. For many, their ability to do business at all came to a shuddering halt: many lost access to their business premises, customers or key staff and were staring down the barrel of business failure.

As bankers we know, because many came to their business banking manager for help to get them through.

The need was so great that ANZ alone ended up helping nearly 3000 Canterbury retail and business customers with several hundred million dollars in deferred loan payments and interest-free overdrafts.

Canterbury’s business community showed remarkable strength and resilience to get through that period, but the environment has remained challenging. Many families and businesses are still affected by earthquake impacts, and the recent floods in Christchurch have presented yet another test.

But the flood response was also a reminder of the community’s ability to deal quickly and effectively with adversity, to support each other, and get on with what needs to be done.

Business owners tell us the experience of facing up to and overcoming the challenges has left them stronger and better able to respond to future shocks.

The mood among business owners has moved from survival to opportunity. Small firms in Canterbury, in particular, lead the country in confidence and there is evidence this optimism has now spread to the rest of the South Island, according to ANZ’s Business Micro Scope survey. The survey results are well supported by what we’re seeing on the ground. And it’s not just emotional resilience behind this growing self-belief. Business owners are placing a real focus on business continuity and putting in place practical measures to equip their operation for future shocks.

Many are diversifying income flows, widening the geographical spread of their customers, and reducing their reliance on physical premises by embracing technology and

Fred Ohlsson

lifting online sales. As a result of these changes and the step-up in reconstruction, the prospects are strong for a vibrant, diverse and flexible business market in Christchurch, which is not only ready for future risks, but better equipped to take advantage of new opportunities as they emerge.

Let’s make no mistake, the opportunities, and the challenges, are immense. Apart from the enormous residential rebuild, two-thirds of buildings in the CBD before the quakes will not be there in future. The Christchurch rebuild is the largest infrastructure event in New Zealand’s history and a major reconstruction project on a global scale.

The impact of the rebuild will be felt way beyond Christchurch. The city is home to the South Island’s busiest port and airport, and is the tourism gateway to the South Island.

The region makes up half of the South Island economy, and 12 per cent of national GDP. What happens in Christ-

church matters to New Zealand.

Along with other major New Zealand corporates, we and our staff have been an integral part of the Christchurch community for a long time — in ANZ’s case, for more than 150 years. As New Zealand’s largest bank, with an extensive network of branches, staff, and customers across Canterbury, we’ve felt a particular responsibility and commitment to the region. We were proud to be the first bank to get a full service branch back into the CBD and are working on a new branch in Northlands Mall. We’re continuing to look at other locations as opportunities come up and are relishing the chance to bring our wider team back into the heart of a renewed CBD as soon as we can.

To help meet the growing demand from Cantabrians starting and growing businesses, we’ve boosted our business banking team to more than 70 staff.

A dedicated migrant banking team

is working with the growing numbers of immigrants — particularly from China, Korea, India and the Philippines — who are arriving to play their part in the rebuild.

These are exciting times for business owners, but times which in their own way call for care and expert support and advice.

Though the majority of businesses have become more agile it remains imperative that owners have strong plans in place to cope with uncertainty, to be nimble and ready to adapt to future changes.

The rapid growth of trades firms driven by the construction boom presents its own challenges. Businesses that once employed a couple of tradesmen may now employ 30.

These businesses have a new way of operating and the owner’s role is now much less about using power tools, and more about marketing, managing people and cashflow.

We believe this is a key reason we

are seeing unprecedented demand for our free business education workshops covering these and other key business topics. Investing in your own growth and development as a business owner is critical to long term success.

Recognising the need for more experts to support the rebuild, ANZ now also has specialised teams in residential construction, commercial developments, and trade and contractor support, all based in Christchurch.

Bankers will continue to play an important role in helping business owners through the transition and developing skills. But, ultimately, it is the remarkable people and business owners of Canterbury who are continuing to adapt, grasping the opportunities and taking the region towards the future it deserves. ● Fred Ohlsson is Managing Director Retail & Business Banking, ANZ.

A lot to offer: Christchurch, Canterbury and beyond Connections Government offices, professional firms and world class retail: All your business appointments are within a 10-minute stroll

● Central time from the city centre

Transformations Movement and change come via world-class education and research, specialised manufacturing and of course, Christchurch Airport

● 15 min

Heavy Lifting Commercial towns thrive throughout Canterbury, partly because Lyttelton Port’s been operating for 125 years

● 30 min

Growth Canterbury has 70 per cent of New Zealand’s irrigated land.

There are agriculture, horticulture and viticulture opportunities

● 45 min

Tourism Opportunities abound for adventure or for beauty and solitude

● 2 hours

Discover Lord of the Rings territory amid glaciers and mountains. From the shores of Lake Tekapo enjoy some of the best views in the world.

● 3 hours

D17

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

A way of keeping in touch W

Gabriel James

hen it comes to information communication technology, the cultural sector is leading the way with a new Christchurch initiative exemplifying how Kiwi innovation can create inspiring new ways to digitally connect a city.

Designed by the exhibitions division of the Gibson Group, TouchCity allows people to explore the past, present and future of their city on massive touchscreen walls. ‘‘Basically it is a data visualisation software platform that allows both tourists and locals to navigate through a 3D-like landscape of a city at the touch of a finger,’’ says Brett Tompkins, Exhibitions Producer of Gibson Group.

The technology originated from a project the company did for the city of Copenhagen (see picture) and they are currently building a version for the city of El Paso in Texas. There are versions in development for other international sites, but what really excites Gibson Group is the opportunity to install one closer to home. ‘‘It would be great to continue to innovate with the platform and develop new capabilities specific to the rebuild of Christchurch’’ says Tompkins.

The interactive platform is scaleable and mobile, with content able to be constantly updated and connected citywide to community projects and current events; it seems to tick many of the boxes for a city in transition. There has been interest from both local and central government, along with several city councillors and local cultural and tourism organisations.

So what does it look like and what can it do?

What strikes you first is it’s not a website. Instead the user encounters what Gibson Group call a ‘‘City Scape’’, made up of thousands of historical and contemporary images harvested from local and national digital archives.

Each image and its metadata are stored in a database and rendered real time into a graphical interface of the digital city that users can navigate and explore with their fingers.

The result is a spectacular visual experience that links time, place,

GETTING READY TO REPAIR YOUR HOME? If you’re having your home repaired through the IAG / Hawkins Programme there are a few things you could do now to start preparing.

These six handy tips from IAG Earthquake Loss Adjuster, Ant Mellon are designed to reduce pressure at decisionmaking time.

TO FIND OUT MORE, VISIT: IAGCANTERBURY.CO.NZ

Having a sponsor who understands and is committed to the digital world and the connections it can offer would be an obvious a fit.

people, events and themes together into a visual amalgam, based on their location in the city.

Users can then open each image and discover layers of information and associated image albums.

It is socially interactive too.

Cameras and pop-up keyboards allow users to contribute their own stories, including uploading their own images to the digital city. They can take a snapshot of themselves

inserted into the city and instantly share it to social network sites or email as a digital postcard. These sorts of features are popular with tourists as it allows websites and messages from the digital city to be incorporated into digital postcards and emailed around the world.

Tourism and city organisations can communicate civic issues and promote current events through the platform too. Images, animations and widgets can all be linked to third party websites, such as christchurch.com and bethere.co.nz, which the visitor can interact with on the wall, right down to making reservations and bookings. It can link to other content on the anchor projects, or display live data from initiatives the such as the sensing city that the visitor can provide feedback and comment on.

Gibson Group is looking to partner with other technology developers to build more features and value into the platform, says Tompkins. ‘‘There is a lot of activity with local people working on mobile, data collection and digital modelling projects that we could join forces with. We are interested in talking with potential partners about projects’’.

Government agencies such as Callaghan Innovation are well positioned to support these sorts of innovative projects, but corporate sponsorship can also play a significant role, says Tompkins ‘‘Having a sponsor who understands and is committed to the digital world and the connections it can offer would be an obvious a fit’’.

ANT’S TOP SIX PRE-REPAIR TIPS:

Make/McCarthy/IAG TIP1 Mar 14HLD

1

2

Before your repair begins your Claims Case Manager will ask you if you have a builder you’d like to use.

Doing some thinking ahead of time will help to make this decision easier. Start by having a look at the list of repair builders at iagcanterbury.co.nz.

Think about whether you’d like to make any changes or alterations to your home at the same time as your repair. You might even want to have a chat to your bank, so you know how much you can borrow and what’s possible.

3

4

Work out what kind of accommodation you’ll need during your repairs, and have a think about your contents.

