FOREWORD VIEW FROM THE GM OPERATIONS & MARKETING

The new health and safety reform is one of many aspects to consider in today’s industry

The long-anticipated Health and Safety Reform Bill has passed and the new law – the Health and Safety at Work Act – comes into force on 4 April. With the aim of reducing New Zealand’s workplace injury and death toll by 25%, the Act’s key emphasis is on everyone in the workplace being responsible for health and safety.

This means that even those who never set foot on a construction site, and may even be in an office in another city, need to consider the impact their decisions have on health and safety. While they might not be on site making sure everyone is wearing appropriate PPE, they need to make sure the budget allows for everyone to have access to it.

The Act has also tried to accommodate the country’s diverse range of businesses, by acknowledging business risk, control and size. The health and safety precautions a business needs to take depends on its level of risk, what’s within its control and what’s ‘reasonably practical’ – which is a relief for smaller businesses that might otherwise find some requirements nearly impossible to comply with.

At PlaceMakers, we continue to do our best to keep you up to speed with these changes and what they mean for your business through our skills maintenance initiatives. This month’s issue of Under Construction is full of business advice we hope you’ll find useful – from the pitfalls of doing ‘cashies’, to strategies for attracting skilled staff, to the potential return on investment of taking on apprentices.

Over the next two months, we’ll also be hosting skills maintenance seminars throughout the country. As you’ll read on page 2, hosting these seminars is part of our ongoing commitment to supporting our customers in earning skills maintenance points – ideally making your lives easier. Make sure to contact your local PlaceMakers to find out when we’ll be in your area.

Gary Woodhouse

General Manager Operations & Marketing

Health and safety is everyone’s responsibility

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24ISSUE 51 > APRIL 2016

>PUBLISHER > DCL Corporate Publishing > ENQUIRIES > editor@pmunderconstruction.co.nz; (04) 384 5689DCL Corporate Publishing reserves the right to accept or reject all editorial or advertising material. No part of Under Construction magazine may be published without the express permission of the publisher. All

rights reserved. Opinions expressed or imagery in Under Construction magazine are not necessarily those of PlaceMakers or the publisher. No responsibility is accepted for the suggestions of the contributors or

conclusions that may be drawn from them. Although the publisher has made every effort to ensure accuracy, the reader remains responsible for the correct use and selection of any tools, materials and systems

followed, as well as the following of any laws or codes or standards that may apply.

OTHER STUFF

28 SPONSORSHIP PlaceMakers on hand to man the BBQ at the opening of the Blues’ new training facility

28 SKILLS MAINTENANCE Record your LBP skills maintenance – you’ve earned it!

NEWS

2 LBP PlaceMakers latest round of skills maintenance seminars gets under way in April

14 INDUSTRY NEWS New dwelling consents fall sharply in Canterbury; The importance of checking consents; MBIE looking into Dunedin balcony collapse; Quarterly reports show value of building hitting record highs

13 PRODUCT NEWS Fancy fences that will make your client’s neighbours see green!

Even those who never set foot on a construction site, and may even be in an office in another city, need to consider the impact their decisions have on health and safety

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FEATURES

3 BUILDERS’ BUSINESS Business practices of your fellow builders

6 WORKSAFE NZ Update on the regulations that will support the new Health and Safety at Work Act

9 BRANZ Some building materials are like chalk and cheese, they just don’t go together

10 BUILTIN How guarantees can help protect you, your business and your clients

16 BCITO New research shows training an apprentice can be a positive investment for your business

18 WORKSAFE NZ Outlining directors’ new duties under the Health and Safety at Work Act

20 CROWE HORWATH With the IRD targeting ‘cashies’, make sure you understand the risks involved working under the table

22 SUCCESSFUL BUILDER Attracting skilled staff is a bit like fishing – you can’t just spend money and expect the best results

24 RIGHTWAY Put in the proper processes early to make operating your business a lot easier

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BUILDERS’ BUSINESS

FEEDBACKTRAINING

With constant regulatory changes in the building industry, PlaceMakers aims to provide ongoing support to its customers through skills maintenance seminars and Under Construction

“I t’s about doing our bit to support Licensed Building Practitioners (LBPs) by enabling them to earn

the necessary skills maintenance points,” says PlaceMakers general manager operations and marketing Gary Woodhouse. “We ensure that PlaceMakers customers can earn all their required elective points through PlaceMakers initiatives, such as reading our monthly Under Construction magazine and attending our seminars.

NEXT ROUND AROUND THE CORNERFor information on the upcoming PlaceMakers Skills Maintenance seminars, which is scheduled for April to June, please contact your local PlaceMakers store.

WHO SHOULD ATTEND THE SKILLS MAINTENANCE SEMINARS?All LBPs, those who have applied for

a licence and PlaceMakers customers are welcome to attend. The session is relevant for all licence classes including brick and block layers, roofers and plasterers.

HOW MANY LBP POINTS DO I EARN FOR ATTENDING?Each seminar is approximately two hours long. Every hour of educational learning is equal to one LBP point, so the seminar is worth two points.

WHAT IF I HAVEN’T GOT MY LICENCE YET?If you have applied for your licence, or are thinking about becoming licensed, you are welcome to attend PlaceMakers skills maintenance seminars; however, remember you must be licensed before you can start earning points.

