Accord set to change 'rules of the game' in construction industry

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

'This Accord provides a platform for change,' said Peter Reidy, Chair of the Accord Development Group, which is made up of construction industry leaders and which drafted the agreement with government. Mr Reidy is also CEO of Fletcher Construction.

'The Accord recognises that the way the construction industry, its clients and government have behaved in the past has created systemic problems that are having an impact on the New Zealand economy and the wellbeing of New Zealanders,' Mr Reidy said.

'It commits those working in, and with, the industry to start treating each other differently, so we can replace the current adversarial culture with one based on respect, trust and shared responsibility,' he said. 'We're agreeing to uphold new standards of behaviour and to be held accountable if we don't.'

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

Mr Reidy said construction employs 250,000 people and is New Zealand’s 4th largest employer. It accounts for 7 percent of GDP, contributing nearly $15b to the economy in 2017 – a figure expected to reach $41 billion in 2023.

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

'New Zealand is not alone in having these problems – these are big issues in the construction industry globally,' Mr Reidy said.

'Changing that picture will require us to work together and to focus on the shared outcome we're trying to achieve – which is a high-performing construction sector capable of delivering great homes, buildings, infrastructure and jobs for New Zealanders.'

'This Accord is a vehicle for us to start doing that.'

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

Now the Accord has been formally launched, the work ahead will focus on sharing its purpose and goals more widely with the industry, as well as developing a plan for putting the principles into action.

Information about this work will be sent to industry participants soon.