2019 Annual Honours — Business Excellence

Professionals doing specialist work and delivering professional services

In recent years, particularly since the middle of last year, high-density residential development investment has become a hot topic in the Chinese property market, with interest continuing to grow.

Yet once projects reach the implementation stage, many developers and builders find themselves facing problems they never encountered when developing individual standalone homes or groups of them.

{ad}

Established in 2015 as New Zealand's first comprehensive Chinese consultancy, Prostone has stepped into the role of the industry's troubleshooter.

The distinctive challenges of medium- and high-density residential investment. Last year, two companies turned to Prostone after running into difficulties with townhouse developments.

One builder lacked experience in fire safety design and properly sequencing fire protection work. Problems included enclosing fire-rated boards before preliminary inspections and making unauthorised holes in them. The council consequently ordered the builder to open up all the fire-rated boards, have the work reinspected and then reinstate the boards.

After becoming involved, Prostone met with the council to review the issues while promptly working with the fire engineer and contractor to revise the plans and carry out remedial work. The client ultimately obtained the desired Code Compliance Certificate (CCC), but had already incurred substantial delays and construction costs.

Another developer building townhouses lacked experience in foundation excavation and site preparation, including access and utility connections. Considerable time was spent dealing with contaminated soil, boulders and backfilling. Construction ultimately took almost a year longer than expected, resulting in a breach of the loan term.

Introduced by the lender, Prostone promptly revised the construction plan and helped the client prepare updated cash flow statements and other documentation, ultimately securing the desired loan extension.

The problems developers and builders face extend well beyond these examples. “Why is the number of townhouses I can develop different from what I expected?” “Why is progress so difficult and construction so slow?”

“Why are council approvals and inspections so difficult?”

“Why is the construction cost per square metre so much higher than for my standalone houses?”

…Prostone's general manager Peter Niu believes, the root cause is a lack of experience among design and construction firms in medium- and high-density residential development. Developers are still applying standalone-house experience to townhouses, leaving them unprepared for issues involving approvals, financing, foundation excavation, utility networks, above-ground fire protection, construction scheduling and more.

Managing risk through a one-stop service

High-density housing, smaller homes and townhouses can be expected to remain a focus for young first-home-buying families and the mainstream investment market.

Typically, developers oversee a construction project while appointing separate companies to handle approvals, design and construction. For these projects, Prostone has developed a one-stop service covering development feasibility, design, approvals and construction, helping avoid delays or cost increases caused by a lack of experience at any stage.

First, Prostone forms a team with independent partner planners and designers who have extensive experience in high-density housing design. Together, they prepare a feasible development plan aimed at achieving the best return for the developer.

Next, Prostone's senior quantity surveyors (QS), foundation engineers, plumbing and HVAC engineers, and project managers join the design process. They give clients and designers precise advice on materials, construction methods and scheduling, bringing costs and timeframes under control from the start of design.

Prostone places particular emphasis on the importance of quantity surveyors.

As a key part of development, Prostone engages senior quantity surveyors with more than 15 years of experience in major commercial developments to assess project risks and estimate the best returns. They then prepare a comprehensive construction quotation based on the final design and sign a package contract with the client. Put simply, this one-stop service combines the broad perspective of commercial development with residential development and construction pricing.

Gaining ground through distinctive services

From 2015, Auckland entered a period of major infrastructure expansion, with large projects emerging one after another and the Chinese construction sector rapidly rising to prominence.

However, Chinese practitioners were concentrated mainly in residential housing, with very few professionals capable of handling major commercial, apartment or subdivision projects.

Recognising this gap, New Zealand Chinese Building Industry Association president Frank Xu brought together experienced development managers, project managers, quantity surveyors and civil engineers capable of managing such projects. They formed an independent consultancy serving Chinese clients, offering one-stop advisory services in property development investment, project management, construction management and cost management.

Project management was already an important part of New Zealand's construction industry, and many established project management companies were operating in the market at the time.

Prostone's foundation has been its consistent commitment to a distinctive service approach aligned with Chinese developers' thinking.

Traditional local project consultancies charge by the hour, while Chinese clients generally prefer fees based on results.

To meet this need, Prostone sets milestone deliverables within its workflow, giving clients a clear picture of expenditure.

Deliver what clients need, rather than what they want.

Prostone does not simply follow clients' wishes unquestioningly. It applies its expertise and experience to scrutinise decisions and ensure clients truly benefit.

Early project involvement and planning (ECI).

To address risks in New Zealand's current construction market, Prostone's experienced development and project managers can become involved early to scrutinise designs and tailor the best construction plan for each project, keeping risks under the greatest possible control.

More flexible and varied advisory services. Prostone's consultancy is not confined to entire projects: it can also cover a specific component or stage, such as quotations, resource consent applications or tendering.

Heritage building refurbishment: growing interest in a niche field

Another distinctive strength is the Prostone team's extensive experience in designing and refurbishing historic buildings.

This is a construction field unfamiliar to most Chinese developers. Since the Christchurch earthquake, major insurers and banks have imposed strict requirements on the sale, purchase and leasing of commercial buildings, particularly historic ones.

These requirements directly or indirectly affect investors' purchase prices and rental returns.

Professional refurbishment can therefore substantially improve these properties' value, acceptance by banks and insurers, and rental returns, delivering very attractive investment returns.