White Associates Directors

Graham White to retire as White Associates goes from strength to strength

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Graham will retire at the end of November, leaving behind a strong management team and a company that continues to grow.

No one would ever describe Graham White as a shy and retiring sort of person. However, it is nonetheless true that after a long and highly successful career he is retiring from White Associates, the company he co-founded with Konrad Trankels back in April 2005.

 

Planned over the past three years, Graham’s retirement at the end of November comes at a time when White Associates celebrates its 18th birthday and looks ahead with confidence, in a time of growth. The business is led by Konrad with exceptional directors in place – Justin Maritz, Darin Bayer and Brett Zeiler – plus a new Associate Director and a strong roster of Associates in the team for a year now. There is longevity within the leadership team, with Director Justin Maritz and Associate Weng Tan celebrating their 10-year work anniversaries this year. 

 

Structured and strong, White Associates has expanded successfully into the South Island from its Auckland base, establishing a flourishing office in Queenstown led by Elliott Smith which is now in its fourth year. White Associates’ service offerings now span four thriving departments: Pre Contract, Post Contract, Funding Representation and Advisory Services. 

 

The track towards this level of success was laid in the very first days of the firm, when the immediate priority was to win work in the right way, says Graham. “Konrad and I always said from Day 1 ‘we’re not going to do it the old way’. We determined to do what we thought was right, and this has always been the litmus test for everything that has followed. 

 

“We have grown over the years thanks to meeting great people along the way: brilliant clients and people who have worked in our team. The relationships and teams we have forged along the way, as well as the projects we have been fortunate enough to work on, have been the defining feature of my working life, and I will never forget them.” 

 

Graham adds that over the years he has realised that White Associates is great at doing its job, and that it doesn’t need to go beyond that. “We have learned to focus on what we are great at, so we have spent considerable time and resource in creating processes and people in place to be truly effective as a QS firm. White Associates has improved hugely over recent years, growing in a sustainable and structured way while reclaiming its core value of ‘doing it right’. Truly we’re going from strength to strength.” 

 

Appointed an NZIQS Life Member in December 2019, Graham says that as White Associates reaches its 18th birthday now is the right time to go. “This is my baby; it is a big thing for me to leave, but it is the right time, something we have planned for the last three years. I’m ready to move on to the next chapter of my life, and it is good for the directors to grow as a team. It is good for the company as well: a refresh, time to grow with our leaders in place. 

 

“I am leaving White Associates in brilliant shape. Konrad has been running the company for years, and I am truly in awe of our team. The structure is in place for White Associates to succeed into the future, with our technical teams focusing on getting the job done in the best way for our clients and our staff, and Konrad at the helm ensuring all facets are aligned to the White Associates’ vision.” 

 

That said, he also says that he plans to keep in touch for years to come. “I will continue to meet regularly with Konrad to be a sounding board, to help him and hear what’s going on. I want to hear great things about White Associates when I bump into people. I know I will.” 

 

We know that Graham has formed many great relationships and made many friends along the way. If you have any messages you’d like to send him, please click HERE:  

Retentions Money Regime White Associates

A Practical Guide to the new CCA Retentions Regime – how will it affect me?

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In this article we highlight the implications for Financiers, Principals, Developers, Contractors and Subcontractors.

The Construction Contracts (Retentions Money) Amendment Act 2023 (“CCA”) comes into force next week on 5 October 2023, and with it, a myriad of changes affecting the way in which retentions should be held and managed on commercial construction contracts [1].  It will apply to contracts entered into after this date, and contracts entered into before this date and renewed thereafter.

This is the second article in our series in which we shed light on the new regulations and how they impact you.  Whether you are a Principal, Contractor, Subcontractor, Developer or Financier; whether you hold retentions, or retentions are withheld from you; this guide aims to highlight the most important changes to the Act, and practical steps you can take to help you meet your obligations and avoid the pitfalls of the revised CCA regime.

 

Parties A and Parties B – which one am I?

The rule of thumb is that Party A holds retentions and Party B has retentions withheld from them.

