Construction Sector COVID-19 Response Plan

A resilient sector

The construction sector will have an important role to play in kick-starting the New Zealand economy when COVID-19 Level 4 restrictions are lifted. 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 government to act as an adviser to Minsters 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 group has responded with urgency, meeting twice weekly, and additional sector leaders have been bought into the group to broaden the perspective and ensure greater sector coverage. 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.

Plan summary

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
  • Phase 3: transform – refocus on high performance

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 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
  • Support for the large labour hire market and migrant workforce
  • Consider the impact of site deterioration during the shutdown on compliance with building regulations
  • 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 - transform

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 are 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(external link) for specific projects and the activities of the newly formed Infrastructure Industry Reference Group which has been tasked with identifying infrastructure projects(external link) that are ‘ready to go’ and helping ensure the regulatory environment supports their immediate start after the shutdown.

The Accord group promotes the principle of we are all in this together. If all parties act in a fair and reasonable manner and are prepared to share the burden, then the sector as a whole can emerge intact and be in the best position to restart.

Next steps

Government is urgently considering the advice given in this plan and updates will be provided through the Accord website on the latest developments across this Response Plan.

People working within the industry are invited to contact the Accord with their suggestions for actions to support the sector, either by connecting with their relevant representative on the Steering Group, or their industry body, or through emailing accord@mbie.govt.nz.

 

Actions completed and underway

Safety at work

Focus area Action Completed? Lead/s
Health and safety/COVID control Health and safety protocols and information released for each Alert Level CHASNZ
Health and safety/COVID control Providing ongoing updates and guidance to industry on health and standards and protocols CHASNZ

Workforce capability and capacity

Focus area Action Completed? Lead/s
Skills Developing proposals for retaining apprentices made redundant during COVID, including new training models such as brokered and accelerated apprenticeships. Underway NZCIC
Skills Reviewing the Transformation Plan in light of the changed environment including RoVE and the Construction Skills Action Plan. Underway NZCIC

Maintaining and accelerating the pipeline and removing barriers

Focus area Action Completed? Lead/s
Accelerated pipeline and pipeline certainty Collating and reviewing 'Shovel ready' project proposals. Underway Accord, IIRG, CIP, Infracom, MBIE
Accelerated pipeline and pipeline certainty Developing a set of conditions for funding of shovel ready projects following Cabinet decisions. Underway InfraCom and CIP
Accelerated pipeline and pipeline certainty Creating an Accord Charter to apply to shovel ready projects. Underway MBIE
Accelerated pipeline and pipeline certainty Working with DIA and LGNZ to support continued local government capital investment where possible. Underway Accord
Rapid mobilisation delivery models Rapid Mobilisation models advice shared with Ministers and the sector, and published on Accord website 11 May. Tonkin and Taylor, Infracom
Rapid mobilisation delivery models Developing a rapid mobilisation toolkit to support the advice. Underway MBIE, Infracom
Rapid mobilisation delivery models Preparing a Cabinet paper on rapid mobilisation operating within Procurement Rules and construction procurement guidelines. Underway NZGPP
Building regulation and RMA compliance issues Master Builders provided information on consenting challenges. LGNZ/HCC, Master Builders
Building regulation and RMA compliance issues Preparing advice to Ministers on potential changes to the consenting system to make it more efficient. Underway MBIE
Professional services review Developing ways to streamline professional services to support efficiency – including a Professional Services Leadership Statement, new guidance on Engineers to the Contract, and wider guidance on efficiencies through all stages of projects. Underway NZIA, Engineering NZ
Residential pipeline Assessing the impact of COVID-19 disruption in different regions and finding ways to boost consumer confidence in residential investment. Underway Fletcher Building, Master Builders, HUD
Residential pipeline Reviewing and advising HUD on alternative residential delivery models including progressive home ownership models. Underway Fletcher Building, Master Builders
Residential pipeline Working with Treasury and Reserve Bank to monitor lending for residential construction activity. Underway MBIE, HUD

Maintain cash flow and consistent approach to contracts

Focus area Action Completed? Lead/s
Contract guidance Guidelines on a fair contractual approach to the cost of the lockdown on government projects and on establishing the value of the contract variation issued to government entities on 3 April and 11 May, and published on Accord website. InfraCom, MBIE
Contract guidance Guidance on contract management and supplier relationships through the Alert Levels published on Accord website on 21 April. Infracom
Contract guidance Developing interim special conditions for 391X contracts to deal with events such as COVID. Underway Infracom
Contract guidance Progressing work to deal with difficulties in getting adequate contractor insurance during COVID-19 disruption. Underway Treasury

Additional support for employees and business owners

Focus area Action Completed? Lead/s
Commercial and tenancy response Advice provided to Cabinet on supporting commercial leases. Cabinet potentially considering further advice. NZ Property Council
Employee and employer support Advice provided on support for small/medium businesses. Government support package announced 1 May. Accord
Employee and employer support COVID-19 Leave Support Scheme extended for Alert Level 3 on 28 April to cover all workers (previously focused on essential workers under Alert Level 4). NZCIC
Last updated: 20 April 2020