Auckland s Procurement Forum

Transcription

1 Auckland s Procurement Forum PROACTIVE ENGAGEMENT OF AUCKLAND S BUILDING AND CONSTRUCTION INDUSTRY AUCKLAND PIPELINE REPORT NO.2 NOVEMBER 2012

2 DATA SUPPLIED AT A DETAIL LEVEL Auckland District Health Board Auckland Council Property Auckland Transport Counties Manukau District Health Board Massey University New Zealand Transport Authority University of Auckland Vector Watercare Waterfront Auckland Auckland Council Stormwater New Zealand Defence Force DATA SUPPLIED AT A SUMMARY LEVEL Auckland University of Technology WILL SUPPLY DATA AT A FUTURE DATE Housing New Zealand Corporation Westpac PARTICIPATING IN AUCKLAND PROCUREMENT FORUM BUT UNABLE TO PROVIDE DATA AT THIS POINT Chorus Telecom NZ Auckland Airport SUPPORTED BY Property Council New Zealand Statistics New Zealand Construction Clients Group NZ RCP Rider Levett Bucknall Department of Corrections Ministry of Education Unitec Waitemata District Health Board Transpower Building and Construction Sector Productivity Partnership The Secretariat c/o Ministry of Business, Innovation and Employment Level 6, 86 Customhouse Quay PO Box , Wellington 6143 P F

3 How to use the Report This is the second report of the Auckland Procurement Forum and therefore the data represents the data allocated since March 2012 it will be improved in both depth and extent as the data set is built up so care continues to be taken in interpretation. The Report sets out to assist both Client and supply side organisations understanding the future state and nature of the Auckland construction market. It s main aim is to support improved efficiency and drive out wasted effort from the construction planning and delivery processes. The data presented is extracted form a series of forward spending profiles and it should be noted that forecast data can change at any point. The scope of the information at this point covers the public sector capital expenditure (new build and refurbishment and upgrading projects). The data refers to spend across financial years from 1st July to 30th June - where exceptions are known they are noted in the text. Note: contributing organisations have predominantly supplied data for three years - exceptions are noted within the Report. LEARNINGS FROM REPORT NO.1: The Report was issued on 5 March 2012 and was well received by the Industry. Industry feedback asked for fuller details, especially for the supply side and trade sectors. NEW SECTIONS ADDED TO REPORT NO.2: Data gathered in August/September 2012 and compiled in October A supply side perspective has been added, specifically with a Trade Division split of potential work by value being included. More detail has been added into the client spend sectors allowing a clearer picture of the type of spend areas. New Client organisations have provided data. A time based/trend comparison has been included. NEXT STEPS: Data collection will be streamlined. Deeper analysis will provide more detail about trade division spend. Alignment with Statistics NZ historic data set for Auckland s construction sector to connect historic spend profiles with planned expenditure. 1

4 General economic outlook for this Procurement Pipeline Report PROVIDED BY WESTPAC INSTITUTIONAL BANK New Zealand economic growth accelerated over the first half of GDP growth was 1.1% in the March quarter, and indicators suggest the June quarter also featured robust growth. Negative influences at present are the slow global economy and falling export returns, and restrained government expenditure. Positive influences are rising house prices, which are stimulating more consumer spending (retail sales are up 4.8% over the past year), and the Canterbury rebuild and repair programme. Canterbury activity is gathering pace. Building activity is now 35% higher than a year ago. We estimate that there was $230m of residential repair and rebuilding work conducted in the June quarter of This is roughly equivalent to 10% of NZ s total quarterly rate of residential construction before the earthquakes. Around $400m of commercial and non-building construction work is thought to have taken place over the three quarters to June The quantity of ready-mix concrete produced in Canterbury has now surpassed the 2007 peak. Residential and non-residential building consents are up sharply, indicating further growth ahead in Canterbury. Still, there is a long way to go before Canterbury activity reaches its expected peak. FIGURE 1: QUAKE-RELATED CONSTRUCTION ACTIVITY IN CANTERBURY 2

