Busy times

By - , Build 147

It’s full steam ahead for the industry, with high activity both on the work front and at a government regulatory level.

THE MARKET for building products and materials is arguably more open than ever, and innovative fresh products are becoming available. Competition among suppliers is intense, and inflation statistics indicate that buoyant market conditions are not leading to unacceptable price surges.

Evolving demand

The Christchurch residential rebuild is predicted to come off peak in 12 to 18 months. This is a concern to companies who geared up rapidly for the surge in activity and may have difficulty coping with the fall-off in demand.

On a national basis, any business drop-off will pale alongside the sustainable high growth in Auckland. This will be irrelevant to many small businesses in Christchurch.

In heavy construction, the pipeline of work for Christchurch and Auckland seems set in place for the next 5 years at least.

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Many changes from government

Government attention to the building and construction industry has rarely touched such heights. The list of proposed actions that industry bodies are reviewing through consultation with MBIE is exhaustive. It includes:

● a new system for contracting handling retentions

● establishing a complete new standards-setting system

● reforming the Resource Management Act (RMA) so local government takes account of housing affordability in planning decisions

● revamping the building professionals and trade licensing systems

● furthering risk-based consenting

● a fresh system for consent and compliance for off-site manufactured units

● examining the implementation of a home warranty scheme for new builds.

Changes to retention handling

The new system for handling retentions – deemed held in trust by contractors – will have major implications for the industry.

The government aims to place the financial footing of contracting on a sounder basis with less reliance on retentions as a source of working capital. A secondary objective is more financial security for specialist trades as the legislation is likely to prescribe repayment requirements.

Many contractors face a significant adjustment if the change is mandated. New credit lines may have to be established. The eventual upshot is almost certain to be higher costs of doing business, which will flow through to customers. The use of bonds as an alternative to retentions will get much attention.

RMA reform

The RMA reform should help builders find easier acceptance by local government of some plans.

Garages at the front of townhouses close to road frontages and structures built closer to section boundaries may become more acceptable. In both of these examples, the cost of providing new builds should decrease.

Risk-based consenting

Moves to a greater degree of risk-based consenting will provoke much debate. A likely question is whether small builders providing a simple house require less attention from compliance authorities than group builders.

Licensing scheme reviews

A revamp of the professional and trade licensing systems is bound to attract vigorous industry debate.

Home warranty schemes

A new comprehensive home warranty scheme for new builds will be challenging. Differing warranty schemes are available from Registered Master Builders Association (RMBA) and Certified Builders Association of New Zealand (CBANZ), but large numbers of builders are not members of these organisations.

Independents may be able to get workmanship and materials and product warranties at a satisfactory cost, but the high cost of more comprehensive insurance is an insurmountable barrier for many.

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