Therefore, if you are a main contractor, you will be both Party B – in respect of the head construction contact, and Party A in respect of any sub-contract retentions.

 

If you are a:

  • Principal
  • Developer
  • Head Contractor (holding retentions for a Subcontractor)

You are Party A.

What are my rights?

  • To withhold a portion of money from Party B in each progress payment claim (assuming this is permitted by the specific contract) [2].

 

  • To utilise retention monies to rectify defects and/or non-performance by Party B – if necessary and once the necessary preconditions have been met.

 

  • To keep any interest earned on retention monies.

 

[2] However, the retention regime will apply even where money is withheld as security for the performance of contractual obligations, even where the contract does not allow retention money to be withheld.  A Principal’s deduction, or funds held by a 3rd party in escrow, are both considered retention monies.

What are my obligations?

You must:

  • Keep retention monies separate.
    • They are held on trust and cannot be mixed with any other funds. However, you can hold retentions from multiple different projects and parties in the same account [3].

 

  • Report on retention monies regularly.
    • A retention report must be provided to Party B after every retention money transaction, every 3 months minimum thereafter, and upon reasonable request [4].
    • The report must include:
      • The bank name, branch, account name and number.
      • The total amount of retentions held on behalf of that Party B.
      • The contract(s) to which the retentions relate.
      • Date(s) and time(s) of any transactions.
      • A statement that Party B may inspect the retention accounts and records.

 

  • Release retention monies – this should occur once Party B has completed its contractual obligations. The due date for the payment of retentions cannot be later than date of completion of contract obligations.

 

  • Use retention monies – to remedy defects as long as:
    • Use of the retentions for that purpose is permitted under the contract.
    • The relevant contractual provisions are complied with.
    • At least 10 working days’ notice is given to Party B of its non-performance and Party A’s intention to use retentions, prior to using the retentions.

 

[3] A trust is automatically formed as soon as monies are withheld.  The retentions are trust property.  Party A is the trustee, and Party B is the beneficiary.

[4] Full and complete accounts / records must be kept, the cost of which is not recoverable by Party A.

How can I best comply?

  • Educate directors and staff – to ensure everyone understands the roles and responsibilities, from directors to administrators.

 

  • Ensure that effective internal accounting policies and procedures are in place – directors have a legal duty to ensure their companies are abiding by the retention money regime.

 

  • Open a dedicated “Retentions” bank account – for the sole purpose of holding retentions.

 

  • Develop a naming protocol – A simple coding system will ensure you can quickly and easily identify each project, retention type value and entity, and report on it to the relevant Party B.

 

  • Update your monthly payment schedule / certificate template – This will simplify the reporting process by including retention money reporting in a standardised format.

 

  • Contractual – Ensure that contractual provisions including relevant notice requirements are adhered to. Terms making payment of retentions, or due date for payment, conditional on anything but Party B’s performance of its contract obligations are ‘prohibited provisions’.

Key Takeaways for Party A

  • Retention monies are held on trust – It is not your money, and you must not mix it with money in your own accounts and/or use it in any way.

 

  • Retentions monies must not be used as working capital.

 

  • In the event of receivership or liquidation – the receiver or liquidator will step into your shoes, automatically becoming Party A and the new trustee of the retention monies.

 

  • Non-compliance is expensive – The new Act outlines significant penalties including fines between $50,000 – $200,000 which can be enforced against both your company and individual directors.

 

  • Demonstrating compliance may become a condition of funding (banks and financiers)

 

  • Ensure that the contract entered into contains adequate procedures and criteria for dealing with retentions. Also note – a contract must not contain provisions which attempt to avoid the retention money regime.

If you are a:

  • Head Contractor (having retentions held from you by a Principal or Developer)
  • Subcontractor

You are Party B.

What are my rights?