5 Meanwhile, construction activity elsewhere in New Zealand remains slow. Significantly, the number of residential building consents issued in Auckland has started declining. Interest rates are currently very low, and we expect they will remain low until mid We expect low interest rates will continue to stimulate the housing market, driving prices higher. In turn, this could generate further growth in consumer spending and worsen New Zealand s economic imbalances. Rising house prices are expected to stimulate more residential construction activity, especially in Auckland. As the Canterbury repair and rebuild programme gathers steam, GDP will remain higher than usual and unemployment will fall. Eventually, we expect inflationary pressures from the Canterbury rebuild and rising house prices will force the Reserve Bank to increase interest rates. This could slow the housing market. The exchange rate is high and could rise further. This tends to depress the non-commodity export sector, but it also makes investment activity cheaper by reducing the NZD cost of imported goods and services. 3

6 TABLE 1: CONTRIBUTING ORGANISATION SECTOR DISTRIBUTION Government or Private Horizontal or Vertical Sector Organisation Roading NZTA Auckland Transport Rail Auckland Transport Horizontal Power Infrastructure Vector Transpower Water Watercare Auckland Council Stormwater Misc Waterfront Auckland New Zealand Defence Force Ministry of Education Government University of Auckland Education Massey University Unitec AUT Office See below Vertical Waitemata DHB Hospitals Auckland DHB Counties Man. DHB Social, Cultural and Religious Auckland Council Property Misc Department of Corrections New Zealand Defence Force Private Misc Waterfront Auckland Notes: Sectors and Sub-Sectors (see later) are the industry standards used by Stats NZ. The Auckland Council Property data includes a small social housing element. 4

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8 Report Highlights Total Proposed Spend TABLE 2: CAPITAL EXPENDITURE OVER THREE YEARS ($M) Sector 2012/ / /15 Three Year Total Horizontal 1,665 1,831 1,678 5,173 Vertical ,045 TOTAL 2,226 2,568 2,424 TABLE 3: PREDICTED CHANGES AND INFLATIONARY PRESSURES (%) 2012/ / /15 $ Million Report No.2 (August 2012) (Adjusted to a like for like basis with Report No.1) Report No.1 Total (March 2012) (Adjusted to a like for like basis with Report No.1) 2,112 2,512 2,365 2,053 2, ,501 Report No.1 Total (March 2012) 2,053 2,514 2,511 % Change vs. last Report (Adjusted to a like for like basis with Report No.1) Estimated Inflation (%) CIV

9 FIGURE 2: PREDICTED CHANGES BETWEEN REPORT NO.1 AND REPORT NO.2 AND PREDICTED INFLATION Note: Report No.2 contains revised data for earlier time periods (i.e. Report No.1 and a new client set therefore Figure 2 is on a like for like comparison, based lined to Inflation data from Stats NZ, NZIER forecast (RLB forecast 65). Capital Expenditure is aggregated by the primary sector of the supplying organisation. Inflation Cost Index Value (CIV) has not been applied to the totals. Estimated Inflation is derived from CIV and Capital Goods Price Index Non-Residental Building (CGPI - NRB) data and is given as a general estimate only. Public Private Partnership (PPP) projects have been excluded from this Report. Horizontal and vertical split derived from analysis of organisation s key construction delivery mode. Statistics NZ 2010 calendar year data for Non-Residential Building Work put in place (Institutional, Government, vertical sector) = $659M. For comparator purposes this can be related to Table 2 - Vertical Sector, as is calculated from consented building works (i.e. does not include horizontal infrastructure). This Report Central government and Local Authority sector only. Waitemata DHB were only able to supply data for two years. 7

