Written by John Williams
Mounting supply chain issues and an increasing skills shortage, coupled with a record-high demand for design and building services, have combined to create a perfect storm of long delays and escalating costs for homeowners. Will it blow over, or is it going to get a whole lot worse?
This time last year Auckland was still bouncing between alert levels. It was worrying for many: workplaces remained closed and port activity had ground to a crawl as freight levels plummeted. Most business sectors including the construction industry were uncertain what the short-term landscape looked like, let alone forecasting out to 2021.
For individual businesses, there were two schools of thought: expect the worst — and reduce outgoings by cutting staff; or treat this as a blip — and do whatever we can to retain staff. In the design and building sectors, firms that opted to let staff go are regretting their decision, now are finding themselves completely on the back foot, scrambling to get good, experienced staff to cope with the deluge of work coming through their doors.
Even those who’ve retained staff are struggling. With no experienced workers in the job market, many architects and designers are resorting to headhunting to attract the skilled staff they so desperately need. As one designer we talked to said, “there is no way anyone is shifting at the moment unless you dangle a massive carrot in front of them”.
But this is only half the problem. More pressing, from a homeowner’s perspective, is the shortage of even the most basic of building materials, and an exponential growth in the lead times to secure them.
All the design professionals we spoke with agreed that timelines across the board are being stretched, but none would commit to giving actual wait times, saying that they are very much dependent on the scale and complexity of each project.
Jane McAulay-Frame from Bespoke Studio says when Covid first hit she was worried. The big jobs initially dried up, and she was pressured to take on smaller-scale projects she would normally turn away. Twelve months on, and it’s a completely different story. Her firm now has 50 jobs on the books — an even mix of new builds and renovations from all over the country, with approximately ten percent international clients.
“People have heard through word of mouth, or through their builders or designers, that prices are rising and there are supply issues. So they are saying to themselves, the longer we leave it, the more it’s going to cost, so let’s push the button on it, and get in the queue.”
So how long’s the queue? That depends on which architect or designer you are speaking to, she says. Needless to say, there are fewer gaps in the diary for the initial consultation, more time delays in writing a fee proposal, and further hold-ups in putting together concept designs and mood boards.
“Covid has made people realise that we are so lucky to live in beautiful Aotearoa and, if it all turns to custard once again — and it so easily could, then they have got this wonderful way of living and these havens. So they’re saying, ‘let’s put some funds into our home, or our holiday home at the beach, or down in Wanaka’.”
Bespoke Design offers a full design service to clients and likes to get involved in all aspects early in projects — from initial space planning and consulting on exterior finishes to selecting the soft furnishings and options for art, etc. The current supply chain issues, however, are affecting every stage of every project Jane and her team are working on.
“We are constantly checking what’s in stock and what will still be available when it comes to the building phase of a project, and either pre-purchasing enough of a product to fulfil our needs, or looking for an alternative. We are also buying a lot of building materials and products in advance, at an agreed price, and storing them for when we need them.”
The alternative, Jane says, is if you don’t commit to a material or product, then do not be surprised if either the quoted price has gone up or, in the worst-case scenario, it’s not available when it’s needed on site. “Shifting prices are just part of the crippling situation, and we have to pass them onto our clients, unfortunately.”
For example, at the time of writing, the price of cedar cladding went up by a staggering 50 percent in one week. The knock-on effect of this is that alternative timber cladding companies then raised their prices in line with this increase, even if though there were no shortage or supply issues with their products. This is one example of a scenario being played out in increasing numbers on a weekly basis in the design and building sector.
The result is that the architects and designers, in an attempt to keep costs down and guarantee supply for their clients, are looking for alternative solutions across the board – from framing materials to fabric choices. This, in turn, is adding to the time taken to create and lock in a stable and reliable schedule of products, materials and finishes.
“I’m now having to put my project management hat on at the beginning of every job,” Jane says. “This material scheme is looking lovely for a beautiful house we’re working on in Grey Lynn, but now I have to think… that stone is currently not in the country. They’re telling me 20 weeks. I’m going to double that to 40 weeks. I’m going to buy that now, therefore I need to get my kitchen drawings to the stage where I know roughly how much stone I need.”
Anything coming out of Australia is still more or less OK, she says. There are delays, but they are not insurmountable. The same cannot be said for Europe, North America and China. Not everything coming from these powerhouses is facing major delays, but there is an increasing list of products and materials on the ‘endangered’ list.
For interiors, stone is the biggest problem at present. Textiles can be put on a plane, she says, but stone is heavy and fragile. Also, if you are going with a natural, rather than man-made, stone, the patterns and the colours in every piece are unique. There is no alternative, which is what makes it indispensable.
“Our design approach is to layer a lot of complicated textures and materials in a simple-looking way, and stone is our key starting point because, more often than not, all the colours [in the rest of the palette] are in the stone. I need it to be there. Therefore we have to make decisions early, so I can order the stone to ensure it’s here when it’s required.”
In general, designers are having to work a lot harder behind the scenes to make things happen. Go-to products are not go-to’s anymore, she says.
“Looking back in a few years, this will be an interesting period design-wise, as there will have been a lot of improvisation and inventiveness incorporated into our homes – ingenuity coming from despair,” she says. “And I can’t see an end to it at the moment. These are the new parameters, and we just need to adapt to them. It’s a more complex, more dynamic playing field. Those who understand this and adapt will get things done.”
There is general agreement among designers that there has never been a better time to buy local. Not only are you supporting local businesses when they need it, there is the added layer of craft and knowing the provenance of a material, or an individual piece – plus, supply chain issues are greatly reduced.
“No offence to our Italian friends, but New Zealand is making beautiful furniture now. You can add a bit of European flair with a few small pieces that will come in on a container in 2023, but for the main pieces, buy locally made,” says Jane.
