Australia is importing an increasing amount of northern hemisphere pre-manufacture technology and materials these days. The subject should be getting much more political interest than it is.
Our trade imbalances as a result of buying in these inputs is sufficient to warrant a more strategic leadership framework. I have long made the case that the Australian construction industry lacks a coherent view of its future self. It’s no good winging about this, its perhaps best to report what others are doing about it.
It’s a timely point in this narrative about construction’s future to discuss PrefabNZ’s impressive CoLab 2018 event in early March.
CoLab, as always, delivered. PrefabNZ has now matured into a respected voice of industry and deservedly sits at the NZ housing policy making table, focusing on solving the country’s housing crisis. The organisation is a voice for off-site manufacture, but it’s not simply floating around as a solution without a problem. PrefabNZ has directed its efforts to measurable outcomes.
This leadership now feeds into the NZ government’s call to action to deliver over 100,000 new homes within 10 years. Not just any homes. They want this housing to be the right type and in the right location to directly tackle need. Their strategy is driven by innovation and breaking down more of the same.
Even tiny houses make the mix. The SNUG competition shows how far PrefabNZ and Auckland City Council are going to test possibilities. Clearly the industry’s challenges require more – such as scale and continuity – and these are being tackled as well.
There is a lesson in the PrefabNZ business model in my view. The organisation pushes the boundaries about the changing world of construction and place making. PrefabNZ memberships includes enterprise leaders, designers, academia, government agencies, technologists, thought leaders and most importantly practitioners from makers of construction who are putting the rubber on the road.
The core of PrefabNZ’s culture is open sharing of intel, demonstration of the good, the bad and the ugly, all with one goal – learning and moving forward. This is not a traditional industry association that is fighting to preserve the sanctity of traditional professions or crafts.
PrefabNZ knows that the old boundaries between the professions are being blurred. Members, evidence new business models where designers are becoming builders, where builders are becoming designers, where project managers are becoming one-stop shops and where manufacturers are going upstream as they reappraise their prior business models – all aimed at providing customers with the smarter, better, complete solution. The NZ construction eco-system is worth observing. Its heart is innovative Small and medium-sized enterprises (SMEs) that are agile, bold and smart. But by and large they are still undercapitalised.
This was housing minister Phil Twyford’s central message as the opening of CoLab.
“The government is turning its attention to fostering a viable long-term home building sector driven by SMEs,” he said.
“The government is turning away from the broken duopoly model. We will rely on SMEs.”
Perhaps Mr Twyford had early intel into keynote speaker Mark Farmer’s insights about the UK construction industry, pointing to a “modernise or die” theme.
For those who missed Farmer’s presentation it is worth tracking down. PrefabNZ recorded it. Farmer pointed to the fragility of the traditional Tier 1 construction business model where unmanageable risks were occurring in their supply chains due to growing skill shortages, over exploitation of sub-contracting, risk allocation and transfer pricing practices where large contractors with assumed unshakable balance sheets have allowed government and institutional investors to sleep at night, believing these guys were the tooth fairy.
Governments around the world are now starting to realise that they have dealt themselves out of the public procurement capability game for too long. They now realise the price the community pays when inefficient and risk adverse outsourcing to large organisations that just pass through costs occurs.
The recent experiences of Fletcher Building seem to epitomise many of the systemic problems of a failed construction industry model. This, of course, is not just a NZ problem. Farmer spoke to the Carillion collapse in the UK and suggested this would not be the last, and that the Australian and NZ markets were not immune.
To reinforce Farmer’s key message about a failed industry model, it’s worth following the effects and cost of cleaning up after Carillion. The NZ government should forever hold these consequences in front of mind, in my view.
The need for more from less
It is clear that the global construction industry is now under pressure to deliver more for less. Smarter, better, safer, faster, more sustainable and cheaper.
Mr Twyford and Housing NZ general manager of business innovation and development Andrew Brooker spoke to the need to develop a long-term pipeline of housing demand. Not just public driven. They spoke of the many levers that need to be pulled. Facilitating a pre-manufactured housing industry eco-system was a central theme. They pointed to the need for the industry to invest in itself and upscale. Their challenge was pointed to SMEs to repurpose their value propositions, to become capitally more able and to develop supply chain models that cut waste, lifted quality assurance and lowered cost.
