Construction costs up in Christchurch

Press, 4 April 1989, Page 37

Construction costs up in Christchurch

Construction costs for commercial property in Christchurch have shown a slight rise in the last few months, according to Mr James McAfee, editor of the Rawlinsons Construction Handbook.

Although construction companies were cutting margins to the bone as they attempted to win the few new commercial contracts around, the trend was not apparent in Christchurch or Dunedin, he said.

Building costs had fallen in Auckland and Wellington in the last few months, but in Christchurch and Dunedin, where contractors’ margins had been tight for a number of years, construction . costs had risen.

“South Island builders have absorbed many price rises in recent years. It seems that they have started to pass on increases.”

Mr McAfee said his research showed that building companies throughout New Zealand were now cost conscious.

“We know of instances where some contractors

are quoting below cost, such is their desperation to maintain continuity of work.

“These companies are using similar suppliers and sub-contractors as other tenderers, yet their prices can be fully 10 per cent below the others,” he said.

“All construction companies have cut margins to virtually nothing, but these companies are tendering below cost.

“It is difficcult to believe they’re all doing it by mistake. It is our guess that these crazy prices result from deliberate policy. "Their prices are at perilously low levels ...

there’s no room for error. Some of these contractors seem to hope that somewhere during the course of construction they will be able to make up the difference.” Mr McAfee said he had talked to hundreds of people in the construction industry while compiling his handbook. Rawlinsons is a construction consultancy company, which originally started as quantity surveyors in Perth in 1940. The firm had been established in New Zealand for about 10 years, Mr McAfee said.