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Confidence in New Zealand’s infrastructure under water
Thu, 24th Aug 2023

The annual Construction Industry Survey, in partnership with Teletrac Navman and Civil Contractors New Zealand, reveals cracks in New Zealand's infrastructure.

The survey highlights how New Zealand's infrastructure cannot cope with increased severe weather events and the impacts of climate change.

Only 7% of survey respondents expressed confidence in the ability of New Zealand's infrastructure to cope with climate change, including erosion and severe weather events. At the same time, confidence in the industry outlook and future pipeline of work declined, with 56% expecting no turnover growth in the next 12 months (compared to 48% in 2022).

Continued uncertainty significantly impacts the industry's ability to deliver the infrastructure the country needs. The definition of a clear, committed and funded pipeline of work remains the issue likely to have the most positive impact on the industry, increasing in importance from last year (now 84% vs. 71% in 2022). 

Almost half of businesses (45%) view increased funding for infrastructure and maintenance projects as the most critical initiative from an incoming government following the 2023 election.

Alan Pollard, New Zealand's Chief Executive of Civil Contractors, says more resilience needs to be built in the infrastructure to protect the country's social and financial well-being. 

"Infrastructure investments are long-term. Sometimes the benefits of urban planning, water management and transport investment are not felt for decades," says Pollard.

"This timeline doesn't align with our three-year political cycle of the governments who makes the decisions around infrastructure development."

"Furthermore, if we talk about pipelines, we can't forget that maintenance is the easiest thing to scale up. As a country, we have not invested enough in maintenance or projects to retrofit existing infrastructure over past decades to make infrastructure resilient in the face of extreme weather events." 

"We must work smarter, and technology enables this," adds Pollard. 

Optimism in the sector is decreasing, with only 34% confident in the civil construction industry outlook (declining from 41% in 2022). Furthermore, significantly fewer will be looking to increase staff in the next 12 months (54% vs. 63% in 2022), and 56% expect no turnover growth in the next 12 months. 

These numbers suggest that without this committed and funded pipeline of work, businesses don't have the confidence to continue to invest in people and technology.

To improve optimism in the industry, Pollard says proactive planning is needed: "The country's civil contractors need to understand better what will be built and where. Contractors need project certainty to invest in people and equipment, so it's important projects proceed when planned." 

"Funding announcements are one thing, but for real industry confidence, we need to know when physical construction will happen so those who can build the infrastructure that the country needs can invest in the people and equipment they require to get the job done," says Pollard. 

This year, climate change has started to pose a significant threat to the physical and financial resilience of the civil construction industry. Contractors are often first responders in a natural disaster, working to repair and restore damaged infrastructure. 

47% of respondents had been directly involved in emergency or disaster response over the past year, with 69% saying ongoing projects have been impacted by extreme weather events, with project delays, insurance claims and the need to renegotiate contracts being the primary resulting outcomes.

Only 7% are confident in New Zealand's infrastructure's ability to deal with extreme weather events, a 10% reduction from last year's report. This shows a need to invest in maintenance, renewals and resilience to future-proof at-risk infrastructure.

Sustainability is inevitably an essential topic for civil contractors. 45% of contractors say clients have indicated sustainability practices will impact procurement decisions, and 31% have won a contract based on broader outcomes, including sustainability and innovation. 

Contractors also see technology as a critical tool to improve disaster recovery efforts, and 36% expect that recovery work from significant weather events and climate mitigation efforts will create opportunities for their businesses over the next three years. There has also been a 27% increase this year in contractors looking to innovative technologies like AI to help solve industry challenges.

One of the few areas where confidence has increased is new technology's ability to improve business efficiency and overcome challenges. The survey found that utilising existing technology to its full extent will help future-proof the industry, and 52% of businesses report that they need on-site tech to win work.

Jim French, Construction Industry Specialist at Teletrac Navman, says: "Technology plays a vital role in emergencies and challenging working conditions like disaster recovery after severe weather events. Existing technology features can be used in such situations to support workers and improve safety and efficiency." 

"It is also reassuring to see more contractors are looking into innovative technologies like AI, as it has the potential to not only help improve business operations but also help solve current industry challenges."

"We're seeing an exponential growth in the possibilities of AI technology, and as the industry grapples with more complex infrastructure projects, the insights and analysis AI provides will prove to be invaluable," says French.

The survey results and the civil construction industry's response to these challenges will be further discussed by a panel of senior construction industry leaders at The Civil Contractors Conference in Auckland on 1 September.