As the world struggles under the weight of the COVID-19 pandemic, navigating unprecedented difficulties, industries across the world are struggling to keep up. The construction industry has been hit particularly hard, and in New Zealand, the past 18 months have led to product and staff shortages, as well as significant inflation in material and wage costs.
At the end of August 2021, as the country resigned itself to another Level 4 lockdown, BDO released their annual Construction Sector report, a deep dive into the current state of the industry.
Compiled using data collected in mid 2021, from across the housing and commercial sectors, it paints a picture of how the pandemic has challenged and changed the field, and how we must “rethink” construction for the years ahead.
The report focusses on uncovering insights into four key issues: supply and inflation, labour supply and succession, financial foundations and managing risk.
While the country shuts down for Level 4, it’s tools down and all is quiet, but when out of lockdown, the industry is booming, and a lack of supplies and a disrupted supply chain is driving up costs and increasing levels of inflation. 60% of those surveyed in BDO’s report have faced issues with availability and cost of materials and 56% report project delays, while 62% of subcontractors had a gross drop in margins.
James MacQueen, who is an advisory partner for BDO told Stuff that tight margins become tighter as material costs rise, and the those in the industry are seeing this is the case for plywood, timber, steel and appliances. A lack of skilled professionals and complications with visa processing is adding to the issue.
The importance of a healthy construction sector is clear and will be vital for supporting New Zealand’s economy and infrastructure as we navigate our way out of the pandemic.
At Arch Group, we keep a close eye on the changes within the industry and are seeing an increasing need for adaptability in our processes as the pandemic alters the way we work. Excellent relationships with contractors are more important than ever, and engaging them early in the design process allows for their feedback in relation to product procurement and supply to prevent delays further down the line.
By working closely with contractors from an early stage, we can ensure that longer lead times work with proposed construction programmes. Additionally, selecting materials and fittings before construction begins has become key, and early deposits and ordering mitigates risk.
The pandemic has presented a unique and unprecedented challenge for the construction industry, and adaptability is essential. But where there is challenge, there is opportunity. It’s a chance to solidify our continued commitment to our relationships with both clients and contractors and to take advantage of great locally made products as alternatives to those manufactured overseas.
At Arch Group, we’re in this for the long haul. As we continue to navigate our way out of the pandemic, we will continue to adapt and grow, and be excited for the future of the industry.