Nearly all New Zealand's 128 major tower and crawler cranes on long-term construction sites have stopped working and contractors could suffer severe financial hardship, according to a study out today.
Chris Haines, a director of cost consultant and quantity surveying business Rider Levett Bucknall's Auckland office, said the latest RLB Crane Index showed the only major cranes now working were on health projects deemed essential.
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Before the four-week national shutdown, when New Zealand moved to Covid-19 level 4, Auckland had 88 cranes working. Queenstown and Christchurch 12 each, seven were working in Wellington, five in Tauranga, three in Hamilton and one in Dunedin. National crane numbers dropped 3 per cent in the past six months.
The only cranes still operating are working on projects deemed essential and that could be on only two sites in Auckland and Wellington, Haines said.
A big sector threat had arisen after all the cranes were forced to stop and building sites were shut down nationally.
"We are only aware of a handful of health projects in Auckland and Wellington for district health boards and Southern Cross that have applied to be deemed essential and can continue construction during lockdown," he said.
Long-term fixed and crawler cranes on multibillion-dollar infrastructure work were no longer swinging: Auckland's $4.4 billion City Rail Link, the $1.2b 14.7km long Watercare Central Interceptor and major roading projects like the Puhoi to Warkworth expressway, Kapiti expressway and Transmission Gully.
Augusta Capital announced on Friday that construction work had ceased at the developments in Queenstown for the new Radisson Collection Hotel and Cook St in Auckland for the new Jucy Snooze hotel.
Major retirement village owner/operators also told the NZX in the last few days that construction work had stopped at their many national sites.
Haines said cranes were no longer working on residential, retirement village or commercial projects but design and tendering was continuing but from people's homes, Haines said.
Several key risks to unfinished construction projects could arise after the four-week quarantine, he predicted. Limited cashflow would test the financial solvency of main contractors, sub-contractors, suppliers and some developers would be under huge financial pressure, he said.
"The government subsidies and assistance packages and the dispensations given by the banks will be key to ensuring projects and parties can viably continue during and after the lockdown," he said.
Contractual disputes on project time extensions might also arise, he predicted.
Security of sites, particularly where guards were not considered essential, meant theft risks, he said.
He also raised the issue of protecting work in progress, saying contractors had a very limited time to get organised: risk to timber and finishes being exposed to the elements could mean remediation after the quarantine period ended.
Health and safety issues on sites were other concerns, Haines said.
In the past six months, Auckland crane numbers went down 7 per cent. Nationally, the number of cranes on residential jobs fell 34 per cent, the lowest in the past four years.
"This reflects completion of a number of apartment projects and the growth being seen in the non-residential sectors over the past year," Haines said.
Auckland contributed to almost all of the net drop nationally, with seven fewer major cranes on sites. Crane numbers grew in some areas - Christchurch and Queenstown got five more cranes in the past six months and Wellington had one extra crane.
RLB counts fixed and crawler cranes in many cities then compiles the crane index to give an indication of activity levels in the construction sector. It regards long-term as those sites where cranes are working for longer than one month. Its last crane index came out in October last year.