David Kelly: How the Construction Accord can help the industry to step up
One of the key seminar speakers at the NZ International Building Expo & Summit is David Kelly, Chief Executive of the Registered Master Builders Association of New Zealand.
At a time when he says New Zealand’s construction sector is under-performing and facing issues such as poor productivity, fragmentation and high-profile company collapses - with inevitably negative flow-on impacts for subcontractors - he is optimistic that The Construction Accord can address the underlying problems and help the industry to step up.
“The Construction Accord is the first time I’m aware of that the Government and the industry has formed what I hope will be a genuine partnership to work out our responses: not just as a quick fix but to address real underling problems. The fact that seven ministers signed it was symbolically important, but now the construction sector needs to step up to do a lot of the work. If the Accord fails it will be because the sector hasn’t stepped up.
“The headline message is that the NZ construction sector has a real opportunity to engage, but it needs all parts of the sector to lead improvements, not find reasons why we can’t do so. Our challenge is to find ways we can.”
In his talk at NZIBES, he will detail what this means, covering topics including:
The leadership that is needed:
“We need leadership across the sector, across the whole ecosystem, by which I mean a wide range of organisations including local government, who administer building consent regulations, and the lawyers, who play a big part in writing contracts. All need to be involved to identify the real issues and commit to working together to solving them, putting aside parochial interests to get broader benefits. This requires real leadership.”
He says that Master Builders is working with the major contractors to identify what they need to do collectively and individually to lift performance and change the way they work. “It’s not about pointing fingers; it’s about looking in the mirror to ask ‘what do I need to do to change?”
Changing procurement models to move away from a win-lose risk mentality:
“The model has to change. It’s about fairly allocating the risk and who takes on what risk. From a contractor’s point of view, clients want to put all the risk onto them without paying for it. Contractors should take some of the risk, but it needs to be priced properly, and in some cases the client should take the risk.
Fundamentally, he says that the risk philosophy needs to change too.
“If we want a strong industry, it needs to be reflected in the contract. We want all parts of the sector to be recompensed fairly, and for clients to get a good result. We have to move away from a win-lose mentality.
“The important job of the Accord is not just to address the immediate issues. If the ultimate aim is productivity in the sector, then innovation in procurement models, how people partner to trial and develop different technologies in a way that they share risk, is important. We need to be more innovative in how we think about the regulatory environment to support this innovation.”
Regulatory changes are needed to make the Accord work:
“It is important that the regulatory environment reflects what we need to achieve. It can get in the way. It won’t drive the change, but the regulations can get in the way of improvement. Consenting and the Resource Management Act are part of the problem now, as they can slow things down. In the residential sector, the process is unwieldy and inconsistent across the country, and builders are pricing in the risk of delays. Ultimately, their clients (the consumers) will wear that price.”
The NZ International Building Expo and Summit will help to engage with the opportunity:
“NZIBES creates an opportunity to understand how people think. At RMB, one third to a half of all new applications in Auckland are from Mandarin-speaking businesses.
“The conversation at NZIBES can help Kiwis to understand the needs of Asian construction businesses, helping us to communicate so we can work together. We need to engage on an equal footing to understand the things that are going on and how we can respond and help.”
CEO, Registered Master Builders Association
David Kelly is the Chair of the Construction Industry Council, as well as being Chief Executive of the Registered Master Builders Association.
Prior to talking up his current role, David was a Deputy Chief Executive for the Department of Building and Housing and subsequently Director of the Canterbury Recovery Programme for the Ministry of Business, Innovation and Employment. In those roles, David was extensively involved in the Government’s response to the Canterbury earthquakes from day one, including establishing the technical investigation into major building collapses, which provided key technical information to the Royal Commission. He also led the Building Act changes that were part of a package of reforms in the construction sector.
Going back further, David held a number of senior roles in local government including that of Chief Executive of South Waikato District Council.