As Party B you are entitled to:

  • Receive regular reporting – in respect of all retention monies held by Party A on trust for you. Reporting must be in the correct format and contain all the information specified under the Act – at least once every three months and until Party A’s obligations as trustee of the retention money trust have ended. [as per Party A description above]

 

  • Make reasonable requests to inspect – Party A is obliged to show you the account(s) and records pertaining to your retention monies. [note reluctance due to commercial factors, however, this is your right]

 

  • At least 10 working days’ written notice – before Party A uses retention monies to rectify any non-performance or defect.

 

  • Be paid out retention monies – once all your contractual obligations have been completed and any other pre-conditions for release have been met. Interest is payable on late release of retentions.

 

  • Report non-compliance – The Act is administered by the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE). You can raise any concerns about Party A’s compliance (or lack thereof) by emailing CCRMComplaints@mbie.govt.nz .

What are my obligations?

  • To promptly rectify any defects and non-performance in the contract works.

 

  • Monitor retention holder’s compliance with the CCA and report any breaches thereof.

Key Takeaways for Party B

  • Retentions owed but unpaid retain the status of “retention monies”. Your retentions are now protected in the event of Party A’s receivership or liquidation.  Bear in mind, this form of security associated with retentions, applies even under circumstances where amounts have been certified as debt due but not yet paid.

 

  • Ensure that the contract entered into contains adequate procedures and criteria for dealing with retentions [5].

 

[5] Section 18I – CCA (Retention Money) Act states that provisions in a contract which purport to change the conditions on which retentions are released, and/or avoid the application of this section shall be void.

If you are a Financier:

What should I consider implementing?

  • Make CCA compliance a condition of funding – statutory compliance, in all respects.

 

  • Ensure borrowers’ construction contracts contain appropriate retention provisions.

 

  • Make regular reasonable requests for documentation demonstrating compliance – ideally on a monthly basis, and in any event prior to any draw down of funds. Financiers should verify compliance in relation to the retentions borrowers hold for contractors as well as the retentions contractors are holding for their subcontractors.

 

  • Ensure that retention funds are not considered assets or equity and/or used as security for funding.

What are my obligations?

  • Not to include retention funds in my assessment of my client’s financial position.

 

  • Report non-compliance of retention holders.

Key Takeaways for Financiers

  • Compliance with the CCA can be a condition of funding; however, financiers need to take care not to be construed as a “constructive trustee” and consequently become responsible for management or compliance with the retention monies regime. In order to avoid this situation, borrowers should draw down retention amounts progressively and not leave it to be drawn down as a lump sum when retentions are due to be paid to the contractor.

Next month we will discuss the alternative mechanisms – known as Complying Instruments – available to manage risk and performance under commercial construction contracts.

 

Further Guidance

If you require further guidance, please feel free to contact our Advisory division leads.

 

Further Resources

 

For the relevant legislation:

 

[1] This guidance does not apply to a construction contract with a residential occupier.

 

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.  It is current as at the date of publication only. 

 

This article was contributed by Rebecca Ward and Jesse Conradie.

Rebecca Ward Senior Advisory Consultant White Associates

Introducing Rebecca Ward, our new Senior Advisory Consultant

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Rebecca brings a practical, big-picture approach to the White Associates team.

We are delighted to welcome Senior Consultant Rebecca Ward to our Advisory Division. 

 

Rebecca’s varied background in related industry roles means she has a deep understanding of how different construction stakeholders interact with each other, and what their needs are. After being admitted to the bar as a qualified lawyer, Rebecca soon began applying her legal knowledge in practical property environments including a developer, a building surveying company, and a multi-disciplinary company where she interacted with a full suite of property consultants. “Over time, I began to specialise in contract administration, supporting the project lifecycle and all the associated specialty consultants,” she says.

 

Rebecca’s ability to consider the big picture comes in handy when working on complex projects. “I like to step back from a project and take the time to understand it in its entirety, not just the portion that I’m involved in. I find this gives me a big advantage when it comes to advising on bespoke solutions and considering the best project outcomes for all. I ask a lot of questions and have learnt not to assume anything!”

 

Director Justin Maritz, who leads our Advisory Division alongside Associate Director Jesse Conradie, says Rebecca has already made a noticeable impact on projects.

