Govt looks to cut building costs

Government agencies are forecast to increase their annual spending on building supplies to $3.3 billion, from $1.5 billion.
Government agencies are forecast to increase their annual spending on building supplies to $3.3 billion, from $1.5 billion.

New Zealand's government is looking for ways to save money on building materials as its annual spend is predicted to more than double for the next five to eight years, driven by the Canterbury rebuild and leaky building remediation.

Government agencies are forecast to increase their annual spending on building supplies to $3.3 billion from a previous base of $1.5 billion a year, the Ministry of Business, Innovation and Employment said in a discussion document. Canterbury is expected to account for 54 per cent.

As part of a procurement reform programme started in 2009, the government is trying to save money, improve productivity and boost competition by establishing 'all of government' contracts with suppliers. The government, which traditionally accounts for about 27 per cent of the construction market, wants to expand the procurement programme to cover building materials as its spending ramps up.

"Since 2007, there has been an upward price trend on a variety of building materials despite reduced demand associated with the global financial crisis," the ministry said.

"Our current forecasts indicate that increases in prices arising from renewed international demand, exchange rate movement, a reduction in raw material availability and rising transport costs will maintain or increase this trend.

"Given both the scale and potential increases in agency spend, government is keen to ensure that it takes a more collaborative, coordinated and strategic approach as to how it procures and pays for building materials," the ministry said.

The ministry is seeking input on the discussion document from manufacturers and distributors of building materials, tradespeople and construction companies, and professional organisations or construction professionals involved in the specification of building materials.

Responses must be returned by November 8 and the ministry plans to publish a summary detailing its findings by November 29.

- BusinessDesk

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