Promising pipeline of work

New report predicts construction workload based on known construction intentions and forecasts.

New Zealand is on the brink of the biggest construction boom in 40 years, according to a recently released joint industry and government report.

The National Construction Pipeline (NCP) report points to an unprecedented level of building and construction in this country over the next five years.

The report is consistent with The New Zealand Sectors Report 2013 on Construction, published on 20 November, but provides new information on future industry workload, including the nature and timing of planned construction activity by type and region.

The report brings together economic forecasts and data from the public and private sectors, at local and national levels, on their forward construction workload from 2013 to 2018. It shows at least 10% per annum growth for four years, peaking in 2016, when close to $32 billion of construction activity is predicted – nearly 23% higher than the previous peak in 2007.

The report forecasts an increase in construction right across the country in both residential and non-residential sectors. Construction hot spots are Auckland, followed by Canterbury, Waikato/ Bay of Plenty and Wellington. The main drivers of growth are Auckland’s residential housing demand more than doubling (projected 150% increase) and the Canterbury rebuild.

“This is a ‘heads-up’ to the sector,” said Productivity Partnership spokesperson Andrew Reding. “We want people to be aware that there is an ongoing pipeline of work, so they can manage resources appropriately.

“The NCP report is validated by a database of client intentions – projects that we know are going ahead,” said Mr Reding. “What’s striking is not just the rate of construction growth, but the duration of that growth. We’re looking at a sustained level of activity over many years. The question for the industry is, how are we going to meet that demand without compromising quality?”

The NCP report was commissioned by the Building and Construction Productivity Partnership (Productivity Partnership), a joint industry and government body established in 2011 to address barriers to productivity in New Zealand’s building and construction sector. It was prepared by Pacifecon (NZ) Limited in collaboration with BRANZ, incorporating Pacifecon’s database of over 6,000 known projects with BRANZ’s forecasts.

BRANZ’s residential forecasting is based on modelling historic building consents and economic activity forecasts indicators from Statistics New Zealand’s household formation forecasts, as well as are also compared with observed levels of activity; BRANZ’s non-residential forecasting is based on forecasts of gross fixed capital formation and have been validated against data held by Pacifecon.