KEEPING RECORDS OF RESTRICTED BUILDING WORK – WE CAN HELP!We know it’s tough to keep up with all

the paperwork required these days, so we’ve produced a triplicate Record of Work book to give you a hand. It has three colour-coded copies of the memorandum forms for your job details – one for the homeowner, one for the council and one for you to keep. Each book holds up to 25 jobs.

SKILLS MAINTENANCE

PlaceMakers is here to help

Now have your say...HOW ARE YOU MANAGING THE INTRODUCTION OF THE NEW HEALTH AND SAFETY AT WORK ACT? WHAT CAN WORKSAFE DO TO BETTER INFORM BUILDERS ABOUT WHAT THE CHANGES MEAN FOR THEM?

ANSWER THIS QUESTION TO ENTER OUR QUARTERLY PRIZE DRAW

Email your answer with your full name, contact phone number, company name, number of full-time staff and the city or town in which you’re based to editor@pmundersconstruction.co.nz. All responses must be submitted by 25 April 2016. The answers to this question will be published in Under Construction June 2016.

WIN!

Firm: Bruce Horrox Builders LtdPrincipal: Bruce Horrox Location: Huntly and districts Staff: 2

I think someone needs to start offering financial incentives to builders taking on apprenticeships. It costs a lot to train someone up – both in time and money – and often they leave within a year of being qualified.

Every apprentice I’ve trained, I’ve paid for the fees of their theory courses. If the government bought in some cash incentives for builders to train apprentices, I think a lot more people would be willing to do it. For smaller companies in particular, taking on an apprentice is a big deal.

Health and safety training is another big cost too. You’re responsible for their safety on site, and it can involve a lot of babysitting in the early days, because if they have an accident it’s your responsibility.

As far as recruitment goes, I don’t think anything else needs to be done there. People tend to find the industry themselves. It’s not a career you can really talk people into – either they’re interested or not.

Firm: O’Leary Homes Principal: Greg O’Leary Location: Hawke’s BayStaff: 3

Q: How can the industry help increase the number of skilled builders in New Zealand?

Upskilling the industry Builders’ Business is a column by builders for builders. Its objective is to provide a forum, particularly for small business operators, in which to share knowledge, experience, tips and ideas

Firm: Turnkey Homes LtdPrincipal: Phil SmithLocation: Wanaka/Central OtagoStaff: 10

As a business, Turnkey Homes runs five to six building teams with ten or so houses under construction at any one time. All of these teams are experiencing difficulties in recruiting and retaining staff in what is one of the busiest and most expensive towns in New Zealand.

In my opinion, skilled builders are only going to come through great education and on-site training programmes. We need to educate our youth about the opportunities that are available in the trades and encourage them to aspire to be great in their chosen field.

We also need to encourage employers via incentive programmes to hire more apprentices. This will lead to qualified builders putting in the time and effort to provide great on-site education and training.

It’s a process but I believe that, if we can implement those programmes, the industry will not only have more skilled builders, we will also be better positioned to cope with the unique challenges present in the New Zealand market.

We need to make sure the people training apprentices are competent. The only way to increase skills is to pair the young people coming through with knowledgeable people within the industry – not just the builders they’re working for, but also the people within the organisations recruiting them.

Incentives are a good idea as well, because it’s a lot of responsibility to take on. WINZ used to subsidise a worker’s wages for 12 months when they were going through training; reintroducing a scheme like that might help.

I also think that all of the regulations scare people away from taking on trainees. Health and safety has a huge bearing on it, because you’re responsible for their welfare. If something goes wrong, it can end up costing a lot. It seems like employment law is stacked in the employee’s favour. If it isn’t working out, it can get quite messy to get rid of an apprenticeship.

Finally, we need to make sure we attract good people into the industry. It’s hard to train someone properly if they aren’t prepared to work hard and learn.

PICK A RECORD OF WORK BOOK UP AT YOUR LOCAL PLACEMAKERS BRANCH TODAY!

Builders earn points attending a PlaceMakers skills maintenance seminar at the Working Man’s Club in Petone

The 2016 seminar series is scheduled for April to June. For more information visit

www.placemakers.co.nz/trade or contact your local PlaceMakers store.

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NEWS

People’s Choice goes to PlaceMakers

COMMUNITY

PlaceMakers national key account manager Colette Freel and general manager of sales and manufacturing Blake Bibbie were pleased to accept Smith and Sons’ Supplier of the Year award on behalf of the entire PlaceMakers network, whose commitment to excellent service earned them the title

Renovation company Smith and Sons selects PlaceMakers as its Supplier of the Year

A s a supplier, there’s no better reward than strong customer endorsement, especially when it

comes in the form of an award!

“As a national customer, branches around the country work hard to ensure Smith and Sons’ 30 franchises are well looked after,” says PlaceMakers national key account manager Colette Freel.

“Therefore, it’s the result of a collective effort and truly reflects our ability to deliver for our customers around the country.”

The professional renovation company provides quality home and commercial renovations, from concept to completion. As its main supplier, PlaceMakers is committed to providing the level of service required to maintain Smith and Sons’ excellent standards.

