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By Mark Tammett 09 Nov, 2021
This looks farcical, but it's what can easily happen when you don't have a competent person overseeing all aspects of your project.  (How can you drive into your garage?)

Blocked botch-up: New Hobsonville Point garages built directly behind rainwater pits - NZ Herald

It’s what happens when the design is fragmented into various components and handed out to separate consultants (as it often must be), but there’s nobody having oversight to check all the components are integrated. Contrary to the developer’s comments, it more likely reflects badly on the developer not having a good project manager in place, rather than their various specialist consultants.

You cannot engage various specialist consultants, no matter how good they are, and leave them to it.  They generally only focus on their part of the project, not the total picture.

This is an extreme example.  Someone overseeing the project, even someone who was unskilled in development could have picked this up -  provided they could at least read plans, and had the time to review them.

So first thing I'd suggest as a minimum, is that you as the project owner should at least oversee things.   Even if you don't know development or construction well.  Don't assume your separate consultants or contractors will talk to each other and avoid issues like this.  Often they don't. 

The best solution though is to engage someone highly experienced in your field.  Even if you can avoid the more obvious problems like the above;  other less obvious problems will arise, and unnecessary cost will usually creep in, often without you even knowing it.  The savings and efficiencies  a highly competent person will achieve will usually far outweigh their fees.

By Mark Tammett 08 Feb, 2019

Almost without fail, whenever there's news of a new subdivision underway in the press, the  majority of comments are negative and hostile to the development.  It doesn't matter how much care the developer is taking to bring to the market a quality product, or to meet demand in some other way, there's always the naysayers.  The news of a new development for Halswell in Christchurch for instance by supermarket chain Countdown is a case in point.

In my opinion such negativity is almost always founded on ignorance, or false sense of entitlement from existing homeowners.  I've detailed below some of the objections I commonly hear, and my answer to them.

  1. "New subdivisions are sterile and lack character " - Every house anyone owns in an urban area of New Zealand was once part of a new subdivision.  New subdivisions typically do lack the established plantings of older areas, but this can only come with time, as trees and other vegetation matures.  Character develops organically  - it's more something new residents bring to the area, rather than something a developer implants.

  2. " We already have enough houses in Christchurch - why are they building more?" - This one is founded on ignorance of the basic economics of supply and demand.  The reason that Christchurch house prices have been reasonably stable, and haven't experienced the massive inflation of other centres such as Auckland is that there is plenty of product on the market, largely a result of a lot of land being rezoned for development following the earthquake.  Supply is not exceeded by demand, and so prices have not escalated to the same degree.  Planners typically think that land has to be rationed, rezoned slowly for development, and only in response to known demand.  The problem with that is by the time there is known demand, there's already typically a shortage, and the result is escalating prices, as we've seen in Auckland.   This is fine for older existing homeowners who see their asset appreciate, but it's not good for the younger generation of new home buyers, nor it is good for the economy overall for more money than necessary to be tied up in an asset bubble.  Plenty of competition is key to housing affordability.

  3. "Our city is big enough as it is, we should be putting a cap on growth"  -  This is similar to the above objection - except raised when clearly there aren't houses to meet demand, and existing residents don't want that demand to be met!  Almost all the comments on the Laurel Hills development in Queenstown are a case in point.  Big enough for whom I ask?  Big enough for some perhaps, who own their house and are happy for their town and city to stay the way it is; not progressing, and locking out the younger generation from joining them.  But clearly not big enough for prospective new residents who want to live in the city - and would be locked out if the older generation had their way.  Why should the older established generation have the right to lock out the younger generation?

  4. "The land is flood-prone / liquefaction prone / etc" -  Behind this often lies no appreciation of the amount of work that has to be done to bare land before it can be developed, to minimize these risks.  All new developments in Christchurch have to be at least TC2 equivalent, which requires ground improvement in a lot of cases. Detailed modelling also has be done to ensure the houses are above all but the rarest of floods.  Low lying areas are typically filled, stormwater drainage installed, and overland flowpaths for flood flows developed.  Regardless of what the land was like prior to development, it's very different post-development, and safer in terms of earthquake and flood risk than most older residential areas.

  5. "The section sizes are too small" - Development costs have increased markedly in the last 20 years, and affordability now requires section sizes to be minimized.  Good results can be obtained on smaller sections when the house and outdoor areas are well designed, and many these days are not wanting a massive backyard to maintain.  The reasons for the this increase in costs are numerous, but at the top of the list is compliance costs rort by the RMA, and the time it typically takes to get permission from Council to start construction (usually many years).  Any developer has to have deep pockets and ready to take on significant risk to bring any new development.  A secondary reason is that subdivisions now need to be built to higher standards.   They are engineered minimise flood and earthquake risk, stormwater is treated before being discharged, power lines are underground rather than overhead, footpaths are wider, etc.  All this comes at a cost.

Finally, there's typically a complete lack of appreciation of how difficult, costly and complex land development is these days.  It's easy to sit on the sidelines and criticise when it's not your responsibility, and not your money at stake.

By Mark Tammett 29 Mar, 2018
It seems the good people of Christchurch are waking up to how our money is being frittered away on public projects that are hot on the talk but achieving nothing tangible.  There's nothing tangible on the horizon either, and not even any target dates for the next consultation step.  All projects are potentially complex - but that is no excuse for what is reported here.

