For our fourth chat in our 'Industry Leaders Insights' series, we caught up with Steven Rankin, Director at Chester Consultants, a 100% NZ-owned multi-disciplinary consultancy offering an extensive range of professional engineering design and consulting services throughout New Zealand and the wider Pacific region.
What are the current trends shaping the industry?
Central and local governments continue to shape the industry through sweeping reforms and regulations such as the National Policy Statements on Urban Development (NPS-UD), Freshwater (NPS-FW), the Three Waters reform, and Resource Management Act (RMA) changes. These policies are critical levers that influence everything from planning processes to project execution.
Interest rates and tightening funding have impacted project feasibility over the past two years. The market is showing glimmers of recovery as we move into 2025. One interesting trend is the return of traditional development products, such as freestanding residential homes and dedicated car parks, reflecting changing preferences and urban dynamics.
In a professional sense, the increasing specialisation within professional services in the industry is interesting. The need for multiple specialists to handle tasks that once fell under generalist roles increases both the time and complexity involved in project delivery, so not the most efficient on straight forward developments.
How are technological advancements influencing the industry?
The tools are constantly advancing, bringing improvements in design speed and accuracy, which ultimately enhance efficiency and reduce costs. The integration of AI and coding into design and project management processes is transforming the way work is done across the sector. The depth of technology adoption varies hugely between firms, creating discrepancies in performance and competitiveness.
While these tools offer time-saving benefits, there’s a downside: the expectation to deliver faster results. The pressure to move quickly doesn’t allow time for consideration and time to look ahead. Risk and commercial implications can get overlooked when moving in a hurry, especially when solving complex problems.
What we do is complex, it is people-centric, not technology-centric. Success relies on balancing the use of technology with human judgement, not replacing critical thinking with automation.
What are the challenges Chesters is encountering?
We evolved from a local business that worked almost entirely in the private sector to three New Zealand locations and a Pacific office. So for us, market entry conditions, structure and living the brand are ongoing.
At the same time, we are transitioning with our client base from small-scale private sector projects to larger public and commercial clients. We are focused on still servicing the sector that enabled our growth, but the broad client base means there is a disparity in client knowledge and expectations.
How are economic fluctuations and market uncertainties affecting your business?
Borrowing costs and funding availability coupled with a depressed market have put the brakes on many development projects. This directly removed work from the industry which has impacted us across the entire business. So we have had to change our mindset of what success looks like. Success has shifted from profit maximisation to maintaining a healthy business culture and preserving staff well-being for when the market rebounds.
Housing is integral to the economy. When residential construction is strong, it creates a ripple effect that boosts a range of sectors, from trades to electronics. This activity generates employment, which in turn supports further economic growth. However, with the Official Cash Rate (OCR) tied to inflation and the resulting economic slowdown, we’ve experienced a downturn worse than 2008. The construction sector was hit hard in the last quarter of 2023, especially trades like builders and electricians, who are still feeling the effects. While the construction sector has already begun to recover, other areas will lag, with trades expected to be 12 to 19 months behind the recovery curve.
What is the market outlook you are working towards?
Positive.
In the land development space, we are headed into a period of significant undersupply. Development has been stagnant for years, there isn’t a pipeline of supply ready to enter the market. Interest rates are beginning to trend downward which will create upward pressure on housing prices, creating opportunities for developers to return to the market.
In the infrastructure space, upcoming government work programmes will likely bring more projects to the table, particularly as a new government settles in.
By Q1 2025, the industry should begin to recover, with a strong recovery into FY2026.
Thanks so much to Steven for his insights. Keep an eye on the Assemble LinkedIn page for more chats with Industry Leaders.