“Our relationship with Smith and Sons has endured since its inception eight years ago,” says Blake Bibbie, PlaceMakers general manager of sales and manufacturing. “PlaceMakers commitment to ongoing improvement and excellent service is fundamental in helping our customers with their builds. Our aim is to ensure that no one is easier to do business with than PlaceMakers.”

This philosophy was reflected in PlaceMakers receiving the award, for its performance at two levels. At a national/corporate level, Smith and Sons looked at how well suppliers align themselves to their goal and initiatives, as well as their overall support. At a local level, the renovation company looked at the quality of service.

“We appreciate the value and support that PlaceMakers offers to

Smith and Sons at both a national and local level,” says master franchisee for the North Island Mark Fegan.

PlaceMakers was selected from 11 other key suppliers, and the winner was decided based on submissions from hundreds of Smith and Sons’ employees.

Managing director (NZ) Reon Paterson says it’s PlaceMakers service culture that sets them apart.

“We love the support and the partnership we have with PlaceMakers,” he says.

“To see a company of PlaceMakers size have so many stakeholders who are truly engaged with their service promise and culture is truly motivating. It’s a philosophy that we at Smith and Sons share.”

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The Health and Safety Reform Bill has passed and the new law (the Health and Safety at Work Act) will come into force 4 April 2016

The Act, which is part of ‘Working Safer: a blueprint for health and safety at work’, reforms

New Zealand’s health and safety system following the recommendations of the Independent Taskforce on Workplace Health and Safety.

Working Safer is aimed at reducing New Zealand’s workplace injury and death toll by 25% by 2020. It will

require leadership and action from business, workers and government to achieve this goal. The Act’s key emphasis is on everyone in the workplace being responsible for health and safety.

The Act works to focus effort on what matters, based on business risk, control and size. Below are some key themes included in the Act:

• It reinforces proportionality – what a business needs to do depends on its level of risk and what it can control.

• It shifts the focus from hazard-spotting to managing critical risks – actions that reduce workplace harm rather than trivial hazards.

• It introduces the “reasonably

www.business.govt.nz/worksafe

The Health and Safety at Work Act shifts the focus from hazard spotting to managing critical risks, promoting actions that reduce workplace harm rather than minor hazards

Health and Safety at Work Act

WORKSAFE HEALTH & SAFETY

REGULATION

practicable” concept – focusing attention on what’s reasonable for a business to do.

• It changes the focus from the physical workplace to the conduct of work – what the business actually does and therefore what it can control.

• It supports more effective worker engagement and participation – promoting flexibility to suit business size and need.

The Health and Safety at Work Act will replace the Health and Safety in Employment Act 1992. The new law will be supported by regulations.

HOW TO COMPLYThe regulations, created by MBIE and supported by information and guidance from WorkSafe New Zealand, are intended to help businesses (particularly small businesses) understand what they need to do to comply with the general duties of the Act.

The detailed regulations are now available on the Legislation website –http://www.legislation.govt.nz/.

Guidance is available on the Worksafe website – http://www.business.govt.nz/worksafe/.

REGULATIONS AT A GLANCE

1. Health and Safety at Work (General Risk and Workplace Management) Regulations 2016

Persons conducting a business or undertaking (PCBUs) have duties to ensure, so far as is reasonably practicable, that the workplace is without risks to the health and safety of any person.

These regulations outline additional duties on PCBUs related to managing risks, monitoring risks in the workplace, specific duties related to young persons in the workplace and obtaining a police vet for workers at limited child-care centres.

2. Health and Safety at Work (Worker Engagement, Participation and Representation) Regulations 2016.

These regulations prescribe matters relating to work groups, health and safety representatives, and health and safety committees to support more effective worker participation. This includes information on who can be a health and safety representative or on a health and safety committee, and training for health and safety representatives.

The regulations also include matters that an inspector may make a decision on if the parties are unable to reach an agreement themselves, and specify the sectors that are high risk for the purposes of worker participation requirements.

3. Health and Safety at Work (Major Hazard Facilities) Regulations 2016

These regulations deal with matters relating to the health and safety of people involved in the operation of major hazard facilities and the local communities near them.

The regulations provide threshold quantities of specified hazardous substances and ways to determine whether a facility is a lower or upper tier major hazard facility, and the duties of operators.

4. Health and Safety at Work (Asbestos) Regulations 2016

These regulations impose additional duties on PCBUs in relation to work involving asbestos. This includes managing asbestos risks, removal of asbestos and licensing of people removing asbestos.

5. Health and Safety at Work (Adventure Activities) Regulations 2016

These regulations deal with the provision of adventure activities. They set out the process for becoming registered as an adventure activity operator and make it an offence for unregistered operators to

offer adventure activities to participants.

These regulations revoke and replace the Health and Safety in Employment (Adventure Activities) Regulations 2011. Only minimal changes were made to align terminology and concepts with the new Health and Safety at Work Act 2015, and to add a new offence of offering adventure activities while unregistered.

6. Health and Safety at Work (Mining Operations and Quarrying Operations) Regulations 2016

The regulations prescribe matters concerning health and safety in mining operations, including competency requirements relating to safety-critical roles in mining, quarrying and alluvial mining operations.

