Infrastructure: NZ needs a broader strategy for skills development
Closing the productivity gap – Hong Kong
New Zealand's construction sector is strong, but inefficiencies are costing us. Despite being among the top 10% of OECD countries for infrastructure investment, we're in the bottom 10% for value delivered.
According to Infracom1, labour productivity in heavy and civil engineering construction grew just 5% between 2000 and 2020 - far behind the 23% growth in building construction and 30% economy-wide. If civil construction had kept pace, it's estimated that costs could be 10% lower, workforce demand 11% lower, and output 5% higher.
Alex Katsanos is Managing Principal Advisory — Asia, Aurecon. Photo / Supplied
As an industry, we must look inward and acknowledge that we can be slow to change. Tools to lift productivity already exist – AI and automation, prefabrication, smarter project management methods. Great work is happening within individual companies, but to make real inroads, we need industry-level transformation. An example New Zealand could look to is Hong Kong, with its focus on workforce development, data and digital innovation, and programme management.
Workforce
Hong Kong's workforce planning aligns its talent pipeline with future infrastructure projects and the changing skillsets required for modern construction. Vocational training is shifting its focus towards technologies such as Building Information Management (BIM), prefabrication, and automation. A centralised data system has been established to track key workforce data – how many people work in each trade, where they are located, how many are entering the workforce through training and visas and how many are expected to retire. This data is mapped against future project needs to reveal skills gaps and inform workforce planning. Data is taken to the most granular level - such as time taken to complete individual tasks - helping to build a bank of insights that can support standardisation and lift productivity over time.
New Zealand's construction industry is a little different – made up largely of small contractors, with a handful of large companies - meaning building this kind of national picture of talent may be a little more complex. However, we can still increase visibility of the pipeline of engineers, builders and tradespeople coming through as compared to the pipeline of projects ahead. This will help quantify the scale of our skills gap, supporting a targeted strategy around building capability and sourcing overseas talent.
A broader strategy for skills development - focused on the needs of a modern construction sector - will be key to enabling the wider adoption of new technologies and delivery methods.
Programme management
Hong Kong is moving away from fragmented project-by-project management toward an integrated approach, letting groups of projects to Programme Management Offices (PMO) run by international firms. An example is the HK$224 billion Northern Metropolis housing and business hub, which is being delivered as tens of interconnected projects by a PMO. Although in its emerging stages, the model is expected to significantly reduce delivery timelines while improving quality outcomes and budget performance.
Hong Kong, China - May 26, 2022 : Landmark M+ Museum in West Kowloon cultural district in Hong Kong city
While New Zealand may not be embarking on a project the scale of Northern Metropolis anytime soon (900,000 new homes will be built as part of the project), we can still benefit from a programme management-type approach in some contexts. With the NIP recommending that 60% of infrastructure investment be directed toward asset maintenance, we're likely to see an increase in smaller-scale projects in the future. Delivered collectively, these could unlock efficiencies and economies of scale. Water infrastructure stands out as a clear opportunity - and the Local Water Done Well framework provides a foundation for a PMO approach to maintaining water assets.
Data and digital
Building a more complete picture of the condition of our assets is a key opportunity for wider adoption of data and digital technology. New Zealand has a huge number of assets that, if digitised, could provide an excellent resource for asset owners to make better decisions and help prioritise their maintenance activities.
Building this bank of data could have a flow-on effect on the industry, helping drive greater use of digital technology at every stage of project delivery.
In Hong Kong, the Government is implementing policies to drive wide adoption of BIM, robotics and drones, digitally enabled prefabrication, AI and virtual reality, collaboration platforms and other technologies. The approach aims to cut construction costs and boost productivity by 10% or more.
Data generated in projects will be captured on a single platform, creating a resource to assist decision-making on future projects and prioritisation of investments.
While New Zealand is already adopting many of these tools, we are only at the stage of developing a common data standard – which is key to realising the full benefits of this technology. Clear policy from the Government, together with industry input, is essential.
Aligning investment to national vision - Ireland
The NIP calls for a stronger focus on long-term investment planning, to enable a more sustainable and affordable approach to project selection and delivery.
Rightfully so, but could we take it a step further, to align a national vision to investment planning?
Aerial view of Dublin's channel, near the port.
Defining a vision for where and how we want to grow (and the kind of future we want to create), could help simplify decision-making around which projects to prioritise, and separate infrastructure from political cycles.
Linking investment to vision also enables us to more clearly measure outcomes.
A country doing this well is Tracey's native Ireland with Project Ireland 2040, the Irish Government's long-term strategy to build a more resilient, inclusive, and sustainable future. The strategy aligns infrastructure investment with National Strategic Objectives for 2040 and is delivered through two key levers: the National Planning Framework, which sets out the spatial strategy for the next 20 years, and the National Development Plan 2021–2030, which commits €165 billion over a decade to realise the country's economic, social, environmental, and cultural aspirations.
Executing fast but thinking deeply
The National Infrastructure Plan is a genuine step forward and lays out clear priorities for responding to New Zealand's infrastructure challenges. However, we must now turn plans into outcomes.
To make progress, we must think both fast and slow: accelerating the way we deliver projects while slowing down and thinking deeply about the kind of future we wish to create and the infrastructure investments that will take us there.
As we embark on this journey, we can take insight from other jurisdictions - Hong Kong is lifting productivity through integrated workforce planning, programme management and digital innovation, while Ireland looks to the future, aligning infrastructure investment with a national vision. The best outcomes derive from a mix of both.
Aurecon is an advertising sponsor of the Herald's Infrastructure report.
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