10 TABLE 4: ORGANISATIONS OVERALL EXPENDITURES Organisation Spend ($M) 2012/ / /15 TOTAL Auckland Transport ,282 NZTA ,388 Watercare Ministry of Education University of Auckland Vector Auckland Property Counties Manukau DHB Auckland Council Stormwater Department of Corrections Auckland DHB AUT Waitemata DHB Waterfront Auckland Massey University Transpower New Zealand Defence Force Unitec TOTAL 2,226 2,568 2,424 Note: Only one year of data was available from Transpower and two from Waitemata DHB. 8

11 FIGURE 3: TOTAL INDUSTRY SPEND Note: Transpower were able to provide only one year of data. Overall expenditure includes both proposed and committed spend. 9

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13 Section 2: Supply Side Review This review of expenditure from the supply side perspective is divided into vertical and horizontal industry determined trade sectors. Figures are based on historic project expenditure split data which has been derived from a client sector and sub-sector proposed expenditure split. They also represent all up construction costs Rider Levett Bucknall. TABLE 5: VERTICAL TRADE DIVISION SPEND Trade Division 2012/ / /15 $ Million Earthworks and Civils Structure External Envelope Internal Finishes and Sundry Building Services On-Costs and FF&E TOTAL Note: on costs and FF&E are defined as furniture, fittings and equipment. FIGURE 4 Note: This graph represents the spends in each Supply Side Trade Division and is not cumulative. On Cost and FF&E are excluded. 11

14 TABLE 6: HORIZONTAL TRADE DIVISION SPEND Trade Division 2012/ / /15 $ Million Roads and Bridges Track and Civils 8* 1 Stations, Terminals, E and M Power Transmission 84* 2 Power Distribution Water Drainage Civils and Sundry TOTAL 1,665 1,831 1,678 FIGURE 5 Note: This graph represents the spend in each Trade Division and is not accumulative. *1 The only Track and Civils spend is being conducted by Waterfront Auckland. Kiwi Rail have not provided spend information. *2 Only one year of Power transmission data was provided to this Report therefore neither *1 nor *2 feature in Figure 5. 12

15 Section 3: By Client Sector (total spends) TABLE 7: HORIZONTAL SECTOR TOTAL SPEND Sector Roading Rail Skill Sub-sector Roading Bridges Track and Civils Stations E and M 2012/ / /15 $ Million 867 1, Power Infrastructure Generation Transmission Distribution Buildings Water Civils Networks Misc TOTAL 1,665 1,831 1,678 Note: No generation spend data was collected for this Report No.2. 13

16 TABLE 8: VERTICAL SECTOR TOTALS Sector Skill Sub-sector 2012/ / /15 $ Million Tertiary Education Hospitals Social, Cultural and Religious Secondary Primary Clinical / labs Consulting / Services Administration Misc TOTAL Note: Sectors align to Statistics New Zealand survey Sectors (see Table 1). Not all Sectors are fully represented in this Report - i.e. Other (Housing New Zealand Corporation), Power Infrastructure + IT/Telecoms. Data will be added over subsequent updates. This Report covers only a selection of Central Government and Local Authorities. FIGURE 6: THREE YEAR SPEND PROFILES 14

17 FIGURE 7: HORIZONTAL BREAKDOWN FIGURE 8: VERTICAL BREAKDOWN Note: These graphs represent the spend in each Sector and are not cumulative. Only one year of data was available from Transpower and two from Waitemata DHB. 15

18 Section 4: Changes since the last Report FIGURE 9 AND 10: CHANGE IN EXPECTED SECTOR SPEND (3 YEAR TOTAL) BETWEEN REPORT NO.1 AND REPORT NO.2 Figure 9 shows the change in the capital spend which occurred between the publishing of Report No.1 and Report No.2. The figures have been normalised to take account of additional organisations providing data to make a like for like comparison. 16

19 Note: The classification of Waterfront Auckland has been changed from Social Cultural and Religious to Misc, though this has been accounted for in this comparison. A like for like comparator has been used (see also notes on Table 2). The overall change in rail expenditure is, in part, based on: - early overall expenditure figures being subsequently firmed into detail spending categories, - programming decisions extending expenditure outside the scope of the Report. 17