Will you take your belongings with you or put them into storage? Thinking about this early can help to relieve pressure at decision time.

Do you have any pets?

Start thinking about whether you’ll take them with you, have someone look after them or put them into a boarding facility.

5

6

If you know your home will be repainted as part of the repair process start thinking about colours! You might even like to drop into a paint shop and grab some testers.

Start jotting down any questions you’d like to ask your loss adjuster and builder at your first onsite meeting.

YOUR HOME YOUR COMMUNITY OUR JOB

D18

Rebuild Christchurch

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

The future Don Miskell tells Fran O’Sullivan that the aim is to make Christchurch a friendly, safe and liveable city

D Above and below: The Health Precinct will help in establishing the structure that will add to an accessible, green and vibrant city.

Above: Living space in the city. Below: Te Papa Otakaro — the Avon River Precinct.

on Miskell is relishing the challenges posed by delivering on the highprofile anchor projects that will underpin the Christchurch CBD’s future.

Miskell — general manager (planning & design) at the Christchurch Central Development Unit (CCDU) — was a key leader in the design of the ground-breaking Blueprint for the CBD. ‘‘It is a living document,’’ he explains. ‘‘People have called me a ‘keeper of the faith’. But it is not a blind faith. It is the guideline and you tweak it to keep it real.’’

Already the Blueprint is being tweaked to create some upmarket residential housing within the East Frame, which was originally targeted to allow the central business district to expand as the city grows. ‘‘Inner-city residential is one of the big changes we are looking to make happen,’’ says Miskell. ‘‘Empty nesters like myself would be able to take advantage of the opportunity to walk to work, enjoy hospitality and cultural events.’’

CCDU is targeting 1500 new residents — a significant increase on the 4900 central city residents recorded in the last Census. Miskell says the residential development will be over the road from the Christchurch Club.

It will include an open space of 40-50m wide (‘‘wide enough to feel welcome and also narrow enough that you can overlook it and feel a sense of ownership’’).

The Avon River Precinct (already under way) will provide 3.2km of world-class urban waterfront with a continuous promenade for walking and cycling.

Meanwhile a consortium will soon be awarded the contract to design and build the new Convention Centre on ‘‘one of the best sites in Christchurch’’. It will be in the heart of the city and act as a catalyst for city renewal and activation and will include a hotel and other commercial opportunities.

Right now the Justice and Emergency Service Precinct is simply a ‘‘hole in the ground’’. But it is aimed to be completed by 2017 when the lease for the current court runs out.

It will include an internal courtyard to keep out of the persistent Christchurch wind. ‘‘Taking out the wind and letting the sun in makes it a place that you want to stay,’’ says Miskell.

The stylish bus interchange will be delivered in the middle of 2015.

Miskell reckons it is a game-changer for public transport in Christchurch.

Don Miskell by the Avon River.

The real big test with all the great ideas in the world is that people actually spend their money. For every dollar that the Crown is putting in we have to make sure we are attracting 5 dollars from the private sector.

Don Miskell

‘‘It will be designed like an airline terminal, so it is modern, safe and inviting. You can have a coffee. And people can buy fruit and veges before they hop on the bus.’’

There will also be concerted effort to use design to try and avert crime in the central city. CCDU is implementing Crime Prevention Through Environmental Design. ‘‘A lot of it seems like common sense, but it is about avoiding dead ends, such as Latimer Square which is 80m wide and not well lit. There used to be a bit of antisocial behaviour occurring in the middle — drug dealing and so on. With the East Frame you can read the looks on people’s faces as to whether they are supposed to be there or not. It will be easy to get on the phone and report as there will be no nooks and crannies. The same with the bus interchange.’’

Miskell explains what CCDU is really doing is place-making — ‘‘making places where people are attracted to go as opposed to go through. We have seen other developments like

Picture / Simon Baker

Docklands in Melbourne that attracted a lot of investment,’’ he says. ‘‘But they actually created a soulless place, and now they are trying to retrofit that to make it attractive to people and connect it to the rest of Melbourne. We want to learn from those mistakes, and build in what we are calling a public realm plan which includes parks, lanes, roads and footpaths.’’

Miskell says the Metro Sports Facility ‘‘legacy’’ project will help Christchurch get back on its feet and avoid leakage of capital. ‘‘We are lucky that we have some landowners in Canterbury willing to stay and invest in the city. There are some key people who have chosen to stay here in the central city and invest and develop.’’

Intriguingly CCDU hired a designer from Docklands and asked ‘‘If you were to do it again, what would you do differently?’’

The upshot is that CCDU is now going for wider footpaths and trees.

Miskell says Christchurch will be a green city, not a cement jungle. ‘‘So let’s slow the traffic down — in the core it is 30 km/h — add in the trees, and make the pedestrian experience more safer and comfortable.’’

Miskell has also challenged the designers of the Convention Centre to come up with a great building. ‘‘We have said, ‘We have given you a great site, give us a great building. ‘‘So when people see a photo of it they think of Christchurch like the Sydney Opera House. ‘‘The challenge is give us a building that is recognisable as Christchurch, but does not turn its back on the streets or parks. We want friendly faces, we don’t want a box that turns its back on the street. ‘‘

D19

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

looks bright

The Bus Interchange (right and below), intended to deliver streamlined public transport directly into the city will be in the block bounded by Tuam, Colombo and Lichfield Streets, and SOL Square.

The East Frame (right and below) is a community centre with a large park at its heart, surrounded by a residential community of medium density housing.

D20

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Undertaking on an Epic scale A clever collaboration has brought the Enterprise Precinct and Innovation Campus to life, writes Bill Bennett

S

LI sells site search softwareas-a-service to the world’s major online retailers. CEO Shaun Ryan says his business exists because while most e-commerce sites have search facilities, the experience is often awful for customers who may then choose to buy elsewhere.

To help SLI staff keep the business’ main function in mind, a giant wall display shows a live list of the latest shopping queries hitting the company’s servers. The company is a significant technology exporter with 97 per cent of revenue coming from overseas.

Ryan says SLI has a development centre in San Jose, but he and around 75 staff are in Christchurch. Christchurch is an interesting town with a lot happening and that makes it relatively easy to recruit and retain staff: ‘‘It’s position is great, right in the middle of the South Island which is like a huge playground. Among other things we’re only an hour’s drive from ski fields.’’

Before February 2011 SLI was based in the BNZ building overlooking Cathedral Square. When the quake hit, Ryan made a video of the dust settling over the square which was used for TV news footage.

The earthquake had little direct impact on business. SLI’s customers often don’t know the company is New Zealand-based and weren’t aware of any problems. Says Ryan: ‘‘Our sales people are all located in the markets they are selling to. The New Zealand connection is something they may find out later, or not at all — it’s secondary’’.

It may have been business-asusual on the outside, but inside things were tricky. There were logistical issues with the servers and buildings. ‘‘Our offsite back-ups weren’t off site and we had difficult getting them,’’ says Ryan. ‘‘The stuff we were serving for our customers was all served from overseas and we managed to jury-rig some systems to get through those first few days and weeks. We had to go into the building with a search and rescue team to get our servers. ‘‘My brother had a factory with some space and I had a flat with some space, then we got some temporary offices for a year and a half or so. It wasn’t good, the building was dark and it leaked, but we made it work.’’

At this point Ryan began talking to Colin Andersen, another Christchurch tech entrepreneur, who was looking to bring a number of tech companies together. Previously Andersen had been involved with another group of tech companies out near the airport. Ryan liked the idea, but wanted any offices to be in town. ‘‘By definition the CBD is central and it works for everyone, it’s good for public transport and it’s a nice place to work.’’

Andersen worked with Will McLellan to create the Enterprise Precinct and Innovation Campus or

The Enterprise Precinct and Innovation Campus is centrally based, in Manchester St.

Its position is great, right in the middle of the South Island which is like a huge playground. Among other things we’re only an hour’s drive from ski fields.

Shaun Ryan

SLI NZX-listed SLI Systems has offices in California and London, but home is in Christchurch’s CBD. The company occupies much of the first floor of the two story Epic Centre on the corner of Tuam Street and Manchester Street.

Epic. Getting the Epic Centre off the ground was something of a mission.

The low-rise, CBD building houses 18 technology companies. SLI is the largest occupying much of the first floor.

It’s a temporary building, with a planned life expectancy of just five years, by that time a larger, multibuilding campus will be ready.

Ryan says it is a fantastic place to work.

‘‘Anytime there’s anyone in town or anything entrepreneurial or technical is happening, the BNZ space down below is the place to be. They hold the coffee jam sessions down there with different speakers each week. The Canterbury Software Cluster holds meetings there. It always has this entrepreneurial buzz.’’

