Few topics have dominated the headlines of the past few years more than the impacts of COVID-19 on global and local supply chains. In early 2020, having steady access to food and essentials became one of the world’s most pressing concerns for manufacturers, producers, distributors, retailers and consumers alike.
New Zealand has not been immune to the acute supply and demand pressures felt around the globe. Despite repeated pandemic shocks and the new demands of a re-opening world, one sector of the New Zealand economy has remained robustly reliable when it comes to keeping its doors open and, to a significant extent, products on shelves: supermarkets.
You can therefore imagine the importance of programme when developing and constructing a new $50 million Green Star-rated North Island distribution centre in Palmerston North for Woolworths NZ Ltd, which would deliver roughly 450,000 cartons of groceries to 55 North Island Countdown supermarkets every week.
Design began in 2019 to create a 37,000m² distribution warehouse and a 1,200m² office and amenities building on a 100,000m² site. This was followed by a planned two-stage construction process – with civil and earthworks taking place from March to June 2020, followed by a year-long vertical build completing in June 2021.
On this intensive project, White Associates provided full quantity surveying services covering pre-contract, procurement and post-contract cost management. Associate Weng Tan was the post-contract lead QS of the White Associates Team on this project, which also included Konrad Trankels, Justin Maritz, Brett Zeiler and Richard Moore-Savage.
No room for slippage
Weng says that timing was always the critical aspect.
“You might think that the sheer physical size and scale of this development would dominate our team’s thinking. However, while it was undoubtedly a major factor for us, timing really was the most important thing on this project, as the tenant’s setup team – IT, security, and racking – was working on an extremely tight, back-to-back schedule.”
“Everything had to happen within a precise timetable to enable Countdown to move in and begin it’s vital work to supply fridges and pantries across the North Island. All sub-trades are lined up at the start of the year, working to a highly precise programme throughout the year. If our team were to miss any project milestones along the way, the tenant would have to reschedule their team, and the facility might not open on time. To highlight how tight the programme was, when the construction team finished the ground slab, the racking contractor immediately moved in – the next day – to start installing racking. Once their electrical subcontractors finish on one project they move on immediately to the next project, with hotels booked in advance, so there is absolutely no room for slippage. They only had a certain window for the Palmerston North project to come here, set up, then head off to the next site. If we missed the window they’d be lost. This is a challenging enough dimension on it’s own, but when you consider the challenges provided by lockdowns, it was significantly amplified.”
The pressures of time, which also included a short timeframe to award the contract, meant that it was necessary to bring a contractor on board quickly.
“We managed the tendering process to ensure the client obtained accurate, reasonable and comparable prices from tenderers,” says Weng. “Our quick response and rigorous tender analysis process provided the client and project design teams with a clear view of the best available contractor for this project.
“Then, to ensure that the carefully designed racking system could be installed we needed to guarantee that the first half of the warehouse would be completed by March 2021 and the second half by May 2021. This required milestone-based incentives to be put in place to encourage the contractor to achieve these goals, and to ensure we hit the milestones we had to ensure provisions for acceleration costs were included in our estimate.
“To prevent any confusion regarding the scope of works required we ensured to keep in close communication with the client and the contractor. To provide clarity for all parties involved we had to tightly manage client and contractor expectations, which required early planning and constant planning ahead; working to do so every day.”
Splitting costs
Maintaining budget was also a critical and evolving dimension to the project, says Weng.
“Careful construction cost control was required to meet budget, as you’d expect. However, although the project started with a usual cost reporting format, it changed when we were requested to split the costs out between the project and tenant forecasts, fitout payments and expenditures.”
“As we were also required to provide cash flow and expenditure forecasts for the project, we sat down with the contractor to identify costs and split payments between the project and tenant costs so we could provide a realistic cash flow programme. Communication was the key to achieving this; talking to the Engineer to the Contract, the project manager and the contractor’s QS all led to higher accuracy for cashflow planning and variation of work budget costing.”
Delivered on programme and budget
Just under a year ago, amid media fanfare on 31 August 2021, the new Palmerston North Distribution Centre for Woolworths opened. Not only was the practical completion achieved on schedule in June, the project was also delivered within the approved budget. This project has recently received a Merit in the CBRE Industrial Property Award at the 2022 PCNZ Industry Awards.
These achievements were the source of some pride for Weng and the White Associates Team.
“I’m really proud of the fact that all cost reports and payment recommendations were issued on time throughout the project, despite the many COVID disruptions. To finish on time and budget, and for the client to be able to use their facilities as planned, was not easy, particularly with COVID doing its best to get in the way. It is great to think that Woolworths is now using its facility to supply Countdown Supermarkets all over the North Island, helping to ensure that people get the goods they need for their everyday lives.”