Building our way back: COVID-19 response plan for the construction sector

The construction sector has an important role to play in kick-starting the New Zealand economy.

To support this, the Construction Sector Accord has temporarily shifted focus from industry transformation to industry resilience and recovery. The Accord is a collaboration between construction sector leaders from across government and industry.

The Accord Steering Group (ASG) has been asked by the Government to act as an adviser to Ministers on how the industry can best be supported and confidence maintained during and after the COVID-19 disruption.

The construction industry now faces many new challenges including a lack of cashflow, workforce retention and additional pipeline uncertainty.

The sector is diverse and complex, and Ministers have emphasised ‘all parts of the industry matter’. It is imperative the full supply chain is ready to quickly restart on an accelerated work programme once restrictions are lifted.

The Accord Steering Group is focused on how the Government can support the construction sector and ensure resilience for the benefit of the industry, its workers and the whole economy.

This response plan will continue to evolve and be reshaped as issues become clearer and as it is discussed with the sector and Accord Ministers. Specific actions and achievements will be shared with the sector as they are agreed with government.

While the response plan is largely focused on government actions and its leadership by example, it places similar expectations on the private sector that it will act likewise where possible.

The plan has been divided into three response phases:

Phase 1: maintain – retain a viable sector during the shutdown.

Phase 2: restart – ensure readiness to restart works and accelerate projects.

Actions across the phases are focused on:

• Maintaining and accelerating the pipeline of work and removing barriers to restarting works
• Keeping cash flowing in the sector • Ensuring a fair and consistent approach to how contractor costs are covered and/or reimbursed during the shutdown
• Additional financial and other support that could be available for employees and business owners
• New health and safety guidelines to ensure the safe return to work.

Phase one – maintain industry

The Accord Steering Group is working on options for government to consider Building our way back

COVID-19 response plan for the construction sector implementing to maintain the industry during shutdown. These include:

Maintain the pipeline of construction projects

• Encourage existing projects to continue. While construction sites are closed down, other work such as planning, procurement, design, consenting, and maintenance works planning can all be progressed
• Identify additional ‘shovel ready’ projects that could begin when restrictions are lifted
• Remove barriers to a swift restart including in legislation and allowing flexibility in the Government Procurement Rules
• Identify projects at risk of being paused or cancelled and provide advice on options to keep them going.

Maintain cashflow in the sector

• Require agencies to pay contractors promptly or early and ensure that they in turn pay subcontractors promptly
• Require government agencies to take a consistent and fair approach to the costs incurred from work stopping and site shutdowns
• Consider providing rent subsidies to commercial tenants to help sustain businesses and employment
• Consider other options including changes to the management of bonds, retentions and stand-down payments.

Additional government support

• Explore options for further business and employee financial support and consider these as part of the wider economic relief package
• Consider the impact of site deterioration during the shutdown on compliance with building regulations
• Support for the large labour hire market and migrant workforce
• Assist with maintenance of closed sites that might lead to environmental issues such as silt run-off
• Consider options to stimulate house building to support the residential sector
• Consider how best to maintain skills and rebuild the workforce when works resume.

Phase two — restart

When restrictions are lifted the industry must be in a good position to restart works while at the same time keeping the workforce safe.

Essential construction services

• Advising on the types of work that can be restarted at each level
• Provide guidelines for working safely on construction sites while COVID-19 is still in the community.

Maintain the pipeline of construction projects

• Position ‘shovel ready’ projects across urban centres and the regions to begin works, and facilitate their acceleration
• Develop a strategy to support the distribution of work across the civil, vertical and residential construction subsectors, as well as across the supply chain and the regions
• Provide stimulation for the residential market including through Kāinga Ora
• Consider further medium and long-term stimulus measures to help the sector move to long term resilience.

Maintain cashflow in the sector

Rapidly mobilise multi-party collaborative projects through ensuring procurement strategies and commercial frameworks are developed and ready to go (e.g. the Stronger Christchurch Infrastructure Rebuild Team)

Phase three – lift performance

Once works have fully restarted, the focus will shift back to how we can work together to create a high performing sector. In this phase the Transformation Plan will be revised in light of the changed environment and initiatives reprioritised. The focus is likely to be on:

• Raising business performance through an enhanced pipeline and the promotion of better business practices
• Supporting mental wellbeing programmes
• Creating a new more efficient consenting model
• Improving procurement skills and practices with a focus on rapid mobilisation of projects
• Providing greater assurance for subcontractors around prompt payments and security of retentions.

Coordinated cross-sector response

The Accord is a partnership between government and industry that extends across the whole sector. Members of the Accord Steering Group are leaders from major commercial, vertical and residential construction companies, local government, industry and professional bodies and unions, and government agencies including Ministry of Housing and Urban Development, Ministry of Business Innovation and Employment, Kāinga Ora – Homes and Communities, and the Infrastructure Commission.

The ASG is connecting with other agency and industry groups working on the Covid-19 response to ensure advice is complementary and coordinated.

This includes the work underway to speed up resource consenting for specific projects and the activities of the newly formed Infrastructure Industry Reference Group, which has been tasked with identifying infrastructure projects that are ‘ready to go’ and helping ensure the regulatory environment supports their immediate start after the shutdown.

Information from the Construction Sector Accord. To find out more, visit: www.constructionaccord.nz.