“With her wealth of construction and legal expertise, Rebecca has instantly added value. Rebecca’s specialist skill set enables her to bring a different perspective to our Advisory team. As a collective, we can examine projects from a variety of angles and advise outcomes that are beneficial to all parties.”

 

In Rebecca’s view, the key to achieving these beneficial outcomes is communication. “If all stakeholders can ‘buy in’ to the project and have realistic expectations, particularly in areas such as risk allocation, then disputes can be avoided,” she says. “I enjoy helping people understand that a shared risk matrix is much more powerful than an unbalanced one. When things go wrong, everyone pays the price to a small degree but there is a shared desire to work together to find a solution – which is not always the case on projects with unbalanced risk allocation. It’s important to remember that all stakeholders have the same end goal: to deliver a successful project.”

 

If you require advice for your project, get in touch with our Advisory Division today.

 

This article was contributed by Rebecca Ward and Gemma Christall.

White Associates Director - Justin Maritz

The Next Decade of Procurement

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Director Justin Maritz calls for efficient procurement strategies on his 10-year anniversary.

This month we celebrate Director Justin Maritz, our fifth employee to reach a decade of service.

 

Having initially joined White Associates as a Senior Cost Planner in 2013, Justin has been a Director for the last four years. A self-described generalist, he is currently involved in the leadership of three of our four divisions – Pre Contract, Post Contract and Advisory Services.

 

Justin has weathered his fair share of market ups and downs over the last ten years, and has seen firsthand the benefits of collaboration during the procurement process. Looking ahead to the next decade, he believes efficient procurement strategies will be key to navigating changing market conditions successfully.

 

“What I want to see in future is a well-considered competitive market. Well designed, well procured and well contracted.”

With New Zealand currently in a recession, we are seeing a shift from the previously perceived environment of minimal competition. Overall contractor and subcontractor capacity is coming back into the market as larger projects are completed and newer projects are slower to start.

 

This increased competition may cause some negative flow-on effects. Tough economic times mean tough decisions will be made, and the market may make commercial decisions in order to win work. But Justin remains cautious of this approach: “You want a value for money offer that gives certainty of successful project outcomes. We should always be dubious about abnormally low tenders, especially at this stage of the market cycle.”

 

Good procurement benefits all stakeholders of a construction contract, but this needs to be considered on a project-specific basis. Contract terms and conditions should be as realistic as possible, and not favour one party at the expense of the other. “To achieve a fair outcome, terms and conditions should reflect each project’s individual risk profile and specific requirements,” Justin says. “In order to achieve efficient management of risk, this should be allocated to the party best suited to manage it.”

 

Project stakeholders should also carefully consider advice for alternative or non-standard procurement strategies. Justin continues to favour traditional procurement approaches wherever possible: “Let’s challenge our thinking when asked to head down a pathway of hybrid procurement to ensure it delivers the best possible project outcomes.”

 

This article was contributed by Justin Maritz and Gemma Christall.

 

Procurement Advice

If you require procurement advice for your project, please feel free to contact our Advisory Division leads.

Jesse Conradie - Associate Director

Newly Promoted Associate Director Jesse-Paul Conradie, Advisory Division

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Jesse looks forward to continuing to promote a culture of dispute avoidance in his new role.

In 2019 we announced that Jesse-Paul Conradie had joined White Associates, bringing a powerful combination of risk management, dispute avoidance and dispute resolution expertise to our team.

 

Over the past four and a half years, Jesse has applied his unique skill set across White Associates’ wide spread of projects. “My passion has always been in dealing with contractual matters,” he says.

 

Jesse’s prior background in South Africa in various commercial management type roles has helped inform his current Advisory approach. “My responsibility was to protect the company’s contractual rights and interests. Dealing with a variety of challenges helped me gain an in-depth knowledge of EOT and prolongation claims, avoiding and resolving disputes, and negotiating with clients. My experience as arbitrator motivates me to approach contentious matters differently and seek amicable solutions to arrive at reasonable outcomes.”

 

In recognition of the value Jesse has added to the company and its clients, he has been promoted to Associate Director.