These regulations revoke and replace the Health and Safety in Employment (Mining Operations and Quarrying Operations) Regulations 2013. Only minimal changes were made to align terminology and concepts with the new Health and Safety at Work Act 2015, and fix some drafting and minor implementation errors in the 2013 regulations.

7. Health and Safety at Work (Petroleum Exploration and Extraction) Regulations 2016

These regulations deal with matters relating to the health and safety of people involved in the operation of installations for petroleum exploration and extraction.

They revoke and replace the Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations 2013. Only minimal changes were made to align terminology and concepts with the new Health and Safety at Work Act

The Act works to focus effort on what matters, based on business risk, control and size

continued overleaf

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation. 99

4) What is NOT considered an inert material?

a) Glazed terracotta tiles.

b) Fibreglass.

c) Unpainted galvanized steel.

5) In what scenario does rainwater react with zinc-containing materials?

a) After it has run over or through an inert material before hitting the zinc-containing material.

b) Immediately upon contact with the zinc-containing material.

c) Zinc is an inert material and will never react with rainwater.

6) What fixings should you use alongside acidic cladding timbers?

a) Hot-dip galvanised or zinc-plated steel.

b) Stainless steel or silicon bronze fixings.

c) PVC glue.

Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

BRANZTECHNICAL

Compatible materialsSometimes two materials can’t be used close together because, due to their chemical composition, one will reduce the durability of the other

Some common examples to be aware of when you’re working on site are:

• A steel nail in damp timber that has been treated with a copper-based treatment will corrode faster than normal.

• Rain that runs over western red cedar can leach acid out of the timber and corrode unprotected aluminium/zinc-coated or galvanised steel below.

E2/AS1 clauses 4.2.2 and 4.3 states that metals that are in contact in locations where they will become wet, or where water can flow over metals or certain plastics onto another metal, shall be selected in accordance with Table 20, 21 or 22.

Avoid contact between the following:

• Stainless steel and hot-dip galvanised steel, aluminium alloy/zinc-coated steel or zinc.

• Copper and hot-dip galvanised steel, aluminium alloy/zinc-coated steel or zinc.

• Acidic cladding timbers (redwood and western red cedar) and hot-dip galvanised or zinc-plated steel. (Use stainless steel or silicon bronze fixings.)

• Hot-dip galvanised steel, aluminium alloy/zinc-coated steel, zinc or anodised aluminium and copper azole and copper quaternary timber treatments. (Use stainless steel or silicon bronze fixings – galvanised steel is only suitable in closed situations.)

• Aluminium and stainless steel in exposure zone D, except where the stainless steel element is small relative to the aluminium. (Using aluminium with stainless steel is permitted in exposure zones B and C.)

Hot-dip galvanised steel can be used with external CCA-treated timber in exposure zones B and C, and zone D for claddings that have not more than 15-year durability.

COMPATIBILITY OF ROOFING MATERIALSRainwater will cause rust on unpainted galvanised steel if it first passes over glass, plastic or a painted surface. Rainwater is slightly acidic, and it contains carbon dioxide, which is mildly reactive to zinc.

This isn’t a problem until it runs over or through an inert material before hitting the zinc-containing material. Because most of today’s metal roofing is factory-coated aluminium/zinc alloy-coated steel, it doesn’t happen often, but it could be a problem in these situations:

• You paint part but not all of an old steel roof.

• You replace metal pipes that discharge onto a lower unpainted roof with PVC pipes.

• You put a glass skylight or acrylic roofing into an existing unpainted galvanised steel roof.

Inert materials include glazed terracotta tiles, glass, fibreglass, plastics, colour-coated steel and painted roofing.

To avoid the problem, ensure that if you are using an inert material together with galvanised steel cladding, you run the inert cladding the full length down the roof. Check that rainwater from it runs into plastic, pre-painted or coated steel gutters, not galvanised gutters.

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What is NOT yet included in the regulations?

a) Infringement offences and fines.

b) Worker engagement, participation and representation.

c) The definition of a PCBU.

1) What is the idea behind proportionality?

a) That a business’ H&S needs should be based on its level of risk and what it can control.

b) That following an accident, penalties will be split 50/50 between the injured party and PCBU.

c) That directors, managers and workers are all equally responsible for H&S on site.

2) What is “reasonably practicable”?

a) Businesses should only do what is easy and affordable for them.

b) Businesses need to go beyond what is considered reasonably practicable to be compliant.

c) That as far is reasonably practicable, the workplace is without risks to the health and safety of any person.

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

3)

2015, to use clearer terminology for duty holders and to improve the emergency response duty in relation to onshore non-production installations. 8. Health and Safety at Work (Rates of Funding Levy) Regulations 2016

These regulations prescribe the levy required to be paid by employers and self-employed persons under section 201 of the Health and Safety at Work Act 2015.

They also revoke and replace the Health and Safety in Employment (Rates of Funding Levy) Regulations 1994. Only minimal changes were made to align terminology and concepts with the new Health and Safety at Work Act 2015. No levy rates were changed.

WHAT IS STILL TO COME?

• Regulations specifying infringement offences and fees will be finalised shortly.