The building had financial support from Christchurch City Council, the Ministry of Business, Innovation and Employment, and from NZTE. This made it affordable enough to make it practical.

On the outside the building is striking with black timber and neatly laid out paths and flower beds. On the inside the walls are mainly plywood — the look and feel underline its temporary nature. Ryan says it also underscores the nature of the tenants: ‘‘None of us are corporate,’’ he says. Ryan thinks it’s the best space he has ever worked in. And as for the wood? ‘‘That’s reassuring for a Cantabrian, because we know it’s earthquake resistant.’’ ‘‘Christchurch City Council has given Epic the land that the building stands on for five years. BNZ lent $4 million to build; , with the grants, we’ll get to pay off the loan in five years.’’

Ryan says SLI is expanding so quickly that it will have outgrown the space before that happens. ‘‘It’s a particular problem for fast-growing companies where landlords expect commitments for four or five years, but we have no idea how many people we will employ by then’’.

Saved by the Cloud: Computer Concepts Ltd If Canterbury businesses were wary of cloud computing, the February 2011 earthquake soon dispelled their fears. Some companies already committed to cloud computing were back in action within days, others did not fare as well. For weeks after the main earthquake the city centre was closed off with managers and business owners unable to get into offices to retrieve servers and desktop computers.

Christchurch-based Computer Concepts Limited is an IT services

company with cloud computing and disaster recovery expertise.

Business development manager Greg Urquhart says both got a workout immediately after the earthquake. He says the events of 2011 were a lesson. Since then, local companies have been signing up for cloud services out of necessity: ‘‘Today the conversations we have are not about explaining cloud computing, or if it is a good idea, but how it can work best for our customers.’’

Although the shift to the cloud

was under way in 2011, it began in earnest immediately after the big earthquake. CCL CEO Andrew Allan says: ‘‘We are deemed to be an essential service. That gave the opportunity to do things others could not, including recovering data. For 18 weeks after the earthquake we were running full time, three shifts a day. We took tapes and other data, then loaded them on to our virtualised servers.

It saved hundreds and hundreds of businesses.’’

Urquhart says there are three

reasons Canterbury businesses are drawn to the cloud. First there’s the obvious matter of business continuity; data is safer when stored remotely and redundantly in secure data centres. When you use a virtual desktop, everything can be done from a browser, you only need a PC or a phone to get access.

The second reason is that since the earthquake, companies tend to move premises more often, letting someone else look after the servers and data means greater flexibility — that’s still at a premium in

Christchurch. This comes in to play as the CBD rebuild gets under way.

Urquhart doubts many new buildings will be constructed with dedicated server rooms and he says space in the central city is likely to be even more precious in future.

A third reason for the cloud’s popularity is financial. ‘‘Cashflow is a key issue down here. Cloud computing means there are no lumpy capital expenses, just regular payments,’’ Urquhart says. ‘‘Customers trust us to contain costs.’’

D21

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

A weather eye on the economy As publicly funded work on the Christchurch Rebuild ramps up, Government officials are out to alleviate the risk of a boom-bust market writes Alexander Speirs

P

eter Cunningham is leading an inter-government agency effort to try to avoid some of the inevitable supply pinch points for labour and resources in the Christchurch rebuild.

Cunningham — Director of the Productivity Partnership Programme at the Ministry of Business, Innovation and Employment (MBIE) — is working on solutions to try and make sure costs don’t escalate to the point where they threaten the viability of projects and escalate nationwide inflationary pressures which could hammer the NZ economy.

Commercial behaviour in the Christchurch construction market before the Canterbury earthquakes was ‘‘below average’’ compared with the rest of the country, says Cunningham. ‘‘You would typically have six to seven organisations on a shortlist and you would select the contractor based on the lowest-conforming cost.

This was sometimes sub-optimal for the supplier, but they would still deliver the project without any kind of issues as well. ‘‘That’s clearly worked for decades

here and it works in a market where you’ve got typically $300-$400 million of work happening a quarter.

What we’re looking at entering into know is a phase of unprecedented forecast work in the region. ‘‘We’re looking at demand peaking at $2.2 billion a quarter and in the face of that, clearly clients cannot continue behaving in the manner they have done for decades.’’

MBIE is developing a strategic procurement programme and working with clients to enable them to increase their visibility in relation to what other comparable firms are doing, then looking at ways where they could potentially go to market together to work more efficiently.

Part of that process is sharing information, particularly around what capital works are intended by each of the clients.

The aim is to ensure they have enough information to be able to resource, plan and invest accordingly within their own organisations and supply chains. ‘‘It’s all been around enhanced visibility and trying to change the

We’re looking at demand peaking at $2.2 billion a quarter and in the face of that, clearly clients cannot continue behaving in the manner they have done for decades.

Peter Cunningham

behaviours of the clients and the way that they interact with the market and then how they procure their construction works,’’ says Cunningham. ‘‘Here in Christchurch we’ve seen a very traditional construction market where the focus is on transactions, so things would be done project by project rather than in relationships with organisations.’’

Organisations going to market together gave the advantage of scale while creating new efficiencies in supply lines. ‘‘We’ve tried to create an environ-

ment where the clients can engage more effectively with their supply chains and get value for money for public sector clients and the taxpayers dollar,’’ says Cunningham. ‘‘With that you have to improve capability in both the client organizations and with the suppliers.’’ ‘‘We’ve got close relationships with a lot of the tier one contractors and they have been receptive to different ways of delivering works and how they might get engaged earlier in the process.’’

Creating additional value is essential as the construction market moves into a new phase of the rebuild. With the sheer amount of work in large commercial projects on the horizon — particularly from the public sector, — the way contractors and clients interact is set to change.

Warns Cunningham: ‘‘At the moment the clients are still calling all the shots and it will flip this year. All of a sudden clients will be in a position where they are going out to market for projects and the number of companies responding for those tenders will start to drop.’’

Going up The non-residential portion of the Christchurch Rebuild has been progressing at around $500 million per quarter since the start of 2012. That figure is set to rise during 2014 to an average of about $750 million per quarter. By mid2015, MBIE is predicting a peak of non-residential development at around $1.3 billion per quarter which will remain above $1 billion until mid-way through 2018.

The non-residential portion of the rebuild has been progressing at around $500 million per quarter since the start of 2012, with that figure set to rise during 2014 to an average of about $750 million per quarter. By mid-2015, MBIE is predicting a peak of non-residential development at around $1.3 billion per quarter and remain above $1 billion per quarter until mid-way through 2018.

That period will see higher levels of development in the non-residential sector than at any single period for the residential sector, primarily as the government is the client responsible for the majority of work during this time.

Young guns find the silver lining W hen the Christchurch earthquake hit for some it spelled opportunity — not disaster.

Former Hawkins Construction regional manager Quin Henderson felt it was the right time to enter the market with a new firm and a new business model. ‘‘We wanted to take a different approach to contracting, based on a more collaborative and collegial approach. Our style is for the builder to work much more closely with the contractor, the consulting team and the client to come up with a solutionbased methodology.’’

The upshot was South Base Construction — a Christchurch-based subsidiary company of the HGC Group founded by Henderson and NBR- rich listers Phillip Carter and Ben Gough. ‘‘We’re gaining very good traction,’’ says Henderson. ‘‘We’ve been trading for 12 months now and have delivered $25 million in our first year and a forward work load of $60 million.’’ ‘‘We have agreements with our supply chain in Christchurch as well as further afield with our national suppliers who want to come on board with us. We’ve also done a joint venture with Thiess, one of Australia’s largest construction companies, and, we’re looking there at how we may procure ultimate supply routes for materials and labour.’’

Also establishing a presence in the Christchurch market is Ganellen, which has transitioned from being a Sydney-based business focused on private clients to a multinational corporation working primarily with institutional clients. ‘‘I was brought back to head up the development in Christchurch which was Ganellen’s first presence in the market,’’ says Michael Doig, Ganellen’s commercial director for New Zealand. ‘‘We’d purchased substantial land in the northeastern quadrant of Cathedral Square which we purchased from Fairfax Media Limited. It was part of a $140 million urban regeneration scheme that was planned. ‘‘ Ganellen was six days away from practical completion of the development when the first earthquake struck in September 2010. From 2011 onwards its the focus was the

Smart, forward-thinking developers are taking the opportunity created by rebuild to enter the construction market. Alexander Speirs talks to two ‘young guns’

remediation of the Press building so staff were able to move back into the CBD from their St. John’s office, where 350 employees were working out of 24 portable cabins. ‘‘At that stage we were a very conservative entity and our whole strategy was to prove our merits as a builder by building for our own investment vehicle, create those strong relationships with the subcontractors and consultants, then go out and win those third party contracts,’’ says Doig.

