With New Zealand’s largest city short of housing and the next two largest cities in need of rebuilding and repairing, costs are going to increase. At what pace will largely be dependent on timing and consequent pressures of supply and demand.

In an ideal world the work would be distributed in an orderly and logical manner to keep a lid on the potential of rising costs. The reality is that we have a number of competing demands among government departments, councils, developers, institutions and home owners. I am sure a number of people around the country are tired of hearing about the Christchurch earthquake issues, but the reality is that most of New Zealand is going to be affected in one way or another. We cannot look at procurement and building costs in New Zealand without looking at where the greatest demand currently is. If you are finding it difficult to locate tradespersons outside Christchurch you probably know where they have gone.

The arrival of new players in the construction market has become commonplace in Christchurch.

The demolition, horizontal infrastructure and construction phases in Christchurch have all seen the arrival of overseas companies in joint ventures or buy outs. In addition we have seen tradespeople and consultants arriving to be part of the rebuild.

While this will initially contribute to increases due to costs of relocation and establishment, long term it should help with the issue of demand outstripping supply. Training more local workers will take time, and skill levels will only increase slowly.  It will initially also add to costs. We have a number of capable construction companies in Christchurch but the reality is they cannot perform all the work that is ahead within the indicated timeframes.

Statistics New Zealand recently quoted the cost of building a new home had increased by 4.1 per cent nationally, and by 11.7 per cent in Canterbury for the year to June 2013. We know wage and salary rates, together with margins have all increased, and competing demand for a limited labour resource will continue to put upward pressure on costs.

We should be mindful that while we are seeing costs increase they have started from a relatively low base, a result of sustained low levels of construction activity.  Commercial construction costs around New Zealand have been relatively stable for some time and in my opinion have not increased anything like the domestic market.

Recent significant cost increases in Christchurch commercial construction are more attributable to the increased seismic hazard factor, more stringent health and safety issues and shortage of some subcontractors in the early trades. Added to that is the incorporation of damage-resistant designs into buildings. Admittedly these systems and associated costs are often discretionary, but many building owners see them as a leasing advantage providing tenants with both higher importance levels and the ability to occupy the building sooner should another seismic event occur.

How we go about procuring contracts is also likely to contribute to increased costs.  Factors such as time, type of project, location, competing projects, appetite for risk and resource availability including consultants, contractors and subcontractors will all feature in determining how a project is procured.


While traditionally most projects in Christchurch were tendered as fixed price, lump sum contracts, the concern about increasing costs in Christchurch is pushing projects towards a procurement method that reduces delays and gets a contractor involved earlier. These methods, whilst having merit within current market conditions could, if not adequately managed, introduce further risk in relation to the final project cost.

Will costs increase? Yes, but the big questions remain unanswered: When and by how much?  Without a doubt the issues of available resources, timing, procurement methods and new technologies will all affect cost.

Julian Mace is a director of quantity surveying and consultancy firm Rawlinsons, and took over as NZIQS president in June 2013.