NZIQS Research Paper - Construction contract procurement model trends in a buoyant market
Views of industry stakeholders in New Zealand
View full report here
Prepared by the Construction Research Group (CRG) at Massey University, Albany, for the National Research Committee of the New Zealand Institute of Quantity Surveyors (NZIQS).
i. How do the relative use frequencies of the various procurement strategies change during the transition from depressed to buoyant market conditions?
ii. How do the relative use frequencies of the various contract strategies changes as the industry transitions from depressed to buoyant market conditions?
iii. How do the relative use frequencies of the various tendering strategies change as the industry transitions from depressed to buoyant market conditions?
iv. What are the factors that can influence the shift of procurement model from depressed market to buoyant market?
Key Results of the Industry Survey
1. Procurement strategies change during the transition from depressed to buoyant market conditions
2. Contract strategies change as the industry transitions from depressed to buoyant market conditions
3. Tendering strategies change as the industry transitions from depressed to buoyant market conditions
4. 14 factors influence the shift of procurement model
1) Clients’ are generally reluctant to adopt new procurement methods, which are unfamiliar for them.
2) Time constraints.
3) Influence of lenders - their perceived risks and familiarity with procurement approaches as conditions for tendering.
4) Workload of contractors and their readiness to take on more jobs.
5) Contractors’ bargaining power.
6) Risk avoidance: Clients prefer the procurement method that could enable them to pass on risks to other parties involved.
7) Expectations around the delivery of project.
8) Popularity of existing procurement methods: Clients' inclination to go with the method that is popular and commonly used in the industry.
9) Availability of labour resources.
10) Availability of project finances.
11) Influence of consultants if authorized by client - their familiarity with particular procurement approaches incline them towards their adoption.
12) Level of design development and project information.
13) Contractors' willingness to accept client's terms and conditions, including procurement and contract strategies, and specific conditions of contract.
14) Level of competition within the industry.
PAQS International Cost Summary
The Pacific Association of Quantity Surveyors (PAQS) has collated cost information from members on the Cost per m2 GFA across PAQS countries for different building types including: office, retail, residential multi, hotel, carpark and industrial warehouse. See the International Cost Summary here.
Escalation in New Zealand Construction
In 2017, Rider Levett Bucknall undertook industry engagement research to understand what the key factors are in causing escalation in the NZ Construction market, and what effects these have on current projects.
Steve Gracey and Bradley Cole presented the findings at the NZIQS Conference in June 2017. A summary of the key points from this industry research can be viewed here.
Quantity Surveyors' Services in the Project Delivery Process:
Stakeholder Perceptions of Value, Strengths and Areas for Improvement"
The results of the NZIQS research project were presented to the PAQS Conference held in Christchurch in May 2016.
See full presentation here.(PDF 4MB)
The key objectives of the research were to investigate:
Levels of importance stakeholders attach to the QSs' services at the various stages of the project delivery process
How stakeholders perceive the QSs' performance of those services
Key Strengths and weaknesses of the QSs and areas for improvement in their service based on the outcome of Importance-Performance matrix analysis
Perceived added value of the Consultant and Contractor QSs' services in the project delivery process
NZIQS Research Group goals and purpose:
- Investigating the critical problems the profession may have in routine business operations and proffer evidence-based solutions that support competitiveness, business success and growth
- Assuring the quality of QS research activities in New Zealand
- Fostering the delivery of the strategic objectives of the NZIQS by commissioning and disseminating the findings of research
- Promoting practical and industry-relevant research in the New Zealand tertiary education sector
- Engagement with PAQS partners and wider research community and encourage new researchers
- Leverage other research funding opportunities
An additional long-term goal is to engage more with other industry professionals.
In November 2014, the Research Committee surveyed industry to understand from the market what areas of the profession could benefit from quality research, that could in turn produce solutions to support business success and growth.
A summary of those results is here
Members of the research group:
David Finnie (Convenor)