The name of the game is being thrifty and clever, she says. “For example, I’m collecting small, leftover remnants of stone and creating tops for side tables, with the bases made by local metalworkers.”
Jane’s final piece of advice is ‘don’t wait’.
“Pull in your design team really early, get your project to design concept stage, and work on some sort of timeline. Then, get a builder in and booked. Once you have your team locked in, they will have regular people they work with — specialist sub-trades and subcontractors, who they will also lock-in. They should have special favours they can pull to help you get what you need; that’s not to say there’s anything underhand going on, but Auckland’s a small place and everything is about special relationships.”
With builders, the old way was the tender process, with quotes from three or more contractors, then deciding who to work with. That’s not the way it works now, she says. Unless it’s a very big project, a builder will not spend the time on a tender.
So how do you know if you’re paying too much?
“I think everyone’s going to be paying too much, anyway,” she says wryly. “You pick your builder on their integrity and reputation. Where you do your negotiation is in the small print of the contract.”
And don’t think you can buy your way out of this situation, says Rose Schwarz from Schwarz+Design. “Money doesn’t talk anymore. The clever ones have worked this out and are ordering early. The silly ones still think money talks. And it doesn’t. It’s serious. Clients need to be realistic, and that means buying early.”
Rose’s advice is to look for a designer who you trust to go into bat for you. “In order to secure materials and products at good prices, designers are trading on their reputations with suppliers — but there’s only so long we can keep projects on track,” she says.
Colour and material ranges are becoming depleted. Rose shows us a sample box from a well-known supplier. It’s half full. The gaps represent finishes that are not currently available. “This is what we are now having to work with,” she says. “With so many gaps in what’s available, we are struggling to hold onto a look.”
Leigh Garner from Origin Architecture says no one is comfortable with the current situation, and the fluid nature of the supply chain issues, plus the shortage of skills in vital areas of the design and build sector, is causing stress on both sides. It’s leading to awkward conversations, broken promises, budget blowouts and time delays, he says.
“There has also been a slight shift in dynamics,” he says candidly. “Prior to Covid, the client called the shots. Now, the designers, architects and builders are having more say in the process, simply because they are so busy.”
The small to medium jobs, previously the mainstay of many smaller architectural practices, are now being passed up in preference to the larger, full-house renovations and new-build projects that are now coming online. This has left a huge basket of smaller jobs with no one to do them.
“The old-school way of doing things, where you draw up the design, get it through consent, and then put it out to tender to a few builders — well, that model’s not really working anymore. I am now advising my clients to get a builder on board from the get-go in order to guarantee, in today’s conditions, that you’ve booked your [building] slot.”
Engaging with a builder early also gives an insight as to the availability of essential building materials — information your architect may not be privy to. As Leigh points out, there is little point in going through and agreeing on a particular cladding or roofing material, only to be told by your builder four months later that there is none available in the country… and the next shipment is due into the country in mid-2022!
And there’s also the cost to consider: being able to negotiate prices with a builder at today’s rates, not a six-month-down-the-track rate — and that’s assuming the material is available, he says.
“Builders are now wanting certainty. If they get a sniff that you’re taking your drawings around to two or three other builders, they may very well say they’re not interested in your job, as they will probably have a line of other potential clients ready to give them work. I’ve actually had this happen to me on a couple of recent jobs,” he says. “But, to be fair, I have not seen builders out there exploiting their situation; it’s more about certainty and controlling the design and budget process. With an integrated design-build process, you can actually have a lot more flexibility to control the budget — especially in these times of uncertain availability and pricing.”
Leigh says he is also beginning to see a shift in culture around how we build our homes.
“The situation that’s evolved over the past six months has forced me to think more — one hundred percent. I now have to do a lot more research into the supply side; where and how a product is made, and its availability. I’m also having to line up the final finishes of the interiors before we begin the build.”
Even with the best will in the world, Leigh says some things are outside his control. Auckland Council, for example, is currently taking twice as long for sign-offs. Why? He suspects it’s simply because there are a lot more projects in the system, or not enough inspectors, who knows? And it’s not just the public sector that’s feeling the pinch. The boom in demand, coupled with a shortage of skilled staff, is putting pressure on the services of private contractors, such as geotechnical and structural engineers, which adds to delays. Everything is literally taking twice as long, he says.
“It goes back to getting all your ducks in a row, right at the outset of your project,” he says. “It’s never been more important to plan ahead, not only with regard to the availability of products and materials but also the availability of skilled, human resources.
“It’s about decision making, and knowing what you want. Making changes to a design has always been a source of time delays, but given the present situation, even the smallest change can now potentially add months to a project, if external experts and/or council have to be brought back into the mix.”
Delays like this can have horrendous knock-on effects, as the next round of sub-trades, and the ones following that, all have to be carefully rescheduled — and in these testing times, that’s not easy. Even a one-week delay in the early stages has the potential to balloon out to months during the final stages of the build.
“Working to such a tight logistical timeline, you have to get everything right. And that’s where I feel sorry for these builders and project managers because these delays are really throwing them off.”
Not all the issues we are experiencing stem from the Covid crisis. The shortage of pine, for example, partly started out as a geopolitical spat between Australia and China, which New Zealand was drawn into, so China’s now buying its pine from us, leaving the country with a shortage for its own market. “It’s not that there’s a shortage of timber, it’s the fact that overseas clients are paying more, like a lot of our exports,” he says. “The frustration is knowing it’s here, but it’s going straight onto a boat.”
Overall, the message coming through from the design community is to do things early — bring your dream team together as soon as possible, make your design decisions quickly and stick to them, and pre-order your materials and products to ensure you get the best price, and to guarantee that when they’re needed, they’re on hand.