Message from the NZCB Board

The importance of communication during a challenging year

Earlier this year, I sent a letter to the Construction Sector Accord to raise the issues affecting the construction industry at the time. This included making them aware of the ongoing struggle for many of us to access standard building materials (such as timber framing and strand floor) and the knock-on effect this was causing, with alternatives also becoming in short supply. I explained how this impacts costs and timelines, not just for the builders but for our clients, consenters, designers, and more.

The letter highlighted some of the reasons behind these supply issues, including shipping problems at Auckland Port leading to some container ships bypassing New Zealand altogether and heading straight to Australia. The cost of shipping had almost doubled at that point, causing some suppliers to stop importing because it was no longer cost effective. Both situations were contributing to standard building supply problems. The upshot of this letter was that while some members accept the issues we’re facing, other government departments involved with the Accord did not consider or recognise there was a problem. However, since then, numerous media reports have voiced these issues and we are currently waiting to see how the Accord intends to address them.

Client communications

There are small but effective measures we can take in our day-to-day work to deal with the issues we’re facing. Many of us are struggling to get sub-trades, materials are in short supply, and costs are rising, leading to stressed customers. Changing COVID-19 alert levels are also affecting who can be on-site and how they work.

Processes we can put in place to help get us through these times, include:

• Keeping the communication lines open with our suppliers and sub-trades to ensure we’re kept informed regarding lead-in times, supply issues, and rising costs. • Speaking to your customers and new clients about their expectations and the realities of current times. Though it’s not easy, it will help prepare them for the ongoing situation. • Talk about price increases and let customers and new clients know how the contract responds to price increases. • Explain any delays and if you’re unable to procure items resulting in delays which may impact construction times, contract costs and possible stop/start approach to the job. • The same goes for COVID-19 alert levels. Speaking to clients in advance may help them understand why builders are not on-site every single day. • Allow in your timeline for having sub-trades on-site one at a time, so if alert levels rise this is covered in the job schedule. • Include extra cost management to run your projects on and off site and allow for longer durations due to the stop/ start nature of delays. • Consider allowing for an increase in ongoing costs caused by delays or lockdowns – scaffolding hire would fall into this category. One suggestion is to price ongoing services like this as a provisional sum. • If you foresee it will be a challenge to accurately price the job, or components of the job, or think price increases will impact your original estimate, consider using the Cost and

Mark-up contract instead of the Fixed Price+ Contract, as the Cost and Mark-up contract will naturally respond to price increases. Alternatively, fix the price for stages of the build ensuring to keep fixed costs within a reasonable time-frame. Review this before you carry on to the next stage to allow for cost fluctuations.

Two very useful New Zealand Certified Builders (NZCB) videos explaining how fixed price and cost and markup contracts work, and what they do and do not cover, are: Building Materials – Delays & Defects: https://vimeo.com/548175414 NZCB Contracts & COVID-19 Disruptions: https://vimeo.com/605338400