Construction Sector COVID-19 Response Plan

A resilient sector

The construction sector has an important role to play in supporting the New Zealand economy in the post COVID-19 recovery phase. In March this year, the Accord Steering Group (ASG) was asked by government to act as an adviser to Minsters on how the industry could 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 issues and additional pipeline uncertainty.

The group responded with urgency, setting up the Accord COVID-19 Response Forum which included an additional 15 sector leaders to broaden the group’s perspective. A response plan was quickly developed to maintain confidence in the sector, support jobs and businesses, and minimise the economic damage from the COVID-19 disruption. The Forum met twice weekly to progress actions in the plan, and will continue to meet throughout 2020.

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 COVID-19 Response Forum 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. Specific actions and achievements in the plan are listed below.

While the response plan is largely focused on government actions and its leadership by example, it places expectations on the private sector to also take a supportive and collaborative approach to the recovery.

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 COVID-19 Response Forum worked on options for government to consider implementing to maintain the industry during shutdown. These included:

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
  • 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

To transform construction to a high performing sector the Accord is committed to maintaining pace and progress to drive this shift through delivery of the Construction Sector Transformation Plan. The 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 and COVID-19 Response Forum 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, New Zealand Transport Agency (NZTA), 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 Infrastructure Reference Group which has been tasked with identifying infrastructure projects(external link) that are 'shovel ready' and helping ensure the regulatory environment supports their immediate start.

The Accord Forum 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 be in the best position to recover.

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 Accord 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(external link) 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. The plan has a new focus on retaining skills. NZCIC

Maintaining and accelerating the pipeline and removing barriers

Focus area Action Completed? Lead/s
Accelerated pipeline and pipeline certainty Collating, reviewing, and publishing 'Shovel ready' projects(external link) 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 a Contract Partnering Agreement to guide any project including shovel ready projects [PDF, 118 KB] 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 [PDF, 3.6 MB] Tonkin and Taylor, Infracom
Rapid mobilisation delivery models Developing a rapid mobilisation toolkit to support the advice(external link) MBIE, Infracom
Rapid mobilisation delivery models Preparing a Cabinet paper on rapid mobilisation operating within Procurement Rules and construction procurement guidelines. 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. MBIE
Professional services review Developing ways to streamline professional services to support efficiency:

 

NZIA, Engineering NZ

  • Wider guidance on efficiencies through all stages of projects.
Underway
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 [PDF, 758 KB] 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 [PDF, 527 KB] 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

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: 24 September 2020