Government construction projects will support skills training

Government agencies are being encouraged to take skills and training into account when contracting for large construction projects, rather than wait for it to become mandatory. 

The Ministry of Business Innovation and Employment (MBIE) is currently working to make skills and training development a requirement for construction procurement projects valued at over $10 million and this will likely take effect next year. 

However Economic Development Minister David Parker and Building and Construction Minister Jenny Salesa have agreed that Government agencies should take the lead in setting good construction procurement practice as soon as possible. 

They are writing to chief executives of 137 government departments and agencies advising them not to wait until it becomes a requirement. 

“While central government contracts only make up about 18 per cent of construction activity, government should take a leadership role,” David Parker said. 

“There's no ‘one size fits all’ solution to the delivery of complex infrastructure, but there are good practices that can be more consistently applied.” 

The chief executives are being encouraged to follow the Construction Procurement Guidelines, and to consider adding skills and training components as requirements in new construction contracts. 

“Government agencies can use their capital investment to find ways to partner more effectively with the construction sector to deliver better value, and better outcomes, for New Zealand,” David Parker said. 

The voluntary Construction Procurement Guidelines were developed in conjunction with the industry in 2015 and provide direction on areas such as considering whole-of-life costs and outcomes and the appropriate allocation of risk. 

Jenny Salesa said the Government has had a number of discussions with stakeholders in the construction sector about how to work together better to improve long-term outcomes.  

“They have told us that consistent use of these Guidelines will be positive for the sector as a whole. 

“We have heard there is also a tendency for agencies to favour the lowest cost bid, which typically favours suppliers who do not invest in training and developing their workforce. 

“This has been a long-standing issue that has contributed to a shortfall of about 30,000 construction workers. Creating a more sustainable construction sector for New Zealand means we need to invest in workforce development and training,” said Jenny Salesa.  

The Government Rules of Sourcing, which are used in conjunction with the Guidelines, will be updated to include a new requirement for agencies to provide evidence that the Guidelines have been considered. This is expected to come into effect next year.

Notes to Editors:

The New Zealand Government spends approximately $41 billion each year on procuring goods and services. This is about 18 per cent of New Zealand GDP.

Construction Procurement Guidelines are available at: https://www.procurement.govt.nz/procurement/specialised-procurement/construction-procurement/

The Government Rules of Sourcing are at:

https://www.procurement.govt.nz/procurement/principles-and-rules/government-rules-of-sourcing/