To avoid competing with core clients, all of Ganellen’s property holdings in Christchurch were sold off. ‘‘We’re now moving into other contracts and looking at new opportunities in both the residential and private sectors. We primarily focus on larger products or medium-to-high density residential projects.’’ ‘‘There’s been a lot of challenges, particularly for clients. Because of the scale of the devastation, there were real challenges to work out what type of product to build and where, and how to convince tenants to come to your property. It’s pretty easy in an operating city to develop a property because you’ve got some evidence of other buildings around, but in Christchurch the challenge that we have is exactly what to build. ‘‘The next phase of development for us is shifting, as we’ve previously been targeting what we’d term as

Above: Michael Doig of Ganellan; right: South Base Construction.

A-/B+ clients. The challenge is going to be how do you deliver affordable stock that perhaps can’t pay more than early-$300 per square metre. ‘‘If you look at the profile of the city prior to the earthquake, there was roughly 350,000sq m of space and of that only about 50,000sq m that would be profiled as A-grade. So the vast majority of the city was B & C grade properties. We’re looking for cost efficiencies in construction and innovative ways in which we can deliver to that demand.’’ ‘‘Because so much of the city’s previous building stock is gone, it’s almost like we’re trying to redefine and rebuild what the previous wall stores were — buildings that can be used for private, residential or retail purposes.’’

Doig says the market is showing signs that it’s running near full cap-

acity and everyone’s getting pretty busy through the first two quarters of this year. ‘‘The ongoing effect of that will be interesting because I don’t really think we’ve seen any real evidence of trade escalation at this point, but what happens next year could be another matter.’’

If trade escalation through to subcontractors does occur, then more national or international construction entities would likely look to enter the market as the amount of money to be made in Christchurch would presumably outweigh what is available just in their own regions. ‘‘With the commencement of government projects which is starting towards the end of this year and the insurance work around commercial entities, we’re going to see a massive escalation of labour rates and material costs,’’ says Henderson.

‘‘One of the ways to help control this is working with the client and the whole team up front. It’s around selection of products, the building itself and working out just what can be done early in the piece.’’

Both Ganellan and Southbase have found an advantage in working with a construction management model and being one of the smaller players in the market. By being able to work with contractors on a project-byproject basis it allows for new efficiencies to be created by not having any slack within the supply chain. ‘‘We are firm believers in organic growth,’’ says Doig. ‘‘We’ve been approached by entities to come and work with them based on the professionalism we’ve displayed in the market, but we’re being very careful with controlling our cash flow in a boom time. We need to expand based on the work we have coming. We don’t want to be the biggest builder in town, we just want to be the most reliable. ‘‘We’re really keen to work with the public sector. To date all of our work has been focused on the private sector because they’ve moved a lot faster, but certainly in the coming years we’re expecting a lot of work out of institutional public clients.’’

Henderson’s goal is remarkably similar.

He says that ‘‘over the next 12 months I would’ve like for us to consolidate our place in the Christchurch market and be recognised as one of the best in industry — not the biggest. We want to lead the industry in terms of safety, quality and speed and be respected for adding value to projects we’re involved in. ‘‘Through our joint venture with Thiess, some of those major projects will be targeted. We’re in a supportive roll with Thiess, but that will work out very well if it pans out. On our own we’re targeting quite a range of projects around town, looking for an ideal of $20 million-$50 million projects from institutional clients.’’

D22

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Time for new supply lines M

BIE partnership and procurement director Peter Cunningham says there is a real opportunity to test the international supply chain market as the Christchurch rebuilds ramps up. ‘‘When we do find ourselves in a situation where demand outstrips supply, to control costs we’ll either have to slow things down or create opportunities for international players to come into the market,’’ he says.

Cunningham stresses that alliancing has been done in the horizontal space depending on the size and scale of the project and the risk involved for probably the last decade. ‘‘But it’s never been done in the vertical space and we’re looking at how we might create those opportunities and supply chain alliances.’’

At the moment there is an unconstrained approach to the Christchurch Rebuild, with everyone working independently of each other. But with major organisations all looking to go to market during the same time period, they are effectively competing for the same resources. With as much as $4.1 billion of work to commence by this time next year, tendering costs alone could be as high as $50 million.

MBIE is taking a lead role in creating what Cunningham terms a ‘‘production line mentality’’ to a programme of work. ‘‘We’ve been looking at clients that have got similar types of construction where we can put those clients together.’’

Among them are organisations like the Christchurch City Council, Ministry of Education, University of Canterbury, Housing New Zealand and

the District Health Board. ‘‘You’ve got a good mix of organisations with similar construction types, if you could get those organisations working together then we could go to market in a completely different way with that group of projects.’’ ‘‘That’s a significant amount of money over a 10-year period, so you’re able then to go into the market place and look to put this together as

an alliance approach and look at four or five organisations, similar to SCIRT.’’ MBIE has created a framework agreement from organisations that have collaborated successfully, which can then be implemented in the future. One of the first agreements was between the Ministry of Education and the University of Canterbury. ‘‘What we found with them was

that they were both pretty much at the same stage, they both knew they would be competing for the same resources and saw an opportunity to go to market together for consultants and professional services’’.

Another four or five organisations that had hoped to come on board weren’t at the same state of readiness.

A common use clause built into the documentation means that if other

clients want to use what the University of Canterbury and Ministry of Education are setting up, they have that ability. ‘‘At the moment the clients all acknowledge we’re at risk of either not getting our programme delivered or being subject to significant cost escalation in the market.

What we’re trying to do is find ways to alleviate that or enable them to look at more innovative forms of procurement or delivering projects.’’ ‘‘Once the local market has been exhausted we will look for an increase in capacity potentially from the international market.’’

Some local companies have organised joint ventures with international partners, something that MBIE has been keeping tabs on. They’ve been looking to see how the partnerships are operating, whether it’s an international partner bringing their supply chains into the local market or a local company using an international partner to boost their balance sheet credibility and bid into larger projects. ‘‘What we’ve found is that there’s a mixed approach happening. Some of these international companies are coming into the market saying that they’ll use local labour, which is actually just going to compound the issue for us because it’s not solving anything and brings another tier one contractor into the market that’s going to plough into the same resource base.’’ ‘‘Others have been much more proactive in this space, bringing their supply chains over with them. Of course you have to pay a premium for that so it’s a case of being realistic about how we approach this and the outcomes which we are trying to achieve.’’

In the thick of it after the big ones struck Christchurch.

Fulton Hogan has been in the thick of the response work from those first minutes following the September 2010 quake, and everything thrown at Christchurch since.

As a family-owned business with our own headquarters in the Garden City, safety always comes first. With almost one thousand Canterbury-based people, we’re proud to help rebuild an exciting, high-resilience Christchurch.

Phone 03 357 1400 www.fultonhogan.com

Rebuilding Christchurch ! ! ! !

Building communities

! !

! ! !

Our HQ is in Christchurch We employ almost 1000 people in our region Emergency response – September 2010, February 2011 Foundation member – SCIRT Alliance – repairing damaged roads and water networks Leading aggregate supplier from our two local quarries Construction of: ! NZTA’s Christchurch Southern Motorway ! Prebbleton Sewer Diversion ! Runway Overlay - Christchurch International Airport Developing new residential enclaves at Lincoln, Longhurst and Halswell.

Our Fulton Hogan Canterbury Community Earthquake Rebuild Fund has invested more than $1 million in community projects Providing civil repair services to Canterbury insurance providers.

D23

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Quakes force policy change Leading insurers talk to Bill Bennett about the complex issues they have had to deal with in Christchurch

I

AG executive general manager Dean MacGregor says insurers have faced a number of complexities from the Christchurch earthquakes they don’t face elsewhere.

First, there are, in effect, two insurance companies dealing with each claim.

MacGregor points out the Earthquake Commission (EQC) acts as the first loss insurer. This complicates matters with the EQC paying out on residential premises claims of up to a cap of $100,000 plus GST. The policyholder’s insurance company pays amounts over the cap. Around 2500 homeowners are still waiting to hear whether their claim is over or under the cap.

Peter Rose, chief executive at Southern Response describes this two-party approach to claims as ‘‘nothing short of a disaster’’. He points to claimants disputing EQC methodologies.

New Zealand’s open-ended insurance policies are another delaying factor. In most markets houses are insured for a fixed amount. Until recently the practice in New Zealand — effectively, only in New Zealand — has been to insure for replacement to an agreed size. This means there are additional stages to the claims process that add time.

