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On construction industry inputs

Getting the right result Featured Image

Recent coverage in the media and discussions in the industry around the quality of construction industry inputs such as steel mesh and plumbing products has raised more questions than answers. Civil Contractors New Zealand chief executive Peter Silcock says it’s important to compare apples with apples.

The only comment that seems to resonate with everyone I talk to is that you get what you pay for.

The police have to deal with scams that are quite obviously too good to be true. (“If you let me put $100 million in your bank account for a few days you can keep 10 percent of the money.”) So the police are constantly reminding people that “if it looks too good to be true it probably is”.

Are we being scammed in the construction industry? When a contractor is offered inputs at a substantially reduced price, or a client accepts a bid that is significantly below the engineer’s estimate, are we deluding ourselves?

There is no simple answer to that question. But it challenges us all to make sure we are comparing apples with apples.

Is that cheaper input or lower bid a result of some real innovation or point of competitive advantage? Or is someone cutting corners? Are we going to get the same or a similar outcome? What impact is this going to have on the whole-of-life cost?

In the construction industry we are constantly dealing with the balance of price, quality and time.

At Civil Contractors New Zealand we often hear of disputes that arise because there is not a clear alignment of expectations around quality. Clients may well say “I expected it to be done this way”. But there is a very big difference between “I expected” and “we agreed”.

The integrity of construction inputs is a huge issue. With an increasing array of imports with variable standards and quality we all need to be vigilant to ensure we are buying apples and not lemons. That becomes a very big challenge when it comes to building or maintaining an asset with a long economic life.

There is often an over-emphasis on price and time that can lead to a suboptimal result in terms of the outcome and the whole-of-life costs.

That’s maybe because they are the easy levers to pull. They are things that can be easily compared when assessing tenders or measured as a job progresses.

Some of the decision-making, particularly on new builds, is driven by the funding models. It is all very well to say we want the lowest whole-of-life cost but the fact is that the additional time and money required up-front to achieve that is not always available.

Getting the right balance of quality, price and time is probably more an art than a science.

A recent NZTA study attributed the success of a particular project in terms of pavement quality to a “best for project” key result area. Having clear key performance indicators (KPIs) and key result areas (KRAs) in procurement and contract documentation is critical to ensuring that everyone gets what is required.

Setting KPIs and KRAs and specifying standards for key components are important. But the best outcomes invariably occur when there is a team that can flexibly and innovatively drive a project.

The projects we work on, the people we work with, the environment we work in, the equipment and methods we use are all constantly changing. Construction is a dynamic industry where unforeseen opportunities and challenges are to be expected and embraced.

Getting the right result requires agreement and alignment between the client, contractor and subcontractors about the output required, an acknowledgement of each other’s knowledge and expertise, and a system that will 
efficiently and effectively deal with variations, innovations and improvements throughout 
the project.

This article was first published in the July 2016 issue of NZ Local Government Magazine.

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