12.06.2020

COVID-19: Weekly Construction Briefings

12 June 2020

New Zealand has moved into Alert Level 1 from 8 June 2020. While this means that life has largely returned to normal, as physical distancing and other restrictions have been removed, updated health and safety protocols for the construction industry have been released, and these should continue to be observed throughout Alert Level 1.

Health and Safety

New guidance from the Government for working under Alert Level 1 includes updated health and safety practices. Key changes include:

  • Encouraging workers to stay 1m away from those outside their work bubble;
  • Workers can work closer to other workers in their bubble where necessary and if a risk assessment has been completed;
  • Non-essential visitors can undertake site visits;
  • Encouraging minimum 1m physical distancing from a delivery team.

Additionally, businesses must maintain contact tracing under Alert Level 1.

A wage subsidy extension payment is available to support companies who are still significantly impacted by Covid-19. However, a business must have experienced at least a 40% decline in revenue for a continuous 30 day period to be eligible. It is likely that many construction companies will not meet this higher threshold now that sites are back up and running.

Industry Outlook

The impact of Covid-19 will be felt for a long time yet. It is likely that the increased uncertainty will result in a shift in delivery models, as the sector begins to reject risk and welcome collaboration and alliance-based projects.

It is also likely that the significant infrastructure funding from the Government will see the industry shift to programme-based as opposed to project-based models of contracting.

As strict border controls remain in place, the sector may see a decrease in skilled labour. While the Government’s $1.6 billion funding scheme to make tertiary courses free in building and construction may help mitigate this, it is likely that the effects of tight border restrictions will still be felt across the industry in the medium term.

Useful Articles/ Updates

  • The RICS Q1 2020 Construction and Infrastructure survey can be found here.
  • Infrastructure Visionweek are hosting a webinar series on the future of infrastructure in New Zealand on Friday 12 June.

Other Updates 

  • Our Business Advice team has released an article on the Overseas Investment (Urgent Measures) Amendment Act 2020.
  • Our Construction team has released an article on the recent judgement in 127 Hobson Street Limited & Anor v Honey Bees Preschool Limited & Anor [2020] NZSC 53 which confirms the “legitimate interest” test for determining when a clause in a contract designed to secure performance will be an unenforceable penalty.
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