Another complication is waiting for decisions about the viability of land. The poorer the land, the longer the investigations into the need for remediation.

MacGregor says his conversations with the re-insurers confirm Christchurch is one of the most complex insurance events in recent years. It didn’t help that the city experienced multiple earthquakes and that until now the poor quality of much of the land around the city was poorly understood.

Rose shows statistics which indicate one of the biggest causes of delay is that householders believe their house needs a rebuild, when it can be repaired. This takes time to work through; in many cases it means using external advisers.

There are also problems with apartments or town houses where a number of homes are immediately next to each other or share walls and other features. Householders often have different policies and various agencies have to be co-ordinated.

Rose has a chart showing 11 different organisations, many with subcontractors or departmental lines of communications. Getting them all on the same page is far from trivial.

MacGregor says there’s little incentive for insurers to drag their feet on payments: ‘‘In fact the open-ended contracts means an insurer carries the risk of inflation; the longer a claim takes the more it could end up costing us’’. He says there are other costs associated with a delay.

Rose says the open-ended nature of many insurance policies effectively means each claim becomes a protracted negotiation.

Though that might be manageable when there are a handful of claims in progress, it has become a major stumbling block.

He says a further delay comes when householders get notification.

He says suddenly they have to make some big decisions. This can be troubling at the best of times, but many of them are traumatised, some are elderly and confused, and another group is still waiting to hear from the EQC for land value compensation.

Things are substantially different with commercial policyholders. The majority have already been paid, with claims to date amounting to more than $2 billion. Ports of Lyttelton collected $438 million, the largest

Slow progress

The open-ended contracts means an insurer carries the risk of inflation; the longer a claim takes the more it could end up costing us.

Dean MacGregor, IAG

An innovative response Crossley Gates

New Zealand’s Courts have responded with innovation and determination to the number of cases arising out of the Christchurch earthquakes.

Aware of the likelihood of litigation arising from insurance claims, the Chief High Court Judge decided to create a special ‘earthquake list’ through the High Court in 2012.

The idea behind this was to accelerate and smooth the passage of insurance litigation through the Court system. The ‘earthquake list’ is presently overseen by Justice Wylie, and is a register of all insurance litigation filed at the High Court arising out of the earthquakes.

Priority is given to urgent cases or those cases which affect many people.

The earthquake list is designed to be cooperative and productive. Each case is ‘managed’ through the High Court system, mostly via case management conferences. During these conferences, at which both the lawyers and their clients must attend in person, the Court identifies issues that can potentially be agreed upon, and also sets aside issues that need to be disputed. A trial date is fixed.

In a demonstration of just how effective this concept has been, the District Court of Christchurch, Justice Forrest Miller of the High Court and Chief High Court Judge Helen Winkelmann were jointly awarded

the Australasian Institute of Judicial Administration Incorporated 2013 Award for Excellence in Judicial Administration. The award recognised the special list established, as well as the continued work of the Court system in the aftermath of the earthquakes and was the first time a New Zealand nomination had won.

There is no doubt the ‘earthquake list’ has been worthwhile. It has served ordinary people, business people and insurers alike — and much faster than they would otherwise have seen results.

The many judgments handed down as a result of the ‘earthquake list’ cases have illuminated insurance law in New Zealand. Indeed, overseas, some jurisdictions now consider New Zealand to be leading the way in developing insurance law and the interpretation of insurance contracts.

For example, a ‘‘novel’’ insurance law issue arose out of the earthquakes after an insured building suffered repairable damage in the September 2010 earthquake, but was then destroyed in the February 2011 earthquake. It is worth observing that in many cases, the repairs from the September 2010 earthquake had not begun when the February earthquake hit.

A key insurance question was: where both events happened during the same period of insurance, could the insured party receive the cost of repairs that were never undertaken

from the first earthquake, as well as the total loss payment for the second earthquake?

No other country had faced a similar issue in a common law jurisdiction.

The case that has ensued looked to the Marine Insurance Act 1908 for guidance, and found a principle called ‘‘merger of damage’’. In a similar marine situation, the damage of one earthquake is merged into the damage of the other, producing only one payment for the total loss.

However, it remains unclear as to whether this principle applies to general insurance or solely to marine insurance. There are no cases in common law jurisdictions that address the issue.

As a result of the ‘‘earthquake list’’ fast track procedures, this issue has now quickly reached New Zealand’s highest court — the Supreme Court of New Zealand. It was argued before the court in early to mid March. The decision of that Court will be ground breaking internationally.

Thus, no matter what the outcome, the passage of this case clearly demonstrates the New Zealand Court’s willingness to quickly engage with gnarly insurance issues arising from the earthquakes.

The ‘‘earthquakes list’’ was a very suitable response to the largest natural disaster of our times in this country. ● Crossley Gates is a partner with DLA Phillips Fox

payout in New Zealand history.

MacGregor says IAG has completed about 80 per cent of its commercial claims.

Southern Response and IAG have both engaged builders to handle extensive rebuild programmes. Southern Response is close to Arrow, so close the two share a building. Rose says the relationship means his or-

ganisation can act faster and is much closer to the sharp end of the housebuilding market. He says it is Southern Response’s preference to rebuild rather than settle with a case payout.

Both insurers say they are working to speed up settlements. MacGregor expects matters to move faster now. ‘‘We’ve worked through two years of complexity. We’ve managed to re-

solve a lot of those issues and we’ve found ways to get around the roadblocks. Now we need to scale up the rebuild. Work is set to peak this year and our focus is now about moving to a conclusion’’.

MacGregor says IAG has a framework to determine which policyholders get priority. He says: ‘‘It’s based on people’s needs, we’ve

Insurance companies are still in the firing line for the way they’ve handled claims following the Christchurch earthquake. In particular there have been accusations that insurers are dragging their feet when it comes to making decisions and paying claims.

There’s little question Christchurch residential insurance settlements are slow by international standards. The Insurance Council of New Zealand data published earlier this year showed that three years after the February 2011 earthquake insurance companies have only completed 15 per cent of rebuilds. Roughly a quarter of all claims have been paid.

Compare this with Chile where 100 per cent of claims were paid two years after the February 2010 earthquake. And a 91 per cent payout in Japan after that country’s 2011 earthquake.

Many Christchurch residents question whether the insurance companies will meet the promised target of settling 90 per cent of residential claims by 2016 — that’s five years after the event.

Insurance companies respond by saying rebuilding will pick up steam this year.

Earlier this month a group of Southern Response claimants announced plans to launch a class action against the insurer arguing the company was in breach of contract.

Southern Response is a government-owned claims management operation formed after the failure of AMI. Its task is to settle AMI policyholder claims.

Chief executive Peter Rose says when the roughly $3 billion of claims are settled, the organisation will cease to exist. found most people are OK with that’’.

He says IAG is now allowing policyholders to move ahead with their rebuilds before settling EQC land claims. He says: ‘‘If remediation work is needed, we’ll get on with it by taking a deed of assignment on the land as security’’. He also says while IAG would prefer to build, he can understand policyholders not wanting to wait, so it is giving them the option of a cash payout’’.

MacGregor says IAG still has a more aggressive target of the end of 2015 to have its residential programme completed. ‘‘However that’s now looking optimistic. When we set the date 18 months ago it looked possible. Since then we’ve seen a significant rise in over-cap claims, so we may not meet the deadline’’.

The Christchurch earthquake has put an end to New Zealand’s openended insurance policies. Rose says from now on, householders will only be able to buy sum insured policies.

MacGregor says the change to sum insured will have the advantage of making policyholders aware of the need to get adequate cover. He also says that despite the negative news about his industry, the Christchurch earthquakes have raised awareness of the need for cover.

He says everyone here has always been aware New Zealand is a seismic country. So perhaps the longest lasting effect of the February 2011 earthquake on New Zealand insurance is that everyone else knows it.

Says MacGregor: ‘‘Before now we didn’t attract much attention from the re-insurance sector. Now they’re taking more notice of the country and spending more time assessing the risks. That’s likely to lead to an increase in premiums.’’

D24

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchuch

Forget the fear and live with it We have it in us to do more to be prepared, says Beca’s Richard Sharpe Richard Sharpe is sanguine about the personal risk to life and limb from earthquakes saying the really important issue is to focus on resilience. ‘‘The priority is life first, then the building,’’ he stresses when it comes to earthquake preparedness. He points out that we are living in a country which has this particular natural hazard. People need to ‘‘harden up a bit’’; not be frightened. But have it in their psyche to ‘‘do more than they are at the moment’’.

