RMBA launches guidelines to manage risk

Registered Master Builders has launched its Lead Contractor Guidelines to help the building and construction sector better manage risk.

The guidelines were launched at the recent “all-of-sector” Constructive Forum, which was held in Wellington on 16 August – only weeks after another high-profile collapse in the industry.

“It is down to us to ensure we understand the risk we are taking on when we sign contracts, and our guidelines will help the sector do this,” says Registered Master Builders Chief Executive David Kelly.

“The Constructive Forum brought the entire sector together, with Government, to not just discuss the issues but provide solutions about what we can do to change. It could not have been timelier.”

Registered Master Builders presented a survey of over 30 leading CEOs and senior managers from the sector, which found more equitable risk allocation in contracts to be the most critical issue for industry transformation.

“Understanding risk must become mandatory for both lead and sub-contractors. This means demanding we are given the time and information we need to get things right. It also means we need to say no and push back on unfair terms and conditions.

“We will continue to update our guidelines regularly and make them available – we urge the sector to use them. We will also be organising workshops in the main centres and working with the Society of Construction Law to deliver panel sessions to raise awareness about understanding risk”.

Kelly says there was strong alignment from all parties on what the sector can do to change.

“There were some robust discussions about the failings of the competitive procurement model. We need to move to a relationship model, in which we are not focused on working with the lowest price contractors, but the ones which will be the best long-term partners. The race to the bottom means no one wins.

“We need long-term thinking to understand our pipeline so we can give certainty to these relationships beyond the first project. This means building trust between the key parties, and trying to move away from seeing each other as competitors.”

The guidelines were developed by the Vertical Construction Leader’s Group, which came out of the first Constructive Forum in 2016 and is overseen by RMBA.

The group includes the CEOs of New Zealand’s most prolific commercial construction companies, and advocates on number of broader policy issues, including risk transfer, procurement, KiwiBuild, and retentions.

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