20 Section 5: Client expenditure split by type TABLE 8:NEW BUILD OR CAPITAL REFURBISHMENT WORK Horizontal or vertical Organisation NB total 2012/ / /15 CR total NB total CR total NB total CR total NZTA Auckland Transport Vector H Transpower Watercare Stormwater Waterfront Auckland Defence Ministry of Education Auckland University Massey Unitec AUT V Waitemata DHB Auckland DHB Counties Man. DHB Auckland Property Corrections Defence Waterfront Auckland TOTAL 1, , , Year Totals 2,226 2,568 2, Note: NB, New Build = capital works, rebuilding and expansion works. CR, Cap. Re-furb. = Capital refurbishment of existing facilities, which include major repairs and upgrades. This split should allow the supply side to review availability of work by work type and therefore fit to their delivery speciality or business division.

21 Section 6: Project Size Split (of the organisations that provided this split) This split should allow suppliers to review availability of work by project size and therefore fit to their delivery capacity. FIGURE 11 - FIGURE 12 FIGURE 13 19

22 Section 7 TABLE 9: SPLIT BY REGION Area 2012/ / /15 $ Million Note: North and East Central and East 884 1, Southern Pan Auckland 871 1,022 1,020 Total 2,226 2,568 2,424 Where no specific regional data was given data is applied to Pan Auckland. Where proposed work extends across regions it was attributed to Pan Auckland. Where organisations only provided high level (annual data) this is included in Pan Auckland. 20

23 Auckland Procurement Forum Auckland Procurement Forum was formed in December The Auckland Procurement Forum s purpose of demonstrating client leadership can be articulated through six goals. These are set out below along with the outputs required to achieve them: 1 To share the proposed forward plan workload of Auckland s major clients (demand-side) with the supply-side of industry. Output: The Auckland Pipeline Report. 2 Understand and mitigate against the impacts of the boom bust nature of NZ s construction market within the Auckland regions. Output: More informed Clients making strategic decisions through consultation and review between client organisations through the Forum group. 3 Clients acting more efficiently through sharing best practice and resources. Output: Forum Member Meetings and possibly extra-curricular activity. 4 Improved procurement efficiency and reduction of resourcing waste through: a. Process shared and mutually agreed procurement process b. Procurement type implementation of Best Practice c. Alignment and unification procedures Output: Agreement on review, consultation and implementation of better procurement practises. 5 Engagement with industry. Output: Industry consultation on procurement practices, The Annual Industry Event and one-to-one meetings with clients and or specific client groups as appropriate. 6 Engage major private sector clients. Output: Increased Forum membership to include private sector players, and increasingly robust Auckland Pipeline Reports covering more of Auckland s planned expenditure. FURTHER NOTES ON THE DATA SET: To be read with the Notes on page 3 and throughout the report. The data has been reconciled to a Year 0 cost for 2011, no inflation effects included. Where practicable, a comparison with existing current and historic data sets provided in cooperation with Statistics NZ will be given in future Reports. NZTA and Statistics NZ: The latest Cost Index Values for Infrastructure and Public Transport DATA COLLECTION Data will be updated on a quarterly basis and republished overall annually for the next three years rolling forward. The Annual Report will be published in August based on revised forward spending plans developed for approval in June each year. DISCLAIMER NOTE: While the authors have taken all care in preparing this report, it should not be relied on as a comprehensive view of the future capital investment in the Auckland region. The data provided is for the readers information only and does not constitute a commitment by the persons to which the information relates, or the authors, to the indicated levels of spending. Forecasts are based on data from a limited pool of third party contributors, and will change from time to time after publication of this report.

24 Building and Construction Sector Productivity Partnership The Secretariat c/o Ministry of Business, Innovation and Employment Level 6, 86 Customhouse Quay PO Box , Wellington 6143 P F Delivered by Constructing Excellence-NZ through the Procurement Forum for the Productivity Partnership