Accord looks good for city: Hodgson

The new accord between the Government and construction sector should mean more Dunedin subcontractors pick up work and train locals to build the new Dunedin hospital.

It should also mean there is less chance a main contractor would go broke while completing the build, Southern Partnership Group chairman Pete Hodgson said.

The Government is partnering with some of New Zealand's largest construction companies to tackle the sector's reputation after company collapses and poor-quality builds.

The plan is intended to raise workforce capability and capacity, improving business performance and the building consents process.

Mr Hodgson said the Government was suggesting contractors should bring to the table aspects like health and safety, and how they would build and develop a workforce for projects.

If there were large off-shore firms looking to come to Dunedin to build the main hospital building - it is expected an overseas company would take the contract - the accord would mean they would be favoured if they planned for pre-training, which would mean using local firms.

Local builders or electricians, for instance, would not necessarily want to train workers on the off-chance they got work on the hospital.

But that could change if they developed a relationship or memorandum of understanding with an offshore company to be favoured as a sub-contractor.

''All of a sudden we've got local companies being necessary for the success of the large company.

''That augurs well both for training, and ensuring the contractors and sub-contracts for the various buildings are spread far and wide.''

That would include ''a substantial local contribution''.

Mr Hodgson also said the accord signalled a move away from ''a straight historical contracting method''.

Under the method used at present, a contract price was set at the outset, and issues discovered during a build which could change the price were not taken into account.

An example was geotechnical issues, for instance problems in the soil underneath a build that might require a change to foundations.

At the moment contractors would allow for a cost overrun, which would translate into a good profit if there were no problems, or a ''serious impediment to their profits'' if there were.

In the future, there needed to be a willingness from both parties to alter the price up or down ''according to what they find''.

''At the extreme it means that all the players open all of their books and give all of their details to each other.''

That situation did happen in others areas, like roading.

It would be a better way to approach hospital contracts.

''The fear that I have is that building this very large hospital in this relatively small city will either cause too few companies to want to be involved, which will put the price up for the taxpayer, or the opposite might happen, which is a competitive market is achieved, but the company that wins goes bust halfway through.

''Then you've got no hospital and no major contractor.''

It would be better to have a more flexible model ''and that's what's being signalled.''


So the government acknowledges that it has been pushing unfair contracts onto contractors and has had a part to play in the financial instability caused to some building companies, their subcontractors and all the families involved. Good to see that they will now alter their contracts to be more in line with what is generally standard in the private sector. Shame for those that have passed before.