 

Director Justin Maritz describes Jesse’s promotion as a logical move, and common sense from a business point of view. “Jesse’s passion and ability to navigate complex contractual matters has an obvious synergy with the growth of our Advisory team. I look forward to continuing to grow the Advisory Division alongside him,” Justin says.

 

Excited for the future of the Advisory Division, Jesse says its primary focus will be to add value to the industry by promoting a culture of dispute avoidance. “This approach will be beneficial to all stakeholders by protecting relationships, spending less time and money on lengthy dispute resolution procedures, and shaping a better environment for the industry as a whole.

 

“We are confident that our contractual experience in both the construction and consulting arenas enables us to provide balanced advice and solutions. This approach reduces formal legal involvement.”

 

White Associates looks forward to our Advisory Division supporting your current and future projects.

 

From Cadet to Graduate and Beyond: Adam Harris

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Adam Harris joined White Associates in February last year as part of our cadet programme. Our fifth cadet in the four years that White Associates’ cadet programme has been running, Adam has been working three days a week in our Auckland office while he finishes off his final year of university studies at Unitec. The cadet programme is designed to equip future quantity surveyors with the skills and experience required to kickstart their careers.

“I am studying a Bachelor of Construction majoring in Construction Economics, which is pretty much quantity surveying,” he says. “I took construction at school and took a liking to it. They taught us the basics of the construction industry, and I’ve always enjoyed maths. So, from there the two combined to lead me towards the world of quantity surveying.”

While in his first year at Unitec, Adam undertook what he describes as ‘a very extensive Google search through the construction companies’ to find QS firms that might be the place for him to start his career. “I looked up White Associates, and I was engaged by how client-driven they are, how it’s all about being fair in the construction industry. That really caught my eye. I didn’t even see the cadet programme opportunity, I just happened to apply at the right time.

Then I got the email saying that I was accepted. It was quite exciting.”

It is good news that although the world of work is undeniably different to life as a student, Adam’s early view marries up with his experience now he is established in the White Associates team. “School life is very different to work, but I am enjoying it. The main thing we talk about here is being fair. It’s about making sure that the contract is being administered in a way where everyone is following the contract correctly, and it’s a good team vibe.”

Over the last six months, Adam has taken on work on his own vertical built demolition project, doing site visits and making recommendations. “The main thing I have found about the construction industry is the importance of relationships. Being able to communicate with the contractor and client without feeling nervous about it, having open communication gets the desired outcome for everyone. The White Associates team and the contractor have been welcoming and supportive to me.”

One thing Adam has found helpful along the way is meeting a number of other previous cadets at White Associates. “When I first arrived, we had a session in the first week with previous cadets, Corize and Olivia. We discussed how the cadet programme works, what they’ve enjoyed about it, and any challenges. It was good to learn from them, and I am still enjoying learning every day. There are so many experienced people around our office that are willing to help you out. The learning opportunities have been great, and on top of that it’s been good while I was at uni because the cadetship gives you lots of flexibility. It’s not a set three days a week; it can be whatever suits your timetable, obviously through talking with the management team. That’s good when stress gets high if you’ve got some exams coming, and I do have exams coming up!

“I’m excited to see a project from the start to the end, which would be quite useful for my growth as well. I like the fact that White Associates has such a broad range of projects; it’s interesting to see a whole lot of different projects, especially early on in my career. I’ve really been exposed to pretty much everything.

“My first project in the construction industry, something to really look forward to.”

A cityscape from below

Updated Retentions Regime – What compliance requirements will project funders impose?

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In this brief, we discuss this question and how changes to the retention moneys regime provide increased insolvency security and enforced accountability.

A Pivotal Time to Increase Subcontractor Protection 

In today’s market, we see an increasing number of liquidations within the construction sector. It is therefore crucial to ensure that all contracting parties have sufficient security in place to mitigate risks, and are reciprocally releasing securities once the other party fulfils its contractual obligations. Mismanagement of security releases puts undue pressure on cash flow and risks a domino effect which in some instances culminate in liquidation.

