New research on innovation in residential construction

30 October 2014

New research released on innovation in residential construction

A report by the New Zealand Institute of Economic Research (NZIER) on the impact of the demand for individually tailored (bespoke) houses on innovation in the residential construction sector was released today.

The study was commissioned by the Building Research Association of New Zealand (BRANZ) and the Building and Construction Productivity Partnership (Productivity Partnership), which is part of the Ministry of Business, Innovation and Employment. Both organisations take an active interest in how to improve the performance of our construction industry.

This new research by NZIER throws light on how we might increase innovation and productivity in residential building in New Zealand. It indicates that better project management and changing the way building regulations are set and applied provide the greatest opportunities for improvement.

NZIER found that innovation in residential construction here is focused on the use of new products that enhance building design but don’t necessarily improve sector productivity.

“The findings confirm New Zealanders’ love affair with bespoke houses that are designed to meet their individual needs,” said Productivity Partnership Manager Chris Kane. “None of the buyers interviewed for the study built a house off standard plans.

“NZIER’s report shows that both builders and buyers are open to more standardised construction methods, but consumer demand for quality features such as designer kitchens will continue to drive demand for tailoring,” he said. “Greater use of innovative building techniques, such as prefabrication, is one way residential builders can help meet the upswing in construction demand we are experiencing while providing quality, affordable housing.”

See the NZIER report “Bespoke residential housing demand and construction innovation” at http://buildingvalue.co.nz/sites/default/files/Final-NZIER-Report-Bespoke-housing-and-innovation-in-residential-construction.pdf

MORE INFORMATION
NZIER was commissioned by BRANZ and the Productivity Partnership within MBIE to investigate:
1. the impact of bespoke housing (individually tailored for customers); and
2. the predominance of small construction firms (five or fewer employees) on innovation and productivity in residential construction.

Its report “Bespoke residential housing demand and construction innovation” examines the drivers of demand for bespoke housing and the barriers to innovation, and thus productivity, in residential construction in New Zealand. It is based on interviews with people who have commissioned new homes to be built, builders and other industry stakeholders.

Key findings are:
• The drivers of demand for bespoke housing and barriers to innovation are complex.
• Innovation in residential construction is focused on the use of new products that enhance building design but don’t necessarily improve sector productivity.
• The average size of New Zealand construction firms (five or fewer employees) is larger than statistics suggest because they have a high number of contractors who are treated as staff – making their “shadow size” significantly bigger.
• Firms network widely with other trades and suppliers which assists the spread of innovation.
• Residential builders are open to innovation but identify regulation and avoidance of liability as barriers to greater innovation and productivity gains.
• Buyers are comfortable with increased use of standardised construction, such as prefabrication of components, as long as they can still tailor the design to meet their needs.
• Poor project management significantly extends building times and could be due to a combination of customers not demanding it or being willing to pay for it, a lack of project management skills, and slow industry uptake of technology (to assist sharing or project plans and information, etc).

Recommendations include:
• Better consumer information and promotion of existing websites, particularly for households needing to build a replacement home in Canterbury.
• Capturing statistics on build times and making them public (as happens in Australia) to encourage demand for quicker build times and better project management.
• Better industry training in project management, ideally with tools and technology that can be used across the industry.
• Making it easier to import new products that have “proven performance” in international markets.
• Ensuring the benefits of changes to regulations outweigh the costs.

Most of the report’s recommendations are already being implemented.

ENDS

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