“It’s pointless if these opportunities are missed and business as usual is repeated.”
And Andrew Brooker went further. He indicated preparedness to break some of the rules on demonstration projects, to test what is possible. CLT examples were given.
Also, on hand was NZ’s minister for building and construction Jenny Salesa. There is a push in NZ to ensure that as the industry transforms, smarter and more effective compliance processes are applied. Ms Salesa outlined the objectives for a new build WELL-like approach, that would lead to better productivity and importantly turning around public confidence in the nation’s future built-world.
It’s clear that harmonisation with industry leadership across the whole of government is a core mandate. Mr Twyford spoke to a new commitment to plant over one billion trees to feed into the increasing uptake of mass timber construction in NZ and Australia. He talked of turning around the export of raw logs to the northern hemisphere.
“The government wants to see more value added to this renewable national resource, to deploy it smarter and with greater economic impact,” he said.
All of these pronouncements would have been music to the ears of CoLab sponsors XLam and Carter Holt Harvey, as both have their eyes firmly focused on the Australian mass timber market.
But, Mr Twyford and Ms Salesa made it clear the industry would have to take quality assurance and compliance seriously if the government’s appetite for collaboration was to be maintained.
“The government has a social contract with the NZ community, that experiences like damaging leaky buildings must be avoided in future,” they said.
And if there was any doubt as to why these messages needed to be joined up, the research presented by the NZ Green Building Council’s Sam Archer was salutary. He evidenced the NZ population once having amongst the highest incidences of respiratory illness in the world due to living in leaky buildings. Mr Archer pointed to the economic benefit to the NZ economy where rectification of this problem had lowered the national public health cost of respiratory illness by over $1.2 billion a year.
There were many great presenters at CoLab this year. They included Singapore’s Building Construction Authority’s deputy director of construction productivity and quality Leong-Kok Su Ming and Brookfield’s James Murray-Parkes.
Here delegates heard of impressive public and private sector leadership and disruption. And PrefabNZ’s chief executive presented the body’s eight-year report card. But for me the take home message was about how PrefabNZ has ascended to trusted public advocate and policy advisor status in the modern NZ construction landscape. It reinforces my view that NZ has a competitive advantage acting as one country, unlike the sovereign and disparate states of Australia.
Finally, I found myself in the member’s workshop coffee break on the last day. I was chatting with a group of delegates reflecting on the CoLab. The following conversation transpired. Here is how it went (roughly):
Comment by NZ delegate: “I was disappointed that ministers Twyford and Salesa only came to the opening session on Day 1 and then left. They said all the good stuff and tore off.”
My response: “Well I disagree. If you were at PrefabAUS last year, the opening address was given by the Victorian state treasurer who just banged on about how much the government was spending on infrastructure and why the Victorian economy was the best place in Australia to do business, and then he tore off.
“In contrast, your NZ ministers articulated a clear understanding of the problems they had prioritised, for example, housing. They articulated a credible understanding of the issues and how they would need to collaborate with PrefabNZ and industry to deliver a solution. They articulated plans of actions and targets. They clearly got it. They answered questions and took suggestions on notice. And before they departed they pointed to meetings set for the following week with PrefabNZ’s CEO to get on with implementation and delivery. They made it clear to all present – including bureaucrats – that they were up for it, and what they expected. They left in no rush.”
Response by NZ delegate: “Wow, I guess you are right. That’s quite a contrast. NZ is clearly starting ahead of the eight-ball and, yes, we are fortunate that eight years of PrefabNZ ‘s leadership in the pre-manufacture, housing advocacy and proofing space has placed it at the centre of the game.”
It is highly likely that New Zealand will succeed in fostering a viable pre-manufacture housing industry. Its goal is 40 per cent pre-manufacture in housing by 2020.
Adjunct Professor David Chandler is construction practitioner and industry engagement lead at Western Sydney University’s Centre for Smart Modern Construction.