The recent amendment of the Construction Contracts Act 2002 (“CCA”) brings a welcome and timely change to the retention money regime. It increases and enforces the accountability of the Head Contractor to hold and report retention money correctly, in a way that reduces Subcontractors’ exposure. 

A sizeable percentage of projects are funded by banks and/or other financial institutions. The question arises whether funders will impose additional compliance obligations upon borrowers. 

Key changes to the CCA are as follows: 

 

Issues with the Original Act 

Retention money, as between Head Contractors and Subcontractors, can be defined as a portion of payment that Head Contractors can choose to withhold from specialist tradespeople for up to 12 months. Retention money provides the Head Contractor with security if work is not completed to standard and incentivises Subcontractors to perform their defects remediation obligations. 

Under the current retentions provisions of the CCA, retention money can be intermingled with other company money or assets. However, the misappropriation of retention money as working capital has proven to be problematic. Subcontractors “are often the first to miss out in the event a construction company becomes insolvent,” says Hon Dr Megan Woods, Minister for Building and Construction. Subcontractors usually have no visibility of how their retention money is being held or used. 

The Construction Contracts (Retention Money) Amendment Act 2023 (“the Amendment”) addresses both issues.

 

Commencement Date and Applicable Contracts 

The Amendment will come into effect from 5 October 2023, and will apply to all new or renewed commercial construction contracts where retention money provisions are included. 

We note that the holding of retention moneys against Subcontractors remains a choice, not a legal requirement. 

 

Requirement to Hold Retention Money Safely 

Under the Amendment, Head Contractors will need to hold retentions on trust in a separate bank account or complying instrument. This trust is automatically created when an amount falls within section 18B’s definition of ‘retention money’. The bank account, or other instrument, must be ‘compliant’ as outlined in section 18E, and Head Contractors must inform their bank or account holder upon deposit that there is retention money being held on trust.

 

The only instances where retention money usage is permitted: 

  • To cover the value of defects requiring remediation, in which case the Head Contractor is required to provide written notice to the Subcontractor, minimum 10 days before use, outlining the details of such defects; 
  • As permitted by the contract, in which case the relevant contractual procedures need to be followed. 

 

A trust containing retention money will end when any of the following occur: 

  • The Subcontractor receives payment of the retention money; 
  • The Subcontractor releases the Head Contractor of such payment in writing; 
  • The retention money is used to remedy defects as above; 
  • The retention money otherwise ceases to become payable to the Subcontractor. 

 

Retention money may be held for multiple parties in the same trust account. If a deposit or withdrawal cannot be clearly attributed to a party, the amount deposited or withdrawn will be apportioned according to each party’s ledger record balances at the time it was made. 

Interest on retention money can be kept by the party holding it, providing the contract does not say otherwise. 

Notably, liquidators and receivers for all liquidations and receiverships commencing after 5 October 2023 will immediately become trustees of retention money, regardless of the contract commencement date.

 

Enforcement of Accountability 

One of the most significant changes in the Amendment is that it substantially increases the level of accountability. 

It is now a requirement for the Head Contractor to keep thorough accounting records of all retention money held and provide detailed information to the Subcontractor. This provision of information must be done as soon as possible after an amount is deemed ‘retention money,’ and at minimum every three (3) months thereafter until the retention money is released. The extent of reporting requirements can be found in Section 18FD, which includes:

  • The bank account holding the retention money; 
  • The applicable construction contract; 
  • Details of any account transactions. 

 

The Amendment also introduces several strict non-compliance penalties. These include:

Failing to Keep or Use Retention Money as Prescribed: 

  • Directors: Up to $50,000 NZD (New Zealand Dollars) for each offence; 
  • Companies: Up to $200,000 NZD for each offence; 
  • Intentionally providing false information about retentions held: Up to $50,000 NZD for each offence. 

 

Failing to Keep Accounting Records as Prescribed: 

  • Up to $50,000 NZD for each offence. 

 

Failing to Provide Regular Reports of Retentions Held: 

  • Up to $50,000 NZD for each offence.

