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Construction boom expands asset base to be managed and maintained

Sustained economic growth has done more than stimulate business confidence in New Zealand. For the full year 2016, residential construction activity grew 9.5 percent, with building consents at an 11-year high in October 2016.

At the end of 2016, the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion (NZIER QSBO) showed that 26 percent of businesses in the country expected that economic conditions would improve in the following months; with business confidence strongest in the construction sector.

Strong population growth, low interest rates, strong tourism activity, high retail spending and improving dairy prices are all expected to sustain positive growth in the construction sector.

In addition, a number of government investments have helped spur infrastructure build. These include the Accelerated Regional Roading Programme, the Housing Infrastructure Fund and Ultra-Fast Broadband (UFB) and Rural Broadband projects. In Christchurch, the Greater Christchurch Regeneration Act 2016 came into force to support regeneration initiatives (and construction activity is likely to continue at high levels till mid 2017).

Asset Management in 2016

Government-driven improvements to asset management (particularly reporting and capability building), as well as the roll out of the Investor Confidence Rating (ICR) across 25 of the most investment-intensive government agencies is driving action on asset management improvements.

In the first half of 2016, the Ministry of Education transitioned to a new asset management system, Helios. Twenty District Health Boards (DHBs) have also undertaken asset management maturity self-assessments.

Local Government New Zealand (LGNZ) rolled out the Local Government Excellence Programme, with 21 councils involved in the first year. Watercare completed an updated 20-year asset management plan. The 15-year New Zealand Defence Force (NZDF) Estate Regeneration Programme Plan was also completed.  And the new Emergency Housing Funding Model was implemented.

These developments point to an increasing level of maturity in asset management that is likely to be a long term driver of growth for the infrastructure and facilities management industry.

Future Opportunities and Challenges

A number of medium to long term opportunities for infrastructure and facilities management services present themselves in New Zealand. These include demand management strategies for Auckland’s transportation network, further expansion of the Ultra-Fast Broadband network, infrastructure and building upgrades for the defence force, implementation of asset management improvements at district health boards, regeneration projects in Christchurch, etc.

However, in the process of realising these opportunities, the industry must also contend with significant challenges relating to ageing assets, the need to leverage appropriate technologies in built environments (for productivity benefits, as well as to engage the future workforce), the need to increase the level and sophistication of data analytics in managing assets, the variability of facilities management maturity and capability across public and private sector organisations, the need for training and career pathway development within the facilities management industry, etc.

Finally, a more long term and strategic view of facilities management is required to ensure that the industry delivers value beyond short-term fixes of assets.

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