The current problems affecting the construction industry are not unique to New Zealand. The lack of transparency regarding the magnitude and timing of the development plans of central and local governments, the chronic shortage of qualified personnel, the poor quality of construction and the epidemic of bankruptcies of construction companies are worrying factors. In addition, if contractors are continuously subjected to a series of bidding wars focused on cost rather than the quality of results, the New Zealand construction sector in general, which already operates with chronically low margins, will be destabilized. Much of this turbulence is due to the industry's desperate desire to outsource the risk associated with large construction projects, leaving commercial construction companies in New Zealand to assume large amounts of risk.
According to Ardern, the Construction Sector Agreement will improve the culture and reputation of the construction sector, strengthen its workforce, and provide safer, more durable and affordable buildings and infrastructure housing. Prime Minister Jacinda Ardern, together with Peter Reidy, CEO of Fletcher's Construction, and other prominent industry players unveiled their Construction Sector Agreement, a new joint strategy designed to combat these structural problems. The Construction Sector Agreement recognizes that, in the past, construction sector customers and government decision-making behaviors have generated systemic problems that have had a negative impact on the New Zealand economy and on the well-being of New Zealanders. While some companies continue to struggle to address the inadequacy of municipal construction and compliance regimes, much of this problem may also be due to the apparent willingness of New Zealand construction companies to take on too many risks in spite of of operating with very small profit margins.
In essence, the New Zealand construction industry as a whole needs a fundamental change in its approach to tendering and operation.
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