Key Themes of the Construction Industry Survey

For the second year running, Teletrac Navman and Civil Contractors New Zealand teamed up to create and run a survey on the New Zealand Construction Industry. We wanted to know:

• What are the issues contractors are facing?
• Where do the opportunities lie?
• What do you think about procurement - the good and the bad, and how the process can be improved here in NZ?

Construction is a sector that we serve. As well as fleet vehicle tracking, many construction firms use Teletrac Navman for equipment management, so we’re excited to share the results of this targeted survey. If you missed the presentation at the ACENZ/CCNZ joint Conference in Hamilton, here’s a summary of the key insights that came through:

Opportunities and issues

Key opportunities for the industry include nationwide infrastructure for suburban development; housing demand outside Auckland will have a high positive impact at 53% nett positive, whereas housing inside Auckland region sat at 44% nett positive impact. Infrastructure for water supply and waste water management is seen as another key opportunity at 55% nett positive impact. Light rail is another area which represents a significant opportunity for larger firms in future.

The industry is concerned about the projected slowing of economic growth as well as changes in infrastructure spending allocation of both local and central authorities. Around two thirds (61%) of respondents say financial losses by large construction firms will have a negative impact on their business.

The construction sector is largely satisfied with the Health and Safety at Work Act 2015 – the newest piece of legislation in the survey question. The oldest piece of legislation however, the Resource Management Act 1991, needs revision: 45% say it needs some revision and a further 33% say it needs substantial revision.

Staff and skills availability

Firms are still hiring, but fewer staff are needed immediately than in 2017. In 2017, around 19% said that they would hire 11+ staff immediately if the right skills were available. That number dropped threefold in 2018 to only 6%.

The top three challengers for recruitment are:

• A lack of skilled workers - 80%
• A lack of motivated people - 57%
• Uncertainty on future projects - 36%

Procurement

The procurement process is an area that needs improvement – with more focus on ‘best for project’ and value-based decision making, and less focus on the lowest cost.

• 9 out of 10 (93%) of respondents from large businesses (51+ employees) believe a poor procurement process usually affects the entire project adversely.
• The top three issues for construction companies in the procurement phase are client focus on lowest price (81% high to very high impact), cut price bidding by contractors (76%), and a lack of visibility of future work (75%).
• 81% of respondents from large businesses don’t believe clients have sufficient understanding of procurement in the construction industry.

The results indicate several areas for improvement based around better collaboration between clients and contractors, and more education on the costs and whole life value of projects.

• 80% of respondents said that a shared understanding between contractors and clients about the fair allocation of risk would be a major contributor to improving procurement.

Respondents also recognised that technology and education both have a strong part to play in making the sector more stable and contributing to high-quality infrastructure.

These are the top steps that construction firms are taking to better manage risks and fluctuation in demand:

• Up-skilling staff - 79%
• Using technology to track and gain insight into costs - 44%. For large businesses this number rose to 57%
• Increasing staff flexibility e.g. short-term or flexible contracts, more labour hire staff - 43%

To dig deeper into the results, you can download the Construction Industry Survey here: www.teletracnavman.co.nz/construction-industry-survey-2018

The technology edition of this 2018 survey will be coming out later this year, with more insight into jobsite and measurement technology in the New Zealand industry.