The construction sector is part of a highly complex ecosystem which includes regulators, planning authorities, materials manufacturers and suppliers, property developers and a range of professional service providers. The house building process itself may involve up to thirty different players and contractors and for non-residential buildings the process is much more complex by several orders of magnitude involving many more steps and players.

In building construction there are two sub sectors, namely, Residential building (ANZSIC E301) which includes building houses and apartments; carrying out alterations, additions or renovations to houses, or in organising or managing these activities & Non-residential building (ANZSIC E302) which includes building structures such as motels, hospitals, office buildings, industrial buildings and other such non-residential buildings.

The residential building and construction services sub-sectors in New Zealand are dominated by many small firms and self-employed contractors. High proportions of self-employed in residential building (45%) and construction services (37%). The non-residential sub-sector has much larger firms operating (refer figure Representative examples of firms in residential and non-residential sub-sectors). The sector contributes 6.3% of GDP, employs 7.5% of the workforce, but accounts for 10.5% of all businesses. The presence of very few large firms affects ability to develop economies of scale and improve productivity. The sector is characterized by the very large number of small firms; 87% of all firms’ employ nine or less workers. (The New Zealand Sectors Report, 2013)

Productivity in the NZ construction sector has generally been below that for the economy as a whole. For every hour worked in the construction sector, $34 of GDP is generated. This is significantly below the all-sector NZ labour productivity average of $48 per hour worked (The New Zealand Sectors Report, 2013).

The NZ productivity commission’s inquiry into housing affordability noted that “the industry is dominated by small firms which build one house at a time, are unable to generate economies of scale, and often lack management capability. The industry is also fragmented vertically which presents difficulties in the management of the supply chain. The industry is subject to significant demand cycles, making investment in firm expansion and the recruitment and retention of skilled staff difficult. The industry suffers from a number of skill issues, particularly at the management level. The misalignment between industry business cycles and industry training can result in skill shortages during booms and excess staff during periods of downturn.” (NZ Productivity Commission, 2012).

How we can help:

• Process re-engineering
• Sub-contract & Supply chain management
• Skill enhancement
• Waste reduction & Productivity enhancement
• Auditing and Monitoring