• The regulations for work involving hazardous substances are currently being consulted on and will be finalised later this year. Submissions were due by 5pm, Friday 26 February 2016.

• Regulations to support the power in the new Act for the regulator to grant exemptions from regulatory requirements (clause 228A) will be developed this year.

• Phase two regulations will be developed over the next two years.

WHAT WORKSAFE IS DOING TO SUPPORT YOUThere is general information about HSWA on www.business.govt.nz/worksafe/, which will be regularly updated as we finalise formal guidance for you. Worksafe will be rolling out guidance and fact sheets for you now that the regulations have been finalised. It is also working on developing:

• Case studies

• Videos

• Interactive tools.

These will give you good context for your approach and will put you in the best position possible on 4 April 2016.

We are regularly updating information to support you and you can sign up for updates from us.

xxxvHealth and Safety reform (continued)

Stainless steel (like these solar water heater straps) should not be in direct contact with zinc/aluminium-coated roofing

in exposure zone D or where exposed to salt spray

WORKSAFE HEALTH & SAFETY

REGULATION

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Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

7) What do the disclosure rules that came into force at the start of 2015 require of builders?

a) That they disclose if they can offer a guarantee.

b) That they offer a ten-year guarantee on all work.

c) That they offer guarantees on work under $30,000.

What is the government’s current take on ten-year guarantees?

a) It wants to extend them to 15 years.

b) Putting the onus on the public to choose builders who provide one.

c) It has made them mandatory.

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8) What is the main difference between a ten-year guarantee and homeowner’s rights under the Building Act?

a) If a company closes down, its contractual and legal obligations can’t be enforced under the Act.

b) Guarantees can only be enforced under the Act.

c) Homeowners have no rights under the Act.

BUILTININSURANCE

Understanding guarantees

Being able to offer a guarantee could help builders to win business

Are professional organisations that require builders to offer ten-year guarantees pre-empting the government, or should builders and homeowners still have the freedom to choose what guarantees they offer and accept?

The Certified Builders Association recently announced that it is now mandatory for all members to give

their clients an independent ten-year guarantee for work above $30,000. The announcement brings them into line with similar requirements for Registered Master Builders.

This has prompted many builders to ask what the difference is between a homeowner’s rights under the Building Act and the cover in one of these ten-year guarantees.

Put bluntly, if a building company is still trading then its customers can

use the Building Act and other legal means to enforce their rights. However, if the company has closed down, its contractual and legal obligations can’t be enforced, because the company no longer exists.

Many builders say that’s okay, we don’t

plan on going bust! The issue is that your customers can’t be sure you’ll be around for the next ten years if something does go wrong (and frankly, neither can you).

Unfortunately, some high-profile cases of building companies going bust have increased the public’s concern about this.

We don’t need to tell you about the pressures of running a building business, even the best sometimes get into difficulty and often through no fault of their own. This is why homeowners and their banks will often require an independent guarantee.

HOW DOES AN INDEPENDENT BUILDER’S GUARANTEE BENEFIT HOMEOWNERS?Third-party guarantees, such as Builtin’s Homefirst Builders Guarantee, reassure homeowners that they will:

• Protect the homeowner’s deposit.

• Complete the build if their builder can’t, as well as covering the extra costs to do so.

• Fix defects for up to ten years.

They are a guarantee of the builder’s obligations under their contract and in law. In a recent case in Christchurch, more than $1 million was paid on behalf of affected homeowners after their builder went bust, many of whom would otherwise have lost their deposit or faced increased costs to complete their homes or fix defective work.

DO BUILDERS HAVE TO PROVIDE THEM?No. The new disclosure rules that came into force in 2015 only require you to disclose whether you can offer a guarantee, not to provide one.

However, building trade associations require their members to provide them and the government is examining whether they should be made compulsory. Either way, as more homeowners, and their banks, require these guarantees, being able to offer one could help builders win business.

HOW DO THEY BENEFIT BUILDERS?It used to be that these guarantees didn’t benefit builders at all; however, this is changing. For example, under the Homefirst Builders Guarantee (HBG), if there is a claim after your initial 12-month defects liability period ends, the insurer will not chase you to recover their costs (although they may seek recovery from your subcontractors if they were at fault).

This effectively insures the builder from the cost of rectifying those defects that are covered by the HBG. Homefirst also includes $10,000 cover to refund deposits paid by the builder to a component supplier who then goes bust.

OVERSEAS EXAMPLESIn many Australian states, it’s a legal requirement for builders to provide what they call a home warranty for every project, and they can’t be licensed without first being approved to provide warranty cover. In the UK, more than 80% of all new homes are covered by a third-party ten-year guarantee, although the scheme there is optional.

In New Zealand, the current approach is to ensure the client understands up front, before they sign a contract, whether or not their builder is offering a guarantee and what that guarantee covers.

IN A NUTSHELLYou can’t predict what might happen to you or your business, certainly not over a period of ten years. It’s the reason you insure for any risk and it’s why third-party builder’s guarantees are increasingly being asked for by homeowners and their banks. For builders, depending on which guarantee you offer, they also now give cover for you too.