At his Wellington offices on Molesworth St, Beca’s technical director: earthquake engineering points across to the Wellington fault, which bisects Thorndon. The 2013 Wellington earthquakes on July 21 and August 16 resulted in little damage to city buildings — they were ‘‘just at the threshold level for damage of a well-constructed building’’.

But Sharpe has ensured there are bungee cords holding files in place and

all heavy items are screwed to the walls. (‘‘Bungee cords from the local boat shop, attached over files and shelves because of the trauma of stuff falling out.’’)

He says the public often asks if a building is good enough for a magnitude 7.5 earthquake. ‘‘This is a legitimate question — what would happen here (Wellington), well it won’t be pretty, as every 500 to 700 years it is thought to go. ‘‘But I would be surprised if there was large loss of life in Wellington.’’

Sharpe vividly remembers the Inangahua Junction magnitude 7.1 earthquake in 1968 (‘‘I woke up after a capping event and I was wondering what had happened the night before!’’).

But he points out that life entails other risks — like being hit by lightning or while crossing the road. ‘‘You need to have perspective.’’

In the wake of the Christchurch earthquakes there is pressure to en-

sure hospitals and schools are built to higher standards. ‘‘That’s all to the good. But human behaviour also comes into the equation. In Christchurch, 42 people died from parts of buildings falling on them.’’

After the July 21 earthquake in Well-

ington, people ignored the message to stay home and entered the zoned off areas and pushed through the cones and broken glass.

Sharpe suggests a new campaign — ‘‘Fix, fasten and Don’t forget’’ — so people harden up.

Among his learnings are: ● People don’t understand that if the building doesn’t seem to be damaged, then it is probably best to use it. ‘‘The risk is after the initial shock, people evacuate but are at risk of an aftershock breaking windows and being hurt by shards of falling glass.’’ ● Floor Wardens should be trained to support people in earthquakes; checking stairs before descending is a sensible move. There should also be earthquake drills. ● Standing under nearby building verandahs (as with fire drills) is not a sensible option. ● It’s not the initial earthquake that does all the damage; damage can also occur to buildings in the settlement phase.

Portfolio owners are screening their buildings to determine how earthquake prone they are. Sharpe stresses that even a brand new building could

fall down if the earthquake was big enough. ‘‘We can design for higher levels with more ductility, effectively reduce the loads and presumably the cost, to accept damage, but not collapse. ‘‘After Christchurch, people are saying that perhaps that’s not quite the right model; perhaps society actually wants less damage,’’ he notes. ‘‘But you have to pay for it of course. The toolbox includes stronger buildings, adding in bits and pieces that could be replaced if damaged, base isolate and put the whole thing on rubber, lift the whole level of resilience up.’’

He says a lot of weight will be placed on the new building standards. ‘‘But it’s not practical after every shake to do full and comprehensive going back to the birth of the building and any sins that might be incorporated .’’

He says it’s notable that Contact Energy — which faced a dilemma about whether to move out of Wellington’s Kirks’ building while it was strengthened — decided to stay put through the process. But the owners ot the Majestic Centre spent $54 million strengthening that building to 100 per cent of code.

We can design for higher levels with more ductility, effectively reduce the loads and presumably the cost, to accept damage, but not collapse.

Richard Sharpe, Beca

What is the tolerable impact of earthquakes?

Rebuild harnesses water power Alexander Speirs

Engineering Consultancy Beca is working with major developers in the Christchurch rebuild to deploy their innovative artesian water systems as an efficient and renewable energy source for cooling and heating. ‘‘Christchurch naturally has a water temperature of around 12C, enough to cool a building,’’ says Justin Hill, Manager of Beca’s Building Services team.

The design enables the system to use the natural temperature of the artesian water without the need for any mechanical cooling. ‘‘This makes it really energy efficient because the only energy being used is that from the pumps, yet you’re cooling this entire building.’’

For further cooling, and producing chilled water, chillers can be used in a system by Beca, which completely reuses the heat by-product. ‘‘At the same time that these chillers are producing cold water, they have to take the heated energy out of that water and they have to get rid of it somehow,’’ say Hill. ‘‘We put the heat energy back into the

How it works Artesian water is sourced through wells tapped into the natural aquifers that are plentiful in Christchurch. The aquifers have an internal pressure built up between layers of rock.

In Christchurch they can be bored as deep as 100m in the ground and produce a fountain above ground in excess of 10m.

When a well is dug the pressurised water rises up naturally without the need for a pump. To keep this system running in perpetuity, the artesian system returns the water back into the aquifer so it runs in a closed cycle, which is a completely non-consumptive use of the resource. artesian water and elevate the temperature of that water.’’ ‘‘As we developed this further we realised that we could direct the heated energy back into the building.

That’s what makes it really energy efficient because it’s literally just

moving that energy around the building and directing the heat energy and cooling energy wherever it’s required in the building. ‘‘ Beca’s innovation enabled the technology to be twice as efficient, generating an even larger payback. ‘‘A standard heating system using gas boilers for example would operate at about 93 per cent efficiency, these chillers that we are using produce heated water at an efficiency of about 600 per cent. You put 1 kilowatt in and you get 6 kilowatts out and at the same time we can get 7 kilowatts of cooling energy out.’’

The first system was designed for Christchurch International Airport (see above) and its new integrated terminal layout, which opened last year following a major overhaul. ‘‘We started back in 2005 and culminated with the opening of stage one in 2011, just following the earthquakes,’’ said Hill. He said the work at the airport was being put forward to the Association of Consulting Engineers of New Zealand for an engineering excellence award.

The earthquake rebuild has revitalised interest in artesian systems

and their use is being seen in a number of developments around the city. The 23-building Arts Centre complex will use the system, as will the $140 million The Terrace development being built by Antony Gough.

It is said to have been one of the features that enabled Gough to secure Westpac Bank as a key tenant.

Christchurch Council is actively looking to promote the use of artesian systems and similar technologies.

The Christchurch Agency for Energy, a charitable trust set up by the council in 2010 to promote energy efficiency, put forward a $1.8m fund for the council to administer. The fund is available for private sector developments of at least 1000sq m that use renewable sources of energy — those that qualify can receive up to $300,000 towards the plant costs.

The scheme is designed to make it more affordable for major developments to use renewable energy such as artesian water systems. The technology tends to be a more expensive investment up front, but in the medium to longer term should provide significant operational savings and be better for the environment.

This issue dominated the NZ Society of Earthquake Engineering Annual Conference that took place in Auckland last week. Experts gathered to share learnings from the Christchurch earthquakes and about New Zealand’s preparedness to cope with other disasters. ● Resilient Auckland Expo was held to enhance citizens’ awareness of what they should be doing to mitigate risk from earthquakes and reduce the impact of disaster on commercial properties, homes and themselves.

Though Auckland has been listed as one of the most liveable cities in the world (by the Economist Intelligence Unit), enhancing resilience and preparedness will help to ensure this position is maintained in times of disaster.

Wellington Council ● Has been very active evaluating risk for many years. ● Conducted a resilience survey in March 2009. ● Implemented standard codes on ductility and the reliance of buildings.

Christchurch City Council The resilience concept was proven in Christchurch which carried out a full lifelines project well ahead of the earthquakes.

It was designed for life safety at a random level (a one in 500 years return period for a major shake).

Beca’s Richard Sharpe says Christchurch was expecting a rolling motion earthquake but it was caught by a ‘‘viscous close one’’.

D25

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

Calling in the special forces Alexander Speirs talks to building consents fix-it man Doug Martin

W

hen Christchurch City Council was stripped of its accreditation to issue building consents last July, the Canterbury rebuild looked set to come to a standstill.

The Government urgently parachuted in fix-it man Doug Martin as Crown Manager to take control of the building consents process and get things back on track. ‘‘The first thing I was asked to do was develop an action plan to be signed off by ministers, which was a programme to lift the performance of the building control unit,’’ says Martin. ‘‘When Christchurch City lost its accreditation, issues were raised about the technical competence of the consenting officers. There have since been several audits done of the actual jobs they’ve worked on and they’ve scrubbed up very well.’’

He says the assumption that there were technical problems was a misdiagnosis. ‘‘I think the Government got it right, they knew what the root cause was and what needed to be done to address it.’’

Martin has since recruited a new management team — ‘‘probably the most talented in New Zealand’’. Peter Sparrow has been appointed as the council’s director of building control and city rebuild. There are two teams, one specialising in residential and the

Building confidence

Doug Martin (right) parachuted into Christchurch to ensure buildings go up faster on bare land.

other in commercial. ‘‘One of the first things I noticed when I came down here was that nobody had a clue what lay ahead of us in terms of demand and volumes,’’ adds Martin. To rectify this, a forecasting model was developed using data from Cera, MBIE, insurers and project management offices.

