Part 4: Assessing future demand for building control services
4.1
In this Part, we look at Auckland Council's forecasts of the future demand for building control services. This is important because Auckland Council needs to plan to ensure that its staff and information systems meet future demand. In Part 8, we look at what Auckland Council has done to better meet expected future demand for services.
4.2
Forecasting demand is complex and uncertain. Many external factors will influence future demand, including:
- the creation of Special Housing Areas, which will dramatically increase the land available for housing and the number of building consent applications;
- the Auckland Housing Accord7 and the need for more housing in Auckland, including affordable housing;
- the ability of property developers and the building industry as a whole to build housing in the quantity envisaged;
- the state of the housing market and the financial imperatives for developers and buyers; and
- the future extent of pre-fabricated, pre-built, and assembly-line construction techniques, and the consequent changes to building consenting and inspection processes to accommodate this.
Building Control forecasts
4.3
To help forecast future demand, Auckland Council:
- has a unit within the Building Control central office to model and predict future demand for services;
- has a liaison resource within its Housing Project Office that provides a link between the streamlined building consenting process for Special Housing Areas to the expected effect on Building Control workflows; and
- regularly meets builders and developers to better understand industry assessments about future building activity.
Nature and extent of forecasts
4.4
Building Control has prepared multi-year forecasts of consent application processing and inspection volumes. The main features of the model, which is being continually refined, are:
- assuming annual growth of 7% in consent processing activity;
- assumptions about the productivity of inspectors and processing of consent applications;
- sensitivity parameters that allow for different settings of efficiency gains in processing consent applications and inspections, and the subsequent effect on required resources; and
- assuming that the proportion of new residential consents will increase as a proportion of total consents and that the proportion of commercial consents and alterations and renovations consents will decrease.
4.5
The model takes into account the views of builders and developers about capacity and capability.
4.6
The model shows that:
- The number of building consents is forecast to rise from about 22,000 (including Special Housing Area estimates) in 2015 to about 28,000 in 2019.
- There will be 11,900 houses built arising from the existing Special Housing Areas.
- The number of inspections is forecast to rise from about 175,000 (including Special Housing Area estimates) in 2015 to about 210,000 in 2019. This compares to 148,000 inspections in 2013/14.
Comparing Housing Project Office and Building Control assumptions
4.7
In May 2014, Auckland Council's Housing Project Office estimated that the 63 existing Special Housing Areas will supply 10,000 new dwellings to Auckland during the three-year Housing Accord period. The Special Housing Areas were expected to supply:
- 1605 dwellings in 2014;
- 4107 dwellings in 2015; and
- 4365 dwellings in 2016.
4.8
By comparison, Building Control consent modelling estimated that there would be about 6000 Special Housing Area-sourced consents from 2014 to 2016.
4.9
At the time of our audit, there were 274 consent applications that could be specifically identified as coming from Special Housing Areas. Auckland Council told us that building consent applications are received at several receiving offices, and it was not possible to readily identify if they were linked to Special Housing Areas. Also, a single consent may cover multiple houses. It should be noted that there is not a one-to-one correlation between consent numbers and resulting dwelling numbers as a consent can result in two or more dwellings.
Our observations about assessing future demand
What the forecasting model tells us
4.10
Building Control's forecast model is a solid start, but it could be enhanced.
4.11
The forecasting model suggests that significantly more resources will be needed for consent application processing and inspections from as early as April 2015. Auckland Council is addressing the resourcing challenge in a number of ways.
4.12
Auckland Council has arrangements with other local authorities to deal with work overflows. Workflows are uneven, with 55% of the work in the first half of the year and 45% in the second half. Auckland Council does not want to increase its permanent workforce to deal with a workflow peak. Links with other local authorities are being used to help with workflows peaks (see Part 5).
4.13
Auckland Council has a graduate employment initiative. In 2014 and 2015, Building Control employed five graduates in each year.
4.14
There are training programmes to ensure that technical staff meet the qualification requirements of the Building (Accreditation of Building Consent Authorities) Regulations 2006 and initiatives to improve productivity. We explain these requirements further in Part 8, but they include:
- introducing electronic tablets for building inspections;
- moving to digital processing of consent applications; and
- streamlined processes for granting consents for simple building projects and for partnership-building firms.
4.15
Ideally, the model should forecast as far ahead as Auckland Council's next long-term plan – to 2025. That might be difficult. Auckland Council told us of uncertainty forecasting what will happen in the building industry beyond a two-year horizon. However, we consider that there should be reasonably specific forecasts of activity for the next five years and more general forecasts for the period from then to 2025. Assumptions have been made for the long-term plan that could be used to extend the forecast in the model.
4.16
For all transformation initiatives, a robust analysis of productivity efficiencies should be included in the model from the dates that the benefits are expected to take place.
4.17
There appears to be a wide gap between the assumptions and predictions that the Housing Project Office and Building Control use. This may be because of:
- timing problems – with the Housing Project Office seeing early results not yet translated into building consent applications;
- fundamental differences in views about the capability of the building industry to meet the high Special Housing Area targets; or
- the number of building consents compared to dwelling numbers (such as one building consent for terraced housing defined as multiple dwellings in Special Housing Area assumptions).
7: The Auckland Housing Accord is an agreement between Auckland Council and the government intended to increase housing supply and improve housing affordability in Auckland in the interim period until the Auckland Unitary Plan becomes operative. The Accord provides the basis for collaboration, including providing Auckland Council with additional powers to grant special approvals and consent new land. The Accord was signed on 3 October 2013 and remains in place until three years after the notification of the Unitary Plan unless either party withdraws from the Accord earlier.