Kāinga Ora moves to deliver public houses faster and at a lower cost

Kāinga Ora has developed and tested a new Housing Delivery System that is projected to cut new public housing construction build times by 80% and costs by at least 30% through planning and delivering construction work and materials differently. 

Chief Executive Andrew McKenzie says the new Housing Delivery System is transformational for Kāinga Ora. It also represents a shift in the way it works with construction industry.

“By eliminating waste, rework and inefficiencies in the design, planning and construction phases, Kāinga Ora can not only deliver homes faster every year for whānau, but also provide a reliable pipeline of work for the construction industry,’’ he says.

Kāinga Ora expects to work with its private residential construction build partners to deliver over 9,500 homes in the next four years using the new Housing Delivery System. Those homes will be built for at least $820 million less than they would cost if they were built using traditional procurement methods.

“Kāinga Ora is committed to creating improved value for the New Zealand public, the Government and our customers. We’re aiming to ultimately save at least 30%, per home delivered, through increased productivity, material savings and reduced overheads,’’ Mr McKenzie says.

Typically, it takes more than two years for a housing project to move all the way through the design, consenting and construction phases.

“With the Housing Delivery System we have managed to reduce the due diligence and design phase of houses by 94% – from 17 months to six weeks – and we’re aiming to reduce build times by almost two thirds – from eight months down to just over three months,’’ Mr McKenzie says.

Councils working on Housing Delivery System projects are reaping the benefits too. For local Councils, Kāinga Ora seeks their detailed feedback to ensure consent documentation is exactly what the local authority needs, which means they are able to issue resource consents more efficiently.

“There’s a lot of interest from across the housing sector in what we are doing. We’re not only changing how we plan and build new public homes, we’re also setting the industry up for change so we can all build houses faster,’’ Mr McKenzie says.

Construction companies involved in delivering the first public homes built using the Housing Delivery System have been impressed by its efficiency and potential to speed up the delivery of new homes. It’s a big change in thinking behind the work. The changes heighten the importance of planning and cohesion in the workforce.

“I’m finding this all really exciting,’’ says Mark Farrell, Chief Executive of Miles Construction. “Everyone’s really keen to build and as volume ramps up we will continue to see the power of the Housing Delivery System approach.’’

Kāinga Ora has invested $11 million developing the Housing Delivery System and has begun using it for some of its projects. Nearly 700 public homes in Christchurch, Auckland, Hawkes Bay and the Bay of Plenty are working through the system or completed, with $52 million of normal capital expenditure to date. These projects are being used to further refine the new system.

Cost savings driven out of the Housing Delivery System have allowed Kāinga Ora to budget an initial $820 million in cost savings over the next four years on its planned $6.5 billion investment in new public housing. Build partners and material suppliers are working with the organisation on finalising new contract and commercial arrangements that will deliver the next tranche of savings.

“Our focus is on developing enduring system change, which means an upfront investment and long-term view to explore, test and enable an improved way of delivering public housing. We must invest now to save later, both in social and financial outcomes,” Mr McKenzie says.

Read more on the Housing Delivery System

Housing delivery system OIA [PDF, 527 KB] - June 2023