Says Martin: It showed a ‘‘tsunami of work coming towards us, which was quite unusual for the construction sector.’’

The projections showed demand for consents would rise fast before plateauing. There would then be a steep drop as the rebuild began to draw to a close. The unprecedented demand, combined with the sheer

volume and complexity, posed difficulties. ‘‘We decided to increase our head count by about half of what was required and we went out to the international market and brought on board a lot of experienced building officials from Canada and the United Kingdom,’’ says Martin.

They were recruited on 12-18 month contracts and enabled the council to draw in the requisite assets for short-term use in the peak of the rebuild without poaching staff from other NZ regulatory bodies.

Martin has also aggressively outsourced some consenting work to other building consent authorities that have put their hands up to help.

● Doug Martin is one of New Zealand’s most experienced advisers on improving the performance of public sector agencies. Previous roles include working on the implementation of NCEA for secondary schools and performance issues with Environment Canterbury.

Building Consent Action Plan ● Appointed Peter Sparrow as Director of Building Control and City Rebuild. ● 23 hires for building inspector and building consent officer positions. ● 15 contracted organisations processing consents; average 660 building consents issued monthly; improved forecasting systems and resources. ● Christchurch City Council will reapply for accreditation next month.

Invest in the future of Christchurch Rebuilding Christchurch will take enormous energy and investment - but it also creates a once-in-a-lifetime opportunity for business leaders to build positive outcomes for Cantabrians and all of New Zealand.

ASB is already making a difference in Christchurch, and getting things done. We were the first bank to return to the Christchurch CBD. We’ve funded high-profile projects such as The Tannery shopping mall. We’re still offering the ASB Christchurch Fund, with low interest loans to support businesses, and thus rebuild employment and the community.

If you want to be part of this amazing rebuild, the first step is to call ASB’s local Commercial team on 03 365 0083.

The Tannery in Woolston, Christchurch - a beautiful restoration of a 19th century heritage building by ASB Commercial client Alasdair Cassels.

blog.asb.co.nz/thetannery

ASB Bank Limited PPU44700

But inspections are unable to be outsourced as they required people to be able to carry them out in person.

There has been a significant change in the turnaround as new efficiencies are introduced. The team has worked with residential developers who are building big clusters of housing with standardisation of design and product lines and effectively consented them in advance to speed things up. ‘‘We think there are quite significant gains which can be made in this area, but they’re gains that are realised over time as they’re more discrete,’’ says Martin. ‘‘But you knock an hour off issuing a building consent and those gains will certainly accumulate.

Increasing the use of technology has also been a major factor, with an overhaul of the internal IT system set to take place at the end of March. ‘‘All of our inspectors carry what’s called a GoGet, which is a tablet that is linked into the system here,’’ Martin says. ‘‘They can go to the sites and download all the plans and documentation when they’re out. They’ve all been trained to use them and we’ve had hugely good feedback.’’

The council will look to apply for accreditation at the end of April. Ten assessors are scheduled to visit in July to review the council’s progress and identify any corrective actions that may be needed.

The goal is to restore IANZ accreditation by September (if not earlier) says Martin. ‘‘It’s a great new team here, before we were in here running the show and now they’re almost pushing me away which I think is great. It’s a real measure of success.’’

D26

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

We can rebuild: in a smarter horizontal infrastructure work programme for three clients: Christchurch City Council, Cera and the New Zealand Transport Agency.

Jobs are divided among Scirt members based on how well each contractor has performed on earlier work. Nominally they start with 20 per cent each, and then if they perform well, more contracts flow their way. The idea is to get all five performing to the same high standards. Jones says his organisation played a role designing Scirt and it has more than met expectations.

Jones says in itself, the clientdesigner-contractor alliance model isn’t new. He says he was working in Australia in the early 2000s and saw one of the first in this part of the world. ‘‘But to apply it wholesale to a disaster and then to bring in more than one contractor, working together but in separate delivery teams with an element of competition to ensure they are delivering predictably and cost-effectively, is unique’’. ‘‘The Scirt model is attracting attention from all over the world. It was recently awarded the Brunel Medal by the UK’s Institute of Civil Engineers for excellence in civil engineering. It’s a prestigious award. We’ve had visits from Japan, the US and Europe, all looking at how the recovery model works and how they can use a similar model for future disasters.’’ he says.

Scirt has attracted attention for being efficient and for being able to hit the ground running. ‘‘The model managed to bring a lot of resources together very quickly and deliver good value,’’ says Jones. ‘‘The project has been audited to death and the auditor general identified it as an appropriate response to the Christchurch earthquake.’’

Jones says the Scirt model could become the new template for dealing with disasters. He says there are a number of different ways feedback is provided from the delivery teams to the designers: ‘‘It’s all about sharing what went well in a project and making sure other delivery teams get the information’’.

Fulton Hogan is based in

Fulton Hogan chief Robert Jones explains the importance of resilience to Bill Bennett

F

ulton Hogan chief operating officer Robert Jones says the Christchurch rebuild has given his company a deeper understanding of the importance of resilience, which can be used elsewhere in New Zealand.

Getting to resilience was a personal journey for Jones and for Fulton Hogan which has its headquarters in Christchurch.

The company employs around 1000 people in the city and the earthquakes affected their families.

To Jones, resilience means questioning whether building bigger, stronger and better is always a solution. He says: ‘‘To me it is now more about building smarter’’.

To illustrate a smarter approach to rebuilding an earthquake-damaged city, Jones talks about the experience of rebuilding the city’s sewer network.

Before the earthquake Christchurch had a network of concrete sewer pipes five or six metres below the ground. ‘‘Instead of trying to replace all the sewers that were concrete pipes, then having to go back and replace them when there’s another earthquake, we’re putting in small diameter, lower pressure plastic pipes. They are at a relatively shallow depth and connected to pumps to keep things running. ‘‘If the same thing happens again, getting back in and replacing them is a fairly simple operation. Fixing shallow plastic pipes is certainly a lot cheaper than fixing a concrete pipe five metres underground, and there’s much less disruption.’’

Jones maintains that kind of resilient thinking should apply to other earthquake-prone cities. ‘‘Across the country there are common standards for infrastructure — like heavy concrete pipes for sewage — but sometimes you have to challenge them.

You need the best solution to get the job done with the minimum amount of disruption.’’

This last point is more important

than it might seem to people outside Christchurch. Three years on from the February 2011 earthquake, the city’s road network continues to be disrupted with lines of traffic cones, constant road closures and diversions.

As Jones says: ‘‘Every time you go to the shops you have to take a different route’’.

Because the people working for Fulton Hogan are as tired of this and other disruptions to everyday life as everyone else, they are keen to see easy-to-fix sewer systems.

Jones says other parts of New Zealand are high risk seismic areas but concrete pipes are still being laid.

This is partly because councils and other organisations gauge projects by producing a business case based on capital costs. Jones would like to see them move to taking a ‘‘whole of life’’ approach that takes the cost of emergency replacement into account.

Sewer pipes, along with fresh and storm water networks and roads are what makes up a city’s ‘‘horizontal infrastructure’’. In Christchurch the job of fixing horizontal infrastructure has been given to he Stronger Christchurch Infrastructure Rebuild Team, better known as Scirt.

Fulton Hogan is one of five companies making up the organisation which collectivity is working on a complex set of projects with up to 20 active construction sites operating at any given moment. Scirt is big, spending as much as $500 million a year — but as Jones points out, the money is spread over many individual projects. contrasting with about $300 million that will be spent on Auckland’s Waterview motorway in a single year.

The projects making up Scirt are expected to take around five years.

Jones says about 40 per cent of the work is done.

Scirt has an unusual structure.

Jones describes it as running on a cooperative or alliance model. Five companies are jointly managing the

Fulton Hogan’s Robert Jones: rebuilding smarter.

continued on D27

Stronger focus on providing value Alexander Speirs

Scirt boss Duncan Gibb believes Christchurch people are really connected with the move to create resilient infrastructure that gives people security and confidence in their city’s future. ‘‘We’re delivering infrastructure which can withstand another 6 or 6.5 earthquake on the Richter scale,’’ says Gibb.

SCIRT is 43 per cent through its total infrastructure rebuild in Christchurch and well into the recovery phase of the operation. ‘‘We’re focused on getting out of here by December 2016,’’ says Gibb. ‘‘But, when we leave, making sure that we have delivered the work and provided our clients the feel that they’ve got value from what we’ve done.’’

Gibb says value is a difficult thing to wrap your head around. ‘‘For a treasurer, value is getting lowest possible cost; for the community value is making sure they’re engaged and consulted with; for an asset owner value is getting your infrastructure rebuilt with the same or lower ongoing costs of operation.’’