 

In addition, the Ministry of Business, Innovation and Employment is now empowered to investigate and enforce retention money offence related penalties. Head Contractors that fail to provide information requested during an investigation could incur additional penalties. 

 

Third Party Funded Projects 

We provide project funding representation quantity surveying services on a range of projects, working with all the major funders in New Zealand. As part of monthly draw down certifications, funders traditionally expect quantity surveyors to advise:

  • the sum of retentions certified by that draw down;  
  • that it is appropriate for the facility to be drawn and the funds credited to the nominated stakeholder; and 
  • with verification, that borrowers are retaining the correct amount of retentions. 

 

Funders usually require that construction contracts contain appropriate retention provisions. 

We suspect that funders will bolster their compliance requirements to align with the additional requirements prescribed under the amended CCA. This will inevitably include a precondition that construction contracts must respond to the amended CCA. However, experience has shown that simply referencing an Act does not produce the desired outcomes. We recommend that the mechanisms prescribed under the amended CCA be summarized in contracts thereby patently drawing the user’s attention to the express requirements. This will furthermore assist quantity surveyors in verifying compliance. 

Borrowers and contracting parties will need to ensure they understand and are in a position to comply with the new legislation when it comes into force. 

We are liaising with the various funders to provide them further advice and recommendations in this regard and will accordingly share further updates as we become aware of any additional requirements set by them. 

 

Further Information 

You can find more detailed information about the Amendment below: 

MBIE will provide additional resources, including guidance information for businesses and Subcontractors, over the coming months. 

 

Further Guidance 

If you require further guidance, please feel free to contact our Advisory division leads. 

Justin Headshot

Justin Maritz

Director

Justin has over 24 years' international experience and a proven record in achieving successful outcomes on challenging projects.

Jesse Headshot

Jesse Conradie

Associate Director

Jesse has a powerful combination of Advisory expertise including contract law, engineer to contract, and dispute avoidance and resolution.

Rebecca Ward Senior Advisory Consultant White Associates

Rebecca Ward

Senior Advisory Consultant

A qualified lawyer with extensive construction experience, Rebecca provides practical, ethical advice informed by the project lifecycle.

This article was contributed by Jesse Conradie and Gemma Christall.

White Associates strengthens shareholder structure to support growth

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White Associates strengthens shareholder structure to support growth

This time last year we announced that at a time of growth we were adding a new director and three new associates.

One year on, it is with great pleasure that on our 18th birthday as a company we are coming of age and announce a new progressive company milestone that is all about further strengthening our leadership and shareholding structure, developing our people and supporting the continued growth of our business into the future.

We have added three new shareholders

Traditionally, White Associates has been owned by shareholding directors. For the first time, as part of our succession planning and our work to provide more opportunities for our team, we have added three minority shareholders who are staff but not directors.

In this first intake, Company Associates Richard Moore, Elliot Smith and Justin Bearne have bought into the business and have become shareholders. All three are well-recognised people within our business, and we are excited that they see a long-term future here.

Konrad says: “Adding new shareholders from within our own ranks is a hugely exciting step for White Associates. We have been talking consistently over the past year about how we set ourselves up for our next steps in our business growth, strengthening our structure and processes while providing a clearer pathway for our people to progress within our company. It is important to note that we will continue to look at our structure as we grow to provide further, future opportunities for people within our business to buy into it. This is not a one-time-only activity.”

“We want to build a strong, stable and rich working environment for our team as we grow, and enable our directors to work on the business as well as with our clients so we can develop and grow further still.”

The future looks green; budgeting in the construction industry

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The dollar has been unchallenged at the head of the budget table since its inception, but is that about to change?

As the voice of embodied carbon gets louder, one question starts to emerge into the foreground: could a carbon budget overthrow the monetary budget in our near future?

In our view, it could – for two reasons.

