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Come December 2019 the contracting relationship between government and the construction industry is set to be redefined. New construction-specific guidelines have been drawn up to accompany the new Government Procurement Rules (4th edition).

Up to now, the emphasis has been on lowest cost, but this is set to change to rather focus on outcomes. This change in focus is likely to bring about a new era in government procurement procedures, particularly with regard to construction projects.

Construction industry

Simplification Of Contracts

In the past, standard construction contracts had an excessive amount of pages created just for the additions to standard contracts. These special terms were often very complex and lengthy and required specialised legal interpretation. The intention of such deviations was to minimise risk but in some cases, exactly the opposite was achieved. These changes should also result in a cost-saving as less time needs to be spent, by all parties involved, slogging through sometimes hundreds of pages of special conditions.

New Guidelines And The Construction Sector Accord

The guidelines have been created to align with the principles of the Construction Sector Accord. The accord is a commitment between industry and Government to support the wellbeing of New Zealanders through providing safe and durable homes, buildings and infrastructure, built by a productive, capable, resilient and proud sector.

Changes to the government’s procurement rules and the construction procurement guides will:

1. Require agencies to apply the best practice set out in the guides where appropriate, and better support them to do so.

2. Provide more detail on risk to improve agencies’ understanding and ability to manage it.

3. Require most agencies to submit an assessment on their general procurement performance so areas for improvement can be identified.

The new Infrastructure Commission will introduce an approach to infrastructure projects so the cheapest price is not chosen over the best long-term value.

Many of the new rules are optional for local government, but we could see increasing uptake amongst councils. Some councils were already looking to implement the rules in their procurement policies. Focusing on partnership and maintaining a sustainable construction industry is in the interests of all parties involved and is likely to lead to better results for projects, companies, and communities.

How do you feel about the implications of the new contracting relationship between the New Zealand government and the construction industry? Feel like it may have an impact on you, your business or your insurance? Let Bonded help you make sure you’re on the right track. Click the button below to get started today.