Funding needs must be sought outside the box

By Tony Garnier

Dean Kimpton of AECOM says their survey results show the current construction community is under "real duress".
Dean Kimpton of AECOM says their survey results show the current construction community is under "real duress".

To convert the Christchurch rebuild and Auckland growth development plans into delivery mode quickly, new funding sources will need to be identified and exploited.

"Both cities have a vision and goals, and both have great opportunities. But the money needed to translate respective plans into firm projects won't all come from traditional sources," said Dean Kimpton, managing director of AECOM New Zealand. "There is an opportunity for someone to take on the leadership to frame some innovative thinking on what needs to be built and why, what order and when, and how we secure the capital to realise our potential."

"Both cities have the chance here to break out of a tradition of linear thinking - just funding a transport project alone, or a building complex. This thinking needs to be overlaid with a network outcome approach.

"By that I mean we should move our thinking from simply funding to build a transport network, or an urban complex, instead taking funding decisions based on the overall desired outcome and economic and social impact assessment.

We need to look at the needs of both cities from an overall organic whole perspective - not simply whole of project, but whole of city development," Kimpton said. He agreed the plans recently published by both cities allow for an organic or holistic approach in taking funding decisions.

"They both have exciting plans and goals. It's now about brilliant execution."

AECOM recently initiated New Zealand's first Infrastructure Construction Sentiment Survey. Its findings highlight an industry unified in its desire to advance New Zealand's economic development, but with strongly differing view-points on how to get there.

Gathered from regional and central authorities, contractors, consultants, designers and financiers, the findings give fresh insight into the New Zealand infrastructure market. AECOM intends to conduct the survey on an ongoing biannual basis. National workload expectations for the year ahead (see accompanying table) and the full survey can be viewed on the AECOM website at www.aecom.com.

Meanwhile, the principal finding of the inaugural survey reveals a significant mismatch in expected future workload between those tendering and investing in infrastructure.

* On the project delivery side, 83 per cent of respondents expect a rise in their infrastructure workload over the next three years.

* Only 35 per cent on the investment side of the industry expect their infrastructure expenditure to rise.

"While not unexpected in this economic climate it nonetheless sends a clear signal to the Government - as the major investor in infrastructure - that the current construction community is under real duress," said. Kimpton. "There is also a real enthusiasm to resolve the the 'funding issue', make it happen, get the sources of investment, including government, local and international investors excited about our prospects.

"It also reinforces my own growing view - and signals from government - that the days of relying on government to be the major investor in infrastructure are now coming to an end."

Kimpton suggested that the time has come for us as a nation to explore and embrace other investors and investment models.

"We are in a world in which cities are leading their nation's growth, and to make the investments to do that are competing globally for capital.

"Our findings also confirm the observation that funding is definitely slowing down in this area and point to a need for those in New Zealand who are charged with infrastructure development and renewal to:

* Rethink their position on the link between economic growth and performance, and infrastructure as an enabler.

* How the infrastructure required to deliver on that growth aspiration will be funded.

* Market New Zealand as a high-return-on-investment infrastructure destination, for local and international investors alike. "Obviously, funding is critical. The related challenge is further development of our global mindset as a nation - NZ Inc - toward infrastructure investment across New Zealand, not just our two largest cities."

This suggests some priority needs to be given to exploring different investment, ownership and insurance models from what we've seen before, including alternatives to PPPs.

"As I say, we are a small nation competing globally for capital. We have great opportunities. To not make a decision to identify new funding options, is the equivalent of making a 'no' decision. And that's not the Kiwi way," he said.

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n1 at 20 Oct 2014 18:00:39 Processing Time: 1889ms