The Registered Master Builders Association (RMBA) has launched its Lead Contractor Guidelines to help the construction sector better manage risk.
The guidelines were launched at the 2018 Constructive Forum held in Wellington recently, only weeks after another high-profile collapse in the industry.
“It is down to us to ensure we understand the risk we are taking on when we sign contracts, and our guidelines will help the sector do this,” RMBA chief executive David Kelly says.
“The Constructive Forum brought the entire sector together, with Government, not just to discuss the issues but to provide solutions about what we can do to change. It could not have been more timely.”
Equitable risk allocation
The RMBA presented a survey of more than 30 leading chief executives and senior managers from the sector, which found more equitable risk allocation in contracts to be the most critical issue for industry transformation.
“Understanding risk must become mandatory for lead contractors and subcontractors. This means demanding we are given the time and information we need to get things right.
“It also means we need to say no and push back on unfair terms and conditions,” Mr Kelly says.
“We will continue to update our guidelines regularly and make them available — and we urge the sector to use them.
Workshops to raise risk awareness
“We will also be organising workshops in the main centres and working with the Society of Construction Law to deliver panel sessions to raise awareness about understanding risk.”
Mr Kelly says there was strong alignment from all parties on what the sector can do to change.
“There were some robust discussions about the failings of the competitive procurement model.
“We need to move to a relationship model in which we are not focused on working with the lowest price contractors, but the ones which will be the best long-term partners. The race to the bottom means no one wins.
“We need long-term thinking to understand our pipeline so we can give certainty to these relationships beyond the first project.
“This means building trust between the key parties, and trying to move away from seeing each other as competitors.”
The guidelines were developed by the Vertical Construction Leader’s Group, which came out of the first Constructive Forum in 2016 and is overseen by RMBA.
The group includes the chief executives of New Zealand’s most prolific commercial construction companies, and advocates on a number of broader policy issues, including risk transfer, procurement, KiwiBuild, and retentions.