'Time, cost and quality – pick any two,’ goes the old saying. With house construction in New Zealand, there has long been a perception – backed by some evidence – that quality suffers because of the enormous cost and time pressures on new builds.
John Tookey, Professor of Construction Management at Auckland University of Technology, told Build, ‘There is a difficult construction environment of rising costs and pressure on margins. The market is driven by borrowed money, and the cost of this has gone up. This has crushed the building industry in the last 18 months to 2 years.’
At the same time, he says the public’s judgements around quality may be getting tougher. ‘There is an escalation of expectation today. We are living in an era of unrealistic performance – just look at what you see on Instagram, for example. A lot of it is about aspirational lifestyle and not reality.’
New house owners’ satisfaction
One measure of the level of quality in construction can be found in the BRANZ New House Owners’ Satisfaction Survey. The findings of the 13th survey (based on 547 new home builds) were recently published on the BRANZ website as Study Report SR492.
Quality is a significant factor in the selection of a builder – over a third of new house owners (39%) reported choosing their builder based on the quality of their previous work such as show homes. This is by far the number one criterion for builder selection – ranking well above the cheapest quote. That approach seemed to generally work out well: 81% of homeowners thought the overall quality of their home was good or very good. By comparison, this figure was over 90% in the 2013 survey.
There was a considerable drop in the standard of finishes with the positive ratings dropping to just 55% and an unacceptably high 31% rating the standard of finish poor or very poor. In the 2018 survey, the positive (very good and fairly good) ratings together were around 87%, almost the same as the 89% score in the 2013 survey. ‘Rework is a pain in the tonsils for contractors to deal with,’ Professor Tookey says, but nevertheless, in 86% of new homes in the latest survey, tradespeople were called back to repair defects after first occupancy. The most common type of defect was related to a contractor’s work rather than a faulty product, and 42% of homeowners said there were more defects than they expected.
BRANZ research into quality
BRANZ has conducted or commissioned extensive research on issues that affect building quality. Findings have been published in reports such as SR445 Procuring for quality, ER49 The economic costs of quality defects, SR412 Medium-density housing construction quality survey, SR398 Prioritising quality, SR375 Building-quality issues: A literature review, ER29 Evidencing quality issues: What can industry data tell us? and SR387 Prioritising quality: Literature review of common residential housing defects. All are available on the BRANZ website listed under Publications > Research reports
The off-site construction pathway to quality
A major difficulty around consistently achieving quality is that almost everything is bespoke, Professor Tookey told Build. ‘A big company may offer 30 or 40 or more standard design options, and each of those is almost infinitely amendable based on what a customer wants.’ In the latest homeowners’ survey, only 2% of respondents selected their design from standard plans with no changes.
‘To have low defects, you need to have consistency and bolt together components on site rather than build everything on site. We have only scratched the edges of the capability of the off-site construction sector. The irony is that we have a long history of off-site construction in this country.’
One of the challenges is that there are low barriers to entry and low establishment costs for the ‘man, dog and Transit van’ traditional approach to house building. Off-site construction by comparison requires substantial investment, and sustained downturns can drive out those who have made big investments.
Quality and the law
All building contracts should set out the standard (quality) of work expected. Quality is addressed in several laws:
- The Building Act 2004 contains implied warranties that cover residential building work (section 362I). They require that, among other things, work must be carried out in a proper and competent manner and with reasonable care and skill. Homeowners who find a problem with building work can make use of the automatic 12-month period when the contractor must fix defects (section 362Q). Homeowners can take action for up to 10 years after building work is completed if implied warranties have not been met.
- The Consumer Guarantees Act 1993 also applies to residential building contracts. It does not apply to a whole house but to parts of the house, even if they are attached or incorporated into the house. This law also requires that contractors must perform their services with reasonable care and skill. For more, see BRANZ Bulletin
BU691 Residential building contracts.
Government can help
Professor Tookey sees central government, as a large funder of new housing, having a role to play. He points to systems that can help, such as the Performance Information Procurement System (PIPS) developed at Arizona State University. ‘It is deceptively simple. You start by identifying organisations with a great track record of minimising risks and problems.
Then look for organisations with the ability to produce a risk management plan, who can identify risks and have a plan of what to do. After these are taken care of, assess comparative costs.’
There are other approaches a government can take to lift quality in construction. The UK Government set up the New Homes Quality Board in 2021. This voluntary scheme aims to ensure that house builders and developers meet high standards of quality. Over 80% of the top 50 developers have signed up, accounting for around two-thirds of all new homes. The Board established a New Homes Quality Code and also a New Homes Ombudsman Service that is free for homeowners to use.
Our own government’s long list of proposed changes to the building controls system are also likely to have an impact on quality. In some instances, a lift in quality is seen as one of the reasons for change (see the panel story Will reducing inspections affect new build quality?).
John Tookey quotes Aristotle, who said, ‘We are what we do repeatedly. Therefore quality is not an act, it is a habit.’ It is about consistency. Tookey believes there are solutions for us to lift build quality and the ability to do it. ‘The construction industry here is populated by can-do individuals with an optimism bias. Stuff gets done. Stuff gets built. We have visionaries and problem solvers. We need policies and practices to bring everything together.’
The proposal for self-certification met with mixed responses in the industry:
- Registered Master Builders (RMB) welcomed the announcement, noting ‘this scheme rewards trusted, accredited and reliable builders, and fosters higher standards across the sector by incentivising quality work’. RMB said that, while many builders deliver high-quality homes, some use consenting as a substitute for quality control.
- Certified Builders also generally welcomed the scheme, focusing on the likely level of skills and qualifications required for self-certification. Chief Executive Malcolm Fleming told The Press he would like to see changes to builder licensing at the same time. ‘The bar is too low. Anyone can stand up and call themselves a builder.’
- The New Zealand Institute of Building Surveyors (NZIBS) said that more continuous professional development and greatly improved education in the construction sector are required before a self-certification scheme is implemented. It says the sector already wrestles with a high rate of failed inspections, so removing a BCA’s process of consenting could risk further failures.
Where self-certification sees practitioners carrying more responsibility for the quality of their own work, it should in theory lift quality. In practice, the scheme will only work smoothly for everyone, including homeowners, if practitioners are backed by good professional indemnity insurance. Certified Builders has noted that it can be difficult for small builders to obtain this. The NZIBS has also said that its sources indicate that professional indemnity insurance is not currently widely accessible other than for large-scale design and build contracts.
Will reducing on-site inspections affect new-build quality?
Throughout 2024, the government proposed changes in building controls aimed at reducing new home construction costs – in several cases, through requiring fewer on-site inspections (see Supercharging the supply of land and housing in Build 204). Late in the year came a significant new proposal for self-certification.
Electricians and gasfitters can already certify their own work. The new proposal is to allow self-certification, without the need for a BCA inspection, for builders, plumbers and drainlayers ‘with a proven track record’ carrying out low-risk residential building work.
Reducing costs is a primary driver, but Building and Construction Minister Chris Penk has also identified quality improvement as an aim. He says the new opt-in scheme will come with strengthened qualification requirements, a pathway that customers can access to remedy poor work and strict disciplinary actions for careless or incompetent self-certifiers. He says the new approach will see building practitioners shoulder more of the risk around their own work, which he says will ‘incentivise better quality work’.