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Brian Gaynor: Building, the industry that got left behind

Posted by Impression on 07, Sep 2017

Has your renovation has ever gone over time or over budget? All mine have!
Brian Gaynor has been thinking about why our construction industry is stuck in a time warp.

A long read, but an interesting insight into one of factors behind the high price of Auckland houses. 

The poor productivity and performance of the construction and building sector is a major global issue because construction-related spending is approximately US$10 trillion ($13.9t) per annum, equivalent to 13 per cent of world GDP.

These inefficiencies have been highlighted in New Zealand by the disappointing performance of our building-related companies, particularly Fletcher Building.

A recent study by the McKinsey Global Institute, Reinventing Construction: A Route to Higher Productivity, concluded that "construction appears to be stuck in a time warp. In the United States since 1945, productivity in manufacturing, retail and agriculture has grown by as much as 1500 per cent; productivity in construction has barely increased at all". New Zealanders are fully aware of this low productivity issue.

How many major domestic construction projects have been completed on time and within budget? How many families have had their new home or kitchen renovation finished on time and within the original estimates?

The Economist, dated August 19, highlighted the fact that Berlin Brandenburg Airport was due to open in 2012 at a cost of US$1.8 billion ($2.5b) but media reports now indicate that its opening date will be mid-2019 at a total cost of more than US$10.0b.

An industry expert was quoted as saying, "more than 90 per cent of the world's infrastructure projects are either late or over-budget", with the new Apple head office in Silicon Valley opening two years late at a cost of US$5b instead of the original budget of US$3b.

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