9)

Independent guarantees are a guarantee of the builder’s obligations under their contract and in law

Builtin New Zealand is a specialist in insurance & guarantees for builders & tradespeople. For more information visit www.builtin.co.nz, email Ben Rickard at ben@builtin.co.nz or call him on 0800 BUILTIN.

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

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People want to put up fences for all sorts of reasons – whatever your client’s reason may be, these simple steps will help you take the final result to new heights!

A s with any project, it’s important you consider your client’s budget when building a fence. However,

with a bit of extra design and planning work, a standard rail and paling fence can be made to look stylish and even add value to your client’s property without breaking their bank. Consider the following next time you’re tasked with erecting a fence:

CAPPING RAILSThese not only help make fences look good, they have the added advantage of reducing paling movement. Generally they cost just $4 to $5 more per metre than standard rails.

VARY THE HEIGHT OF PALINGS Cutting palings so that they form a curve is a simple way to make a fence stand out.

TRELLIS TOPS A perennial favourite of homeowners is the trellis top. The top panels can be purchased ready-made, so installation is easy.

ALTERNATING PALINGS Alternating the paling on each side of the fence not only creates a great look, it is also a good way to keep your client’s neighbour happy by giving them a good-looking finish too.

HORIZONTAL PALINGS Using horizontal palings is another way to make a fence look different. It should be noted that horizontal palings also make fences easier to climb, so they should not be used when the purpose is to close off an area or where there is potential for people to injure themselves.

DIFFERENT COLOURS OR MATERIALS Using different coloured stains to create a contrast effect is a cost-effective and simple way to make a fence stand out.

You can also use two different types of materials to achieve the same effect.

PLANTING YOUR FENCEIt’s worth checking with your client whether or not they want to plant anything near the fence once it’s completed. If they do, it can be easily

achieved by simply allowing enough room for the plants; or, build the fence around existing plants.

PAINTING If your client wants their fence painted, it’s possible to buy pre-primed palings that can reduce time and cost.

PRODUCT NEWS

NEWS

Fencing outside the box!

Cutting palings so they form a curve, alternating paling on either side and painting fence materials are all ways to make your client’s fence stand out!

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INDUSTRY NEWS

NEWS

xxxxThe Ministry of Business, Innovation and Employment (MBIE) is investigating the balcony collapse in Dunedin on 4 March that injured 18 people , two seriously

The balcony collapsed during a Six60 concert held in the heart of Dunedin’s student living stronghold

on Castle St. Around 1,500 people were said to be in attendance, with many crowding onto nearby balconies and roofs to get a better view of the show in the street below.

The balcony in question is cantilevered and reports indicate around 16 - 20 people had crowded onto it before it collapsed. NZ Police are not launching a criminal investigation and WorkSafe New Zealand has ruled out an inquiry, but Building and Housing Minister Nick Smith has asked MBIE to investigate and prepare a report on the incident.

“We need to establish whether the balcony that collapsed was up to the standards required by law under the Building Code. Structural failure of buildings are rare in New Zealand, but every incident of this sort needs to be thoroughly investigated

to establish whether there were failings and whether our building systems are working as they should,” said Dr Smith.

“The investigation needs to look into whether the design, construction and maintenance of the balcony was up to the required standard, and to establish why it collapsed. It is possible that the balcony did meet standards but that the

loading from the large number of students on it was in excess of Building Code limits. I am open to all possibilities but want to ensure we do everything possible to avoid these sorts of building accidents.”

The Minister expected that a preliminary report on the balcony collapse would have been completed by the end of March.

Minister calls for balcony inquiryRecent reports in the media have highlighted the importance of ensuring that the proper consents are in place before building work begins

Section 40 of the Building Act states that a person must not carry out any building work except in accordance

with a building consent; anybody who carries out building work without the appropriate consent commits an offence and is liable to a fine not exceeding $200,000, plus a further $10,000 per day if work continues.

The offence under Section 40 is a strict liability offence, which means that it is not necessary for the prosecution to prove that the defendant intended to commit the offence. Therefore, a naïve homeowner who unwittingly carried out building work without the necessary consent could be held liable.

ONUS ON BUILDERSOf course, builders who carry out work without a building consent can also be held responsible. Even if a building contract states it is not the builder’s responsibility to obtain the building consent, it is their responsibility to check that any necessary consents have been granted before starting any work.

Recent cases suggest that fines imposed

for offences under Section 40 are significantly lower than the statutory maximum. Examples include a fine of $6,000 for undertaking work three weeks before the building consent was obtained and an $8,400 fine for building work on three yurts.

Fines have been larger where the scale of a project has been significant and undertaken for large profits, as professionals are expected to know better.

For professional parties, however, the fallout from failing to ensure compliance with legislative requirements may be much wider. Professional builders who incorrectly advise clients that specific work does not require a consent may face claims for providing negligent advice or, if a LBP, may become subject to a complaint. According to law firm Harkness Henry, other costs could include:

• Remediating any non-compliant work.

• Assisting the client to obtain a Certificate of Acceptance.

• Managing client disappointment.

• Rectifying damage to reputation both with a client and with the building consent authorities.

• Dealing with negative publicity and embarrassment for getting it wrong.

TAKE CARE WITH EXEMPTIONSAs most builders know, the Building Act outlines a range of circumstances where a building consent is not required. Exempt building work is set out in Schedule 1 of the Act. It is important, however, to check the exemptions very carefully.

