Gyms, libraries and other critical learning spaces are being cut from school development plans, as the Ministry of Education struggles to manage soaring construction costs
When Jacinda Ardern and Chris Hipkins visited Auckland's Northcote College to announce the upgrade of around 180 schools over the next 10 years, the former Prime Minister described it as the most ambitious school redevelopment programme by any New Zealand government. The first wave of 40 schools was budgeted to cost up to $1.3 billion.
That was December 2020. Now, Newsroom has learned the Ministry of Education has been forced to rein in that ambition dramatically in response to rising construction costs. Naylor Love, the firm in charge of at least 10 of the big school builds, says the Government needs to standardise school designs, rely less on consultants, and involve the contractors earlier in the process.
Northcote College is among those to suffer. The $60 million investment in new and refurbished buildings has blown out to $100m, forcing project managers to indefinitely delay cornerstone plans for a new gymnasium.
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Principal Vicki Barrie says the highly anticipated new gymnasium was to be constructed at the same time as the new technology classroom block. "It is hugely disappointing that this has now been delayed by the ministry until later in the project, due to funding issues," she says.
Construction firm Naylor Love is doing the Northcote College project, as well as other major projects like the budgeted $100m merger of the rundown Marlborough girls' and boys' colleges onto one site. Chief executive Rick Herd says that's now costed at $300m. On all the projects, he says, the Ministry of Education is looking for ways to rein in rising costs, meaning cutting back by 10 to 25 percent.
"Ten percent is not unrealistic. But to get 20 to 25 percent savings, they've got to start looking at scope," he tells Newsroom.
"And that might be leaving out a gym or a library or something in the short term, at least. Each project is different – we're cutting the cloth to suit the situation."
At Northcote College, he says, the ministry has imposed a lot of delays and scope changes to get it within budget. "And I think they're successfully doing that."
Naylor Love works on a lot of public sector building projects – about 30 percent of its earnings totaling up to $400m are from building schools, hospitals and prisons. From a procurement perspective, Herd says the Ministry of Education is one of the best agencies. "They've done a lot of work to develop better relations and communications with the contracting sector, and understanding it better."
But there are still problems: they get the designers in too early, and they don't get the contractors in early enough, he says.
"At one school we were doing, we were dealing with a very large precast panel, which they wouldn't let us change. It was right at the back of the job, so the whole design, access, timeframe and construction methodology revolved around installing this one bloody great panel, which weighed about 40 tonne."
"Each agency tends to have its own procurement department, and good procurement people are very hard to find, so they tend to put in a lot of highly inexperienced staff." – Rick Herd, Naylor Love
If Naylor Love had been allowed to change it to an in situ panel or some other method of construction, they could have saved 10 to 15 percent of the value of the overall project. "It's just little things like that, the people with a pen and paper drawing these designs don't appreciate, and the procurement guys don't appreciate.
"We as contractors look at a job and say, how the hell are we going to build this? What are the risks to us? If we get involved early in a project, we can help with that process.
"But they're hellbent on engaging consultants that cost a lot of bloody money, without, adding value to the process. And we see that sort of situation time and time and time again."
Fortunately, he says the Ministry of Health is looking to follow the Ministry of Education's lead, by centralising their procurement systems to get better results.
"The problem was, a lot of government departments still do things on a very ad hoc basis. Each agency tends to have its own procurement department, and good procurement people are very hard to find, so they tend to put in a lot of highly inexperienced staff."
To address this problem, the Government has taken the Christchurch rebuild agency Ōtākaro Ltd, renamed it Rau Paenga, and funded it to expand nationwide.
As Newsroom revealed last year, 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.
"A lot of the people in government procurement partners don't really know what they're doing, and it just ends up costing departments and the taxpayer lots of money at the end of the day," Herd says. "They need to learn to listen to contractors and trust us and realise that we actually want the best for this country."
"Construction costs have risen rapidly in recent years and school development projects have been affected by this." – Sam Fowler, Ministry of Education
Sam Fowler, the head of property for the Ministry of Education, says it's working closely with schools and suppliers to get the best value from the ministry's investments.
"Construction costs have risen rapidly in recent years and school development projects have been affected by this," he acknowledges. "In some instances, we need to stage or phase these investments to make sure that we can use the funding we have to respond to those schools with the highest needs.
He gives the example of big projects at schools such as Ellesmere College and Northcote College, where the forecast costs to deliver have increased significantly since the projects were initially planned.
"In both instances we are committed to delivering the planned projects and working with stakeholders to identify where savings can be made while also looking at staging parts of the developments."
In south Canterbury, Ellesmere College is fighting for its long-delayed rebuild, after the budgeted $30m cost more than doubled. Now, the auditorium and one learning hub are proceeding, but another two learning hubs containing 35 classrooms have been put on hold.
And Fowler confirms the current forecast for the Northcote College works has increased from $60m to more than $100m. Works are underway to deliver the new technology block, followed by the refurbishment of a heritage block.
"The planned new gymnasium will also go ahead but this will need to be delivered as a later stage," he says. "As with other schools where we stage our redevelopments, we will need to invest in the College’s existing facilities to ensure they can continue to be used ahead of the planned new facilities."
"The staging of the redevelopment of Northcote College enables investment to continue across the ministry’s National School Redevelopment Programme to the benefit of a large number of schools while meeting the commitment to the school made through the 2020 investment announcement.”
Northcote principal Vicki Barrie says the college is thrilled to have its building project underway, but frustrated by decisions like the postponement of the gymnasium. "The delays are certainly frustrating."
"We are excited about having more quality learning spaces to reflect the quality of the teaching and learning at our school. We will be even more excited when we have a new gymnasium as well." – Vicki Barrie, Northcote College
She says it's good to finally have the diggers on site and working on the new technology classroom block, with a library and other exceptional new facilities for students and staff. After that, the contractor will move to renovate an historic classroom block.
"The project is good for our school and our growing community. It is the most significant property project in the nearly 150-year history of the school."
The Ministry of Education funds and oversees school construction projects, but consults schools about what they need and want.
"We have certainly appreciated the level of input we have been able to provide in the design phase," Barrie says. "The building is big and complex and the designers worked with each head of department on their specific requirements. We look forward to the time when students are able to move in and benefit from the learning opportunities we will provide in the new purpose built facilities."
School leaders have worked closely with the ministry and contractors to minimise disruption, she adds. Key to that is a village of high quality, prefab classrooms dropped onto the school field. "While we are grateful to have them, we also look forward to having our No 1 rugby field returned to us for rugby when they are gone!"
Barrie says she's lobbying hard to have the gymnasium construction underway as soon as possible. "We are excited about having more quality learning spaces to reflect the quality of the teaching and learning at our school. We will be even more excited when we have a new gymnasium as well."
Correction: The budget for Ellesmere College was wrong in an early version of this article.
