There needs to be more collaboration between Government and industry to understand risk and how to balance it. It is not just an issue for New Zealand. Carrillion's collapse in the UK has highlighted shortcomings in how procurement is managed there too.
We need to move away from focussing on cheapest initial price – this never gets the best result, limits innovation and stifles research and development. Technology and innovation are central to addressing problems that have become inherent in the construction sector, which means the Government needs to be more realistic in pricing contracts.
Greater Christchurch Regeneration Minister Megan Woods spoke positively about the need for change, saying we cannot stick to the same old approaches and expect different outcomes.
The industry agrees that things need to change. Early contractor involvement is one way to identify potential issues and be realistic with costings.
However, it is not the silver bullet and cannot substitute for people with experience in the industry who know how to get value for their clients without passing on all the risk.
We also have some good examples that show how things can go well. I am aware that NZTA's approach to procurement is cited as an exemplar by some major contractors. Many DHB and university projects have been successful. Much of this stems from them having people that understand the process and there is a mutual understanding about the realities of contracting.
In the current construction boom, there is a plethora of projects to bid for. And with the recent damage to some high-profile companies, the sector is getting smarter. Construction companies will walk away from a project if they are not fairly procured.
This conversation is not limited to commercial building. It also translates into residential, with a need to educate homeowners as well as the industry about pricing and taking a 'whole of life' approach to everything we build.
New Zealand needs to get this right. We will keep talking to Government and welcome your input.
David Kelly, is the chief executive of the Registered Master Builders Association