Large projects continue to stall

As of the end of 2025, New Zealand has no tier-one construction companies operating domestically, and this is likely to continue into 2026.

Local companies have faltered after years of race-to-the-bottom pricing wars and open-book models that do little to incentivise efficiency or innovation. International players are hesitant to enter our small market, with its short political cycles and lack of bipartisan projects.

“If you want a serious private-public partner, large global companies need certainty of a pipeline to set up here,” says Grant. “The current models don’t provide that.”

This reduces competition at the high-end of the market and will make large-scale projectsincreasingly difficult to deliver. For example, Precinct’s lofty plan to redevelop the Downtown Carpark is expected to kick off in February 2026, but with very few NZ firms equipped to take on the work, it may face delays.

The rise of design and construction

Traditional procurement hasn’t served our sector well: Design, bid, build puts all design and cost risk with the client to manage.

The Sky City International Convention Centre is an extreme example of this. Even before it broke ground, the project’s procurement processes were the subject of an inquiry by the office of the Auditor General. The property was only handed over to Sky City in late 2025, six years behind schedule.

It was a project that cost everyone money – and will continue to do so as Sky City and Fletchers remain tangled in legal actions.

With only 47% of firms reporting positive cash flow in 2025, there needs to be a better approach in 2026. For that, we can look internationally, where design and build approaches are becoming more standard. Assigning responsibility for design, strategy and construction to a single organisation gives clients earlier cost visibility, tighter control over programme risk and clearer accountability for outcomes. D&C represents one of the few levers available to bring back predictability, financial stability and delivery confidence.

Whether or not we’re right in our predictions for 2026, it’s clear that most organisations would be smart to assess how they manage procurement for their construction projects. Instead of bargain-hunting in a market of rising costs, look for collaborators who offer financial stability along with more certainty around outcomes and delivery timeframes. These factors nearly always determine how much you’ll end up spending on a project, not the figure on the bottom of a bid document.

Similarly, it’s a smart idea to prioritise long-term supplier relationships that can bring consistency, capability and shared accountability across multiple builds.

Valuing and incentivising this performance is key – but standard open-book pricing models will work against these efforts. As Expedite Director Grant Simmons notes, they incentivise spiralling costs.

“Contractors charge a percentage margin, so if supplier and subcontractor costs go up, they make more money.”

Instead, seek partners who take ownership of the full project and can therefore offer cost certainty. This flips the model on its head, where protecting client budgets also protects contractor margins. This makes space for pragmatism when it comes to sustainability, cultural awareness and distinct needs in the post-COVID world of work.

By shifting focus from price to performance and from transactions to partnerships, New Zealand’s construction sector can rebuild with greater resilience and credibility. The next cycle will belong to those who see procurement not as a process, but as a strategic tool for long-term success.