In both private and public projects there are good and bad project managers (in my experience there's a lot more bad or mediocre ones than there are good ones).  But you rarely get this level of stagnation and waste in the private sector.  That's because whoever's financing it either runs out of money, or holds the poor performer to account.  The public sector simply does not have that same built-in discipline.
By Mark Tammett 23 Nov, 2016
I see Chris Trotter is peddling the re-establishment of a Ministry of Works (MOW) , just like decades past when most work was done by government rather than private contractors.

Aside from an ideological bias (towards more government being the solution to any problem), there are several holes in his argument:

1. Some look at back at the MOW days with fondness, justified to some degree because it was era where do-ers got in and did things without endless delays and bureaucracy. But the reason that has ended has nothing to do with private contracting, and everything to do with the RMA and a more regulated environment.

2. Anyone who knows civil contracting and has been part of a tender process, knows that every contractor will generally see a job differentially in terms of the most efficient and cost effective way to deliver the result,  and you'll get a wide variety of prices. Under a competitive tender situation the contractors are encouraged to find cheaper ways of doing it, and the more efficient/less costly proposals generally get the work. When it's a government department there's no such motivation.

3. Anyone who talks to ex MOW workers will generally hear stories of inordinate waste (i.e. point 2 is not just theoretical, it's backed up by what actually happened) in the MOW days.

4. The profit margin that Chris frets about going into private hands is a marginal component in the context of the issues above. Typical margin for a competitive NZTA contract for instance is 5-10%, often less, and sometimes the contractor will lose money. It's of no value to 'gain' that 5-10% profit margin but then actual costs to do the work ends up being say 50% higher.

Some talk about how service levels have dropped in recent decades, for instance when it comes to the maintenance of rural roads - and blame that on private contracting.  However any drop in service standards has nothing to do with private contracting and everything to do with the specification written by Council - which is under increasing pressure to cut costs, because our rates are increasingly being consumed by bureaucracy rather than core services.

You'd think that after the lessons of the 20th century, such as the fall of Communism, the failure of Socialism anywhere in the world to deliver anything but poverty; and to a lesser degree what's happened post earthquake with Christchurch -  that people would have learnt that government control of the economy never works, and never will. But judging may many comments on his thread, who enthusiastically support Trotter's suggestion, it looks like that lesson may need to be learned again in the 21st century.
By Mark Tammett 18 Oct, 2016
It was reported in the Christchurch Press this week that over $300m of projects have been delayed by Christchurch City Council (CCC), many of which sounded like civil rather than building projects.  What's the cause of the delay?  According to one of their managers, "many delays were because of a lack of available contractors".  Really?  My experience is completely the opposite at the moment, at least for civil contractors.  Right now there seem to be a lot  of civil contractors out there desperate for work, who are considering laying off or relocating staff if they don't find any soon - and putting in very competitive tenders with minimal profit as result.  This is presumably due the wind-down in SCIRT earthquake work that the industry geared up for.

If you're a property owner looking to get civil engineering work done, now is a great time to be tendering your project.  As for the cause of the delays in the Council projects, bureaucracy seems a much more likely explanation.
By Mark Tammett 03 Dec, 2015

It was recently reported that the government sponsored ‘Breathe’ residential development project, which aimed to provide an example of how the Christchurch central city should be rebuilt post-quake, has been abandoned. The project started as a design competition with the likes of Kevin McLeod (Grand Designs TV fame) being one of the judges. A winning consortium was announced by the CCDU with great fanfare in 2013, but the developers have failed to obtain the backing of financiers, and after 2 years of waiting the government has finally called it quits. Rival bidders for the project are naturally feeling aggrieved, given the time and money they put into their proposal; only to lose to a bid that was presumably not commercially viable.

This provides a perfect example of the folly of mixing business with government, and how a government that tries to ‘pick winners’ and back commercial projects leads to inefficiency and distortions. In the real commercial world without government interference, price signals provide a discipline that must be adhered to, and you have real competition at every step of the process. For example:

  1. Firstly land prices fall or rise to their natural level. One of the stated aims of the gov’t acquisition of so much land after the quake was to reduce the effective size of the CBD and maintain the values of the areas left open to development. In other words create an artificial shortage of land to prop up prices. In terms of their stated aims they have certainly succeeded, to the point where sale prices of land seem to be higher than they were pre-quake. But this is a bizarre situation given the huge expanse of bare and dusty land left in the city, that there is no longer any strong demand for office space, and the relative unattractiveness of this location compared to pre-quake. There’s an oversupply of land but still the prices are high, and that can only happen where there’s gov’t interference. Without that interference land prices would have dropped to their natural level, offsetting the rise in construction costs that has made post-quake development in the CBD so costly.
  2.   A variety of competing developers engage different architects and designers, each with different ideas and outlooks.
  3. Those who can deliver a good result AND get the costs down sufficiently tend to get the work. Those who can't do both tend to not get the work. 
  4. The developer then risks his (and the bank's) money to build something he thinks the market wants and can afford. If his judgment is good he makes money, and does another similar development, giving more work to his architects and designers. If his judgement is out he loses money and the mistake is not repeated.

At every step there are price signals that tell the market what is and isn’t viable. Government by its nature however is immune to these price signals. Private developers can fail of course too, but they can't do it at taxpayer expense, and they're less likely to spend a lot of money up front on somethings that not commercially viable.

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