If there is any uncertainty about whether or not an exemption applies, the safest option is to ensure that the owner checks with the council or applies for a building consent.

Variations to a contract can also impact on building consents. To avoid this, builders should inform their clients whether the variation will require an amendment consent.

Consents slow off the mark January maintained its reputation for being a slow month for new dwelling consents, with numbers hitting a two-year low on the back of last year’s 11-year high

In January, 1,695 new dwelling consents were issued – the lowest monthly total since January 2014.

This included 1,286 houses, 89 apartments and 135 retirement village units. Seasonally adjusted, the number of new dwelling consents fell by 8.6% and, for houses alone, was down 5.6%.

IN THE REGIONS Numbers hit a four-year low in

Canterbury (down 178 to 289; -38%). Decreases were also recorded in Taranaki (down 28 to 22; -56%) and Wellington (down 21 to 96; -18%), as well as Gisborne, Marlborough, Southland and the West Coast.

The biggest increases were in Waikato (up 81 to 261; +45%), Bay of Plenty (up 55 to 194; +40%) and Northland (up 28 to 70; +70%). Auckland, Hawke’s Bay, Manawatu-Wanganui,

Nelson, Otago and Tasman also recorded increases. With 506 new dwellings consented, Auckland represented 30% of the national total.

In January, the total value of building consents was $1.1bn, up 6.9% compared to January 2015. It comprised $756m residential work (+17%) and $310m non-residential (-12%).

Recent cases highlight importance of consents

The value of building work hit a record high in the December quarter, but there are signs activity in Christchurch is beginning to slow

S tatistics New Zealand’s latest Value of Building Work Put in Place report shows that the actual value

of all building work, in current prices, was $4.4bn in the December quarter – up 10% on the previous corresponding period.

The total was comprised of $2.8bn in residential work and $1.6bn non-residential. The trend for all building work grew by 1.8% on the September quarter, also reaching a record high.

Auckland ($1.5bn) and Canterbury ($1.1bn) combined for 60% of the total national spend, but the report also

showed activity is beginning to plateau in the South Island’s most populated region.

Comparing the December and September quarters, the seasonally adjusted value of all building work in Canterbury fell by 0.5%, following four consecutive quarters of growth. A 1.8% fall in the value of residential building work was offset by a 1.3% gain in non-residential.

In Auckland, the value of all building work was up 5.6%, with residential increasing by 3% and non-residential by 11%. All other regional groupings reported quarterly increases in the total value of building work:

• Waikato – up 2.9%.

• Wellington – up 0.7%.

• Rest of North Island – up 6.4% (boosted by work in the Bay of Plenty).

• South Island excluding Canterbury – up 5.4% (boosted by work in Otago).

For the year ended December, the actual value of all building work hit a record high $16.6bn, comprised of $10.4bn of residential work and $6.2bn of non-residential.

Value of building work hits record highs

The remains of the balcony that collapsed, injuring 18 people at a Six60 concert in Dunedin on 4 March

16

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BCITOTRAINING

Training pays off

Other findings show that, when compared with a business that doesn’t invest in industry training, a carpentry firm that trains all staff will:

• Grow 6% faster.

• Charge $0.44 more per hour per person.

• Estimate work 3% more accurately.

• Do 2% fewer hours to complete the same task or project.

“It is such a worthwhile expense for every business to invest in training apprentices,” says BCITO chief executive Ruma Karaitiana. “Not only does having skilled workers improve your reputation and benefit your business overall, this research shows that, over time, a business’ bottom line is significantly improved.”

The methodology used in this project works back from a measure of economic return, such as cumulative profits over

time. The drivers of profitability were broken down to identify individual attributes of a firm’s performance and evaluate the relative importance of these. The impact of a team’s trade and management proficiencies on these attributes was then considered. Finally, the contribution of training to an individual’s proficiency was weighted relative to the contribution from experience.

BCITO research shows that training apprentices generates profit

BCITO research shows that for every $1.00 spent on training a carpenter, a business will benefit by up to

$4.70 over a ten-year period.

This is the first time that in-depth research of this nature has been undertaken in New Zealand.

There’s a misconception, held by some, that training an apprentice costs a business money – with little or no return. This research proves that, in the long run, that’s not true. Investing in industry training is not just a cost to be minimised, it’s an investment that can grow your business.

Obviously the return on investment

doesn’t kick in immediately. The break-even point – which is when the cost of training is offset by the extra profit generated by training – is three to four years: about the same time as completion of an apprenticeship. Profit keeps increasing the longer the trained person remains with the firm, making staff retention a factor; the longer an employer keeps trained staff, the more profitable they become.

“During the past two years, BCITO has experienced unprecedented growth in new apprenticeships but the construction industry remains woefully short of skilled tradespeople,” says Greg Durkin, group manager of stakeholder engagement for BCITO. “We need more businesses to

come on board and train our young people. With this research, we can clearly prove that training an apprentice is a positive investment for employers.”

As part of the project, carpentry business owners were asked about their firms’ structure, including the number of people working there and what roles they were in. From this information, a model of an average firm in the industry was developed.