Firstly, our Government has passed legislation that makes climate-related disclosures mandatory for some large financial market participants from financial years beginning on or after 1 January 2023. Although this requirement is due to be phased in gradually – and currently only applies to large publicly listed companies, insurers, banks, non-bank deposit takers and investment managers – not only will it widen to other sectors over time, but it will also have an early trickle-down effect into the development and construction sectors that constitute substantial proportions of their lending and insurance books.

Source: https://www.xrb.govt.nz/dmsdocument/4773

Secondly, many large developers and constructors in New Zealand and overseas have responded to their government and other clients’ desire to improve environmental project performance – increasingly weighted in procurement processes – by creating strategies to move ahead in this area. Then they look to publicly disclose their intent and progress in annual sustainability reports. In turn, these reports are being increasingly scrutinised for vague or unfulfilled claims, in some instances leading to a rise in so-called ‘greenwashing’ lawsuits. In fact, the London School of Economics’ Grantham Research Institute on Climate Change and the Environment announced late last year that there are more than 2,000 climate change litigation cases underway around the world, more than double those taking place in 2015.

The effect of these two factors is clear

Unambiguous embodied carbon targets are rising in importance. So, although we have seen them enter the conversation on projects but not yet taking precedence over dollars, we ask: could we be approaching the tipping point?

Government clients are increasingly requiring the first steps along this path. A late-2022 Ministry of Education (MOE) release extract (below) shows how the Ministry is introducing carbon assessments for new builds, a natural first step that will no doubt be followed by additional steps. And the MOE is by no means alone in this area.

The Ministry of Education put out a news release late last year saying:

Carbon assessment for new build projects

As part of Te Mahere Taiao – The Environmental Action Plan for School Property – we are progressively implementing embodied carbon and operational carbon assessment requirements and targets for Ministry-led new builds.

Upcoming requirements:

Ministry-led new build projects contracted after 1 September 2022, with a capital value over $8m, will be required to conduct Life Cycle Assessments. It is optional and encouraged for all Ministry-led new build projects to opt-in and conduct Life Cycle Assessments.

Our intention is to progressively incorporate carbon assessment into business-as-usual processes and our design standards (within DSNZ) at a pace that the industry is capable of accommodating.

We are starting with high value projects, embodied carbon calculations, and simplified energy use calculations. Next year, we will progress to lower value projects and include whole-of-life operational carbon reporting. We will keep design teams updated with timelines and any changes to our requirements.

As public and private sector clients become more environmentally conscious and demand more sustainable building practices, becoming increasingly aware of the carbon footprint of building projects, they will prioritise low-carbon materials and construction methods. This will put pressure on the construction industry to prioritise carbon budgets over financial budgets in order to meet client demands.

Private companies and individuals are already taking steps to reach the targets that Government departments are striving for. This work applies not just to the big construction companies but also consultancies, subcontractors, suppliers and other smaller companies further down the supply chain, all of whom are being / going to be asked by their Tier 1 contractor clients to do more too as time progresses.

One thing is for sure: carbon budgets are emerging into importance, and it is possible that overall carbon budgets for a project might even overtake financial budgets in the construction industry of New Zealand – as the financial budget might end up by being just a component of the carbon budget, rather than the other way around.

The construction industry will need to play its part in reducing emissions, and carbon budgets will be an essential tool in achieving this goal.

How might this process work in practice?

Historically, clients come to us with a question of either, ‘here’s what we want to do. How much will it cost?’ or ‘I have a budget of $x, what can I do with it?’

This conversation is evolving into to, ‘here’s what we want to do. What is a reasonable embodied carbon target?’ Or ‘I have an embodied carbon limit of x. What can I do with it?’.

We are already helping clients by analysing embodied carbon on different options for designs to see which is the most efficient/lowest carbon option. This type of option engineering is just one way we can work alongside your design team to determine the most efficient embodied carbon option.

Companies looking to make the most of this process should come and talk to us. The construction industry has operated for a long time with dollars defining budgets. We’re entering a fast-paced period of change over the next decade, and the winners will be those who respond well.

This article was contributed by White Associates' Richard Moore-Savage

Richard Moore-Savage, Associate
Richard Moore-Savage, Associate