A cross-government infrastructure delivery agency is already working to salvage two big public projects affected by the liquidation of subcontractor Benmax NZ, owing $4.5m
When the structural engineer John O'Hagan first arrived in Christchurch, it was as a volunteer in the aftermath of the 2011 earthquakes. "It was tough," he says.
"I was crawling around under the Hotel Grand Chancellor when it was leaning over, and quakes were happening. We were having to do structural assessments of the building to make sure it wasn't going to fall over – and if it did fall over, what direction was it going to fall."
Now he's acting chief executive of Rau Paenga, a new cross-government infrastructure delivery agency that was provided $100 million start-up funding in the Budget.
And again, he's leading salvage projects.
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Rau Paenga was previously the Christchurch rebuild agency Ōtākaro Ltd but, as Newsroom revealed last year, it's now being renamed, retooled, and funded to expand nationwide.
Its new role is to help councils and small, inexpert public agencies deliver large, complex projects, such as the new Archives Building in Wellington, the three-year remediation of the Auckland District Court building, and the new Plant Health & Environment Biosecurity facility in Auckland – and it's immediately proving its worth.
It's working with partners to progress two public projects that have been affected by the liquidation of a subcontractor.
Christchurch's long-delayed Parakiore Recreation and Sport Centre, and Ashburton's new library and civic centre, were both relying on the aircon contractor Benmax NZ – but last month it went into liquidation owing $4.5m.
Liquidator Brenton Hunt reports that Benmax was affected by the construction industry's unprecedented challenges of the past couple of years. "Delayed construction projects awarded before or during the early stages of Covid, combined with unexpected inflationary increases in material costs, ongoing supply chain issues, and labour shortages, saw project margins eroded, directly impacting the business's financial position," he says.
"Despite the best efforts of the Benmax team and a significant financial investment into the business by shareholders, the company could not overcome the challenges."
Rau Paenga is also negotiating to resolve a $197m dispute with project lead CPB Contractors - a big contingency listed on the Crown books this week.
The Benmax liquidation would be the final straw for many big building projects, but O'Hagan says neither Parakiore nor Ashburton face any new delays as a result of the subcontractor's collapse.
Ashburton District Council Chief Executive Hamish Riach agrees. "It’s unlikely that the liquidation of subcontractor Benmax will have a significant impact on the overall project," he explains.
A new subcontractor is now in place, and the council still expects the library and civic centre to be completed by the end of this year. "We continue to work through the implications of the Benmax liquidation, but we are not currently anticipating additional cost implications for the project," Riach says. "All parties are doing everything they can to have the building completed by the end of the year."
Announcing the Budget funding for Rau Paenga of $100m over five years, Infrastructure Minister Megan Woods says it will support organisations that don’t have day-to-day experience of delivering large, complex projects, to get projects done efficiently and effectively.
The funding will allow it to offer its project delivery services for free to councils and other Government agencies.
"Rau Paenga will use the lessons learned in driving forward major Christchurch rebuild projects post-quake to help deliver construction projects," Woods says.
“We need to keep up the momentum on our vital infrastructure build, while keeping a lid on spending, so Rau Paenga‘s experience in project delivery and robust processes will help us keep up with the good work we’re doing on our large programme of work."
John O'Hagan welcomes that. As a newly repurposed Crown company, Rau Paenga is well placed to support the delivery of infrastructure in New Zealand he says.
It's focused on helping the Crown to be a better customer, building delivery capability within the Crown, and supporting the growth of a robust domestic construction sector.
“The Infrastructure Action Plan articulates a clear vision for the future of infrastructure delivery in New Zealand,” he says. "We are excited by what could be achieved under the Infrastructure Action Plan.”
