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Of construction woes and affordable housing

I wonder what happens to old election billboards. Rather like old politicians, I presume they get recycled and pop up again somewhere, sometime, with a new look. Let’s hope they don’t end up in a landfill like the 1.7 million tonnes of construction and demolition material annually.

Yes, you read that right. 1.7 million tonnes of construction and demolition (C&D) waste is sent to landfills every year in NZ alone. In fact, C&D produces one of the largest global waste streams. This is according to REBRI, a New Zealand organisation that aims to promote, advocate, and assist resource efficiency measures in the building and construction industries. A collaboration of government, local council and industry bodies, REBRI estimates that 50% of all waste to NZ landfills is from construction and demolition projects. In a recent interview on National Radio, Simon Barber, President of the NZ Master Builders’ Association, stated that the figure was likely much higher.

In the same interview, Barber suggested that waste minimisation needs to start at the design phase of a building project. I agree. That means designers and architects having full knowledge of which products create the least waste so they can make informed choices. It means manufacturers having alternative choices to some of the packaging around construction material, like the dreaded polystyrene.

And waste doesn’t just mean physical material wastage either. The ailments afflicting the construction industry include wastage of time and money. According to global figures from the McKinsey Institute, large capital projects typically take 20% longer to finish than planned and are up to 80% over budget. Inefficiency and cost blowouts impact on the cost of the end result. Case in point – in July of this year, Fletcher Building announced a second earnings downgrade amid cost blowouts at two major construction projects – widely believed to be the Auckland Convention Centre and the Justice Precinct in Christchurch.

I believe that digitisation and connectivity can help improve some of these issues. The pundits generally agree that digitisation is making industries more productive and efficient. Last year PwC surveyed more than 2000 industry respondents across 26 countries in their Global Industry 4.0 Survey. 86% of the companies surveyed expected to see significant cost savings and increased revenue in the next five years from their investment in digital processes.

Unfortunately some industries are slow to adopt the benefits of digitisation. Construction is one of those. PwC classifies construction as a digitisation laggard, sitting at the bottom of their global rankings. The McKinsey Institute agrees, stating in a recent report that, “Productivity in the global design and construction sectors has trailed other sectors for decades.”

Our own Productivity Commission establishes a causal link between the poor performance of the construction sector and housing affordability, or rather lack of. The 2011 report of the Productivity Commission states, “The performance of the building and construction industry plays an important role in the supply, quality and cost of new housing, along with the upkeep of existing rental, social and owner-occupied housing.”

That’s logical. If a building project goes over time and over budget, someone has to pay for that and it generally ends up being the end consumer. This will be a challenge faced by the new government. Just a few days ago, our new PM-elect, Jacinda Ardern, announced more details on KiwiBuild, Labour’s solution to the shortage of affordable housing. With plans to build 100,000 new affordable homes over the next decade (re-election permitting), those plans will inevitably face the conundrum of construction labour shortages, material costs and more.

The Productivity Commission reports that aspects of the NZ construction sector exacerbate the trend of going over time and over budget, “The dominance of residential construction with a very high number of very small firms means that productivity enhancements of firms exposed to international competition and innovation are slow to spread.”

That is where I come in, or rather, the organisation that I head up: Masterspec. The issues outlined above define our raison-d’être. We are owned by the building design and construction sectors with the goal of helping to improve how those sectors operate for the greater good. Digital developments are pivotal to that role. In the last few years, technology has been developing faster than Usain Bolt with a tailwind. We’ve harnessed technology gains to connect the often disparate parties that contribute to building projects. With better communication, comes more clarity. With more clarity, comes more efficiency. If the architect has the wherewithal to communicate earlier with the builders or legislation enforcers, i.e. local council, our experience and that of our users is one of increased productivity. 

Masterspec solutions are rapidly gaining traction. 95% of NZ’s top architectural firms use our tools for creating better building specifications and more. We’ve developed solutions for engineers, landscape architects, interior designers, design/build companies and we won’t stop until we’ve connected all the dots. Offshore equivalents are trialling them, e.g. RIBA (Royal Institute of British Architects) Enterprises. We’ve also been working with the Ministry of Business, Innovation and Employment to develop an industry-wide platform for better communication and management of the entire construction pipeline, focussing particularly on facility and asset management.

Regardless of who is in power, affordable housing is a crucial issue for New Zealanders. I believe that we have a real opportunity to take a lead on the world construction sector stage. The McKinsey Global Institute estimates that the world will need to spend $57 trillion on infrastructure by 2030 to keep up with global GDP growth. NZ’s Productivity Commission corroborates this data in a NZ context. I want to keep the momentum going and continue our contribution to productivity gains in the design and construction sectors. After all, the potential gains are massive: less wastage, greater efficiency, reduced costs and ultimately better buildings.

Rolf Huber is CEO of Construction Information Limited, trading as Masterspec, a NZ company. Owned by the building design and construction industries, Masterspec provides those sectors with online building specifications systems, data tools and more. Originally Swiss-made, Rolf has more than two decades of experience in the NZ housing and construction industries. He is a Board member of the International Construction Information Society. 
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