Election 2020: Bruce Cotterill: Never mind the review — let's get building

How about compulsory insurance or a fidelity fund to cover the cost of future repairs. Photo / Dean Purcell

OPINION:

As the election looms, I note that those vying for our votes have seen an opportunity for a full-scale political attack on the process and costs of building in this country.

Depending on who you listen to, we will be repealing the Resource Management Act or conducting a review (yes, another one), this time into the costs of construction.

Like many of us, I'm not sure that a review is necessary.

Anyone who works close to the building and construction industry, including those of us who have built a home or a commercial building, will tell you that the issues are obvious for all to see.

A quick Google search will highlight the fact that particle board is more expensive in New Zealand than Australia. You'll get a similar result if you search for timber framing too.

Flooring? Same result. So, you might be surprised to hear me say that the cost of building materials is not the problem.

You see, there's 5 million of us and 25 million of them — Australians. It's called economies of scale. Then there's the fact that our buildings are highly customised, whereas the Aussies have a lot more standardisation. So you'd expect our stuff to cost a bit more.

The real issues sit elsewhere. Simply put, most building projects are behind time and over budget before the earthworks have started. At that point, you haven't spent a dollar on building products.

The big issue is therefore the process that occurs before building starts. Designing and consenting. And of course, it's tempting to blame the councils again.

But before we do, we have to consider the recent past. According to various reports, councils have paid more than $1 billion in compensation to building owners over the past decade. Faulty or defective buildings, built by developers and builders who are long gone by the time a claim comes in, mean that our councils are often the "last man standing" when looking for someone to blame and someone to pay.

The net result is that council planning departments have become "gun shy" — and rightly so. In other words, they have become so cautious in terms of planning approvals that it takes time, money and sometimes even third party peer reviews from engineers before the council is prepared to take the risk, the green light comes down and construction can commence.

Those with a bit of experience will tell you that, because the councils are now so cautious, some architects are submitting half-complete plans in the expectation that the council questioning will guide them in terms of what minimums they need to meet to get the design across the line. And that, of course, means more work for the already pressured council planning departments.

In any business, inefficiency is one of the biggest drivers of cost. When the delays and cost blowouts happen this early, the entire project becomes one of building products arriving at the wrong time, workers sitting idle and project managers tearing their hair out.

So how do you fix it?

Like any building project, the first thing to do is to get the foundations right.

To me that means that the design, compliance and building sectors need to work in harmony to streamline the process.

Step one is to encourage the architecture and design industry to deliver plans that comply.

There are two parts to achieving this.

First, the designers need to be incentivised to do so, by knowing that they will not get the run-around later in the process if they are tidy up front. Second, compliance needs to be made easier, so everyone knows what the game is.

The next step is for councils to be enabled to streamline their own processes. A start would be to push back incomplete plans and leave that onus totally on the designers, architects and engineers. If you need engineering input, why should the council have to request it? That should come as part of the design process.

Thereafter, the councils need to commit to their own 20-day turnarounds. If it complies, approve it and let people get under way. If it doesn't, present a simple outline of what's required to get it done, and again, push the onus back to the design sector.

Of course, councils can delegate that responsibility if they know they're not going to be carrying the can if things go wrong down the line. The responsibility for failure cannot sit with the local authority any longer.

So the next step is to ensure that the building industry is set up to succeed rather than fail. That means we need to ensure that single-asset development companies set up to build a home or a warehouse can't then disappear on completion.

There are a number of ways to do this. What if a builder was unable to commence a project until they had proof of 10-year insurance for defective work? Or a fidelity fund where a small percentage — say 1 per cent — of every job is paid into an industry-wide insurance scheme. Master Builders offers a well-regarded 10-year warranty. The trouble is, at least half of our builders aren't members.

Once freed of the burden of being the industry's policeman, councils could then turn their attention to supporting innovation in building and design. Again, our complex and slow system stifles that.

Why would the owner of a new building seek to be creative when they know it's going to take longer and cost more to get such innovative approaches signed off?

The same goes for innovative products. The organisation responsible for issuing CodeMark approvals is Branz, whose own website describes an organisation that is focused on "lifting the performance of the building system in New Zealand so it can deliver better outcomes for all".

Unfortunately, in reality they are yet another organisation that gets in the way of progress. Building industry insiders say that they fail to recognise overseas certification of even the most mature and stable building products, and innovative importers of those products are thus forced into a process that can take more than 12 months and cost tens of thousands of dollars.

There are plenty of modern building products and techniques that would save time and money, if only we had the confidence that our city planners would support them.

So, the urgent message to the next Government is this: let's forget the review and get on with it. Start changing things. Simplify things. We'll get some things wrong but we'll get some right too. After all, it would be hard to make the process any more difficult.

- Bruce Cotterill is a company director and an adviser to business leaders. He is the author of the book The Best Leaders Don't Shout. www.brucecotterill.com