Progress on rebuilding Christchurch’s vital infrastructure is progressing well compared to similar efforts after Hurricane Katrina and the devastating earthquakes in Haiti

This is a city that was on its knees and we’ve been able to do our bit to help them get back on their feet. and Japan. Gibb attributes this to the Christchurch rebuild being the most highly insured and underwritten recovery in the world.

Work in the CBD is set to ramp up once again, with 45 crews set to be operating by April, with a goal to finish in the central city by mid-2015 to clear the way for the major anchor projects.

Gibb acknowledges decisionmaking slowed down due to changes in the membership of the Christchurch City Council following the recent local body elections. He predicts the September general election will also have an impact. ‘‘My experience in Australia was that if there were any key decisions that needed to be made at a governance level — and they weren’t made before an election — they shut down for months, especially if there’s a change of government.’’

Getting Stronger The Stronger Christchurch Infrastructure Rebuild Team (Scirt) is an alliance of five major contractors set up to repair and rebuild the city’s earthquakedamaged roads, fresh water, waste water and stormwater networks.

There are three phases to the infrastructure recovery: ● Emergency response and humanitarian relief — making buildings safe and ensuring essential services are restored. ● Early recovery — where severely damaged parts of the network are fixed so that they can at least function. ● Recovery — where the network is operational and there is a planned prioritisation for projects required to fix the remaining damage.

Duncan Gibb

One of Scirt’s focuses is ensuring its work doesn’t overly disrupt traffic within the central city so access can be maintained to businesses. It works closely with with CTOC — the Combined Traffic Operations Centre put together by Christchurch City Council, NZTA and Environment Canterbury to manage city traffic.

Using Australian guidelines, SCIRT

has also produced value reports enabling the project to be compared with a range of other comparable overseas initiatives to track progress.

Says Gibb: ‘‘What it does is it gives us a benchmark. In Australia there are a number of $2 billion-$3 billion projects or programmes, which have been delivered under this value method. If we’re reporting under the

same framework they use, we can look at what we’re achieving compared with what they are and see how we’re performing.’’

Scirt’s work has been recognised by the United Kingdom Institution of Civil Engineers, which awarded it the Brunel Medal for Engineering Excellence last year. The award recognizes outstanding civil engineering achievements and contribution to the profession. Previously the medal has been awarded to just one other Southern Hemisphere civil engineering group, from Seoul. SCIRT was subsequently asked to provide a series of lectures on its achievements.

Gibb is part-way through producing a paper and will give the first lecture in London this June. ‘‘This collaborative arrangement which involves the public and the private sectors and focuses strongly on the community is a great framework and model,’’ he says. ‘‘At the moment we’re exploring what they might look like and if there is an opportunity to craft or prepare a framework with the learnings we’ve had from this experience.’’ ‘‘The 30 years that I’ve been in the construction industry, this is the absolute highlight and is going to be very difficult to follow up. This is a city that was on its knees and we’ve been able to do our bit to help them get back on their feet.’’

D27

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014

Rebuild Christchurch

way Public projects a boost for CBD continued from D26

Brierley Penn

Christchurch and had a sizeable business in the city before the earthquakes. Though some resources were briefly pulled away from existing projects immediately after the February 2011 quake, Jones says most of the company’s work is business-asusual: ‘‘It’s important not to let the work we’re doing with Scirt distract us from the rest of our business. We’ll still be there when the Christchurch rebuild is finished and we need to be sustainable.’’

He says this means the company treats Scirt the way it would treat any other major project — assembling a team, ramping it up, then as the project finishes, ramping down.

Jones says the company has had to recruit from overseas in order to get the skills in place for Scirt but ‘‘we’re in the advantageous position that we can make sure there’s a good spread of existing Fulton Hogan people in that delivery team. ‘‘These are people who have been with us a long time; they know how our business operates. They know how important our relationships are with our clients — we don’t want people in there who are so focused on delivering the immediate project that our long-term relationships go out the window.’’

Jones says the experience from rebuilding the Christchurch sewer system tells him it is time for councils across the country to have another look at building codes. He wants to see resilience built into the nation’s horizontal infrastructure as a matter of course.

He says other cities shouldn’t wait for a disaster to learn the same lessons.

The pace of the rebuild is a major focus for those involved in project work on the ground in Christchurch.

Aecom’s Shaun Hubbard says no one anticipated the scale of the rebuild. ‘‘It is a highly complex environment to work in, and there’s no such thing as business as usual. When you understand the complexities and things like that down here, you understand why it’s moving at that pace.’’ ‘‘I think we look back at some of the other events happening in the world, like the London bombings and things like that, it took an awfully long time to get it back on their feet . . . so while it takes time due to the complexities involved, it’s not surprising really.’’

Nonetheless, Hubbard — who is Aecom’s South Island regional manager — is confident that the rebuild is entering a new stage. ‘‘Things are really starting to ramp up now . . . Its gaining momentum all the time.’’

Aecom is confident the high-value, publicly funded projects will add a much-needed boost to the Christchurch CBD. The company is project manager for the new Metro Sport Facility, which is expected to be a world class complex comprised of aquatic pools, an indoor stadium and high-performance training centre.

The project is under way, and is scheduled for completion in mid2017.

More recently, Aecom picked up work on the new central library, which aims to ‘‘create a city hub for knowledge, heritage material and an area for recreational reading’’.

However, Hubbard says it is important not to neglect the wider focuses of the rebuild. He cites the

Aecom’s Shaun Hubbard (left) and Peter Harris: working in a highly complex environment.

capacity building work at the Port of Lyttelton — an often-forgotten but vital contributor to Christchurch’s economy. Despite damage to the port, exports from the surrounding regions have actually increased over the past two years placing additional strain on the existing infrastructure. ‘‘When we look at the overall picture, it’s about people, and rebuilding a city for the people of Christchurch,’’ Hubbard says. ‘‘I don’t think there’s any silver bullet . . . Getting residential people back in their homes has to be a priority.’’

There are also impacts for the consultancy. Says colleague and technical director Peter Harris, ‘‘We’ve

been able to create a really good and unique atmosphere. ‘‘Because we’ve got a lot of people coming from elsewhere, your team becomes a lot closer, because your work colleagues become your friends. That’s certainly helped us in terms of the culture we’ve created.’’

Last year, Aecom launched Agropolis, as part of a collaborative initiative between FESTA, Garden City 2.0, Aecom, A Local Food Project, Juliet Moore, Andreas Wesener (Lincoln University), Liv Worsnop (Plant Gang) and Rosie Brittenden (Christchurch Youth Council). The project aims to create a scalable and productive farm in the heart of the CBD, composting

waste from local restaurants, and growing food products which can then be returned to the community.

In the long-term the aim is for Agropolis to become an urban food hub, including a mobile kitchen to be used for ‘‘garden-to-plate’’ experiences and educational programmes.

Corporate social responsibility initiatives such as Agropolis can draw on the strong sense of community among Christchurch residents and businesses. ‘‘It’s really about bringing the community together,’’ says Hubbard: As we rebuild the city, it’s not just having a city full of buildings, it’s about having a city that people can live in as well.’’

Christchurch City Council

Christchurch City Council – keeping our city going There’s plenty happening in Christchurch

Did you know?

1. The Council’s Building Control Group is working smarter. In just six months the Crown Manager’s Action Plan has put in place a new staff structure with strong leadership and the operational foundation for significant and sustainable change to Building Control.

2. We are reviewing our District Plan in just two and half years, rather than the normal 20 years. The short timeframe reflects the need to ensure a solid foundation for Christchurch’s immediate rebuilding needs, as well as the longer-term future.

3. Since the Stronger Christchurch Infrastructure Rebuild Team (SCIRT) was established in 2011 it has: - Paved 303,887m of roading – the equivalent of 43 rugby fields 2

- Laid just over 300km of freshwater and sewer pipe – the distance from Christchurch to Blenheim - Started 114 roading projects totalling $562.2 million dollars

How to contact us Phone: (03) 941 8999 or call free 0800 800 169 Got a planning question – ask to speak to a Duty Planner Got a building question – ask to speak to a Duty Building Consent Officer Email: info@ccc.govt.nz www.ccc.govt.nz

Every day in Christchurch...

34

building consents are granted

160

building inspections are completed

26

Code Compliance Certificates are issued

3200

people are inspired in our Botanic Gardens

130

million litres of drinking water is provided

205

million litres of wastewater is treated

D28

nzherald.co.nz | The New Zealand Herald | Tuesday, March 25, 2014