While the payback period for both trained and untrained workers appear similar, the positive return from training is sustained well into the future, increasing the cumulative benefit each year.

TYPICAL BUSINESS TEAM IN THE CARPENTRY SECTOR

Most business owners involved in the research project agreed that, on average, trained workers become fully proficient between six and ten years after starting work in the industry. On average, untrained workers take much longer to be fully proficient and will only ever be 60-70% proficient, whereas trained workers become “fully billable” in a much shorter period of time. In terms of the cost of training an apprentice, the research has taken into account BCITO fees, government subsidy for industry training, an apprentice’s salary and the cost of supervising and training an apprentice.

Investing in industry training is not just a cost to be minimised, it’s an investment that can grow your business

18

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WORKSAFE NZ

www.worksafe.govt.nz

HEALTH & SAFETY

19NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

Directors are not expected to be personally on site ensuring that workplace risks such as working at height and asbestos are properly managed, but they need to ensure that their business is well set-up to handle health and safety. That’s more than just checking that there’s a health and safety policy; they need to know that it’s working and have good reporting systems.

For larger construction firms, that might mean the board sets up a health and safety subcommittee – as recommended by the Financial Markets Authority. Lawyers Chapman Tripp suggest that boards should make health and safety a standing item on their agendas and should consider the health and safety implications of decisions on timeframes, budgets and bonuses.

Health and safety is not something you do once and then file away on a shelf – there needs to be ongoing vigilance.

It’s not just one-way traffic, though – workers also need to take responsibility for acting in a safe and healthy way. This means wearing the right gear (and reminding a mate who isn’t), following proper health and safety processes and taking five to plan how to do a task safely when a situation changes.

WORKER ENGAGEMENT – AND PARTICIPATIONThe new law also introduces a requirement on all businesses to engage with workers on health and safety matters. It doesn’t set in stone what form that engagement must take. That will vary from industry to industry and workplace to workplace. However, the law is clear – if it relates to health and safety then there needs to be meaningful discussion with workers.

As well as asking workers for feedback on specific questions, all businesses need to have clear, well-known ways for workers to raise suggestions or issues on a day-to-day basis. Many construction companies already start the day with a toolbox talk – that’s one simple way to get everyone involved in discussing health and safety, spotting issues and suggesting solutions.

Any business can choose to have a Health and Safety Representative (HSR) or Committee. These are examples of clear ways for workers to raise suggestions and can help the business keep on top of its legal obligations.

Larger businesses (with 20 or more workers) and those in high-risk industries, which includes construction, must arrange an HSR election if requested by a worker. In addition, if an HSR or five or more workers ask for a Health and Safety Committee (HSC), then the business must formally consider that request.

GET READY NOWWhile the law is changing, the fundamentals of keeping people safe on a building site are not. The law doesn’t change the way to put up a scaffold or set up an exclusion zone around a crane, but the Act does require businesses to take identifying and managing risks seriously.

To be clear, that doesn’t mean you are expected to eliminate all risks at any cost. That’s not possible, particularly in an industry that involves heavy machinery, power tools and working at height. However, you need to have good processes for identifying risks and putting in place sensible controls.

The trick is to make sure health and safety is integrated into your business at every level. Keeping an eye out for one another should be part of everyone’s daily routine. If it’s not already, now is the time to take action. Not only will you and your workers be safer and healthier, so will your business.

What is recommended as a simple way to engage workers on health and safety?

a) Get them to complete a questionnaire every week.

b) Have daily toolbox talks.

c) Make them read the Health and Safety at Work Act in full.

What is a benefit of being a director or manager of a smaller company?

a) They are less likely to be cut-off behind a desk, making it easier to ensure compliance.

b) There are less people who could potentially hurt themselves.

c) Small company directors can’t be held liable for any workplace accidents.

What must businesses in high-risk industries do if requested by a worker?

a) Arrange an election for a Health and Safety Representative.

b) Cease work immediately on a site the worker considers unsafe.

c) Give them a practical demonstration of how to use any tools they’re unfamiliar with.

The new Health and Safety at Work Act comes into force on 4 April and it’s important to make sure you understand how the changes will affect your business

Construction is a $30 billion dollar industry that generates about 6% of New Zealand’s

economic activity and employs almost 200,000 people.

However, it’s also made up of many small businesses – 87% of construction companies employ fewer than ten people. For many of those businesses, the owner will be the director, chief executive, chief financial officer, site foreman, company secretary and possibly orders the tea every second day.

It’s a hands-on business. Everyone’s busy,

everyone gets stuck in. In a way, that should make it easier to keep on top of health and safety. The management and directors – at least in smaller operations – are less likely to be cut off behind a desk at head office. Even if you’re based at the office project-managing, you’re likely to have come up through the trades and have a good understanding of the realities of construction.

That practical knowledge of the job at the management level is invaluable for small and medium construction companies, because when it comes to health and safety, everyone needs

to play their part – from the company owner to the casual labourer.

HEALTH AND SAFETY IS EVERYONE’S BUSINESSThere needs to be leadership at all levels, which starts at the top with directors and chief executives. Under the new law, they have to do ‘due diligence’ for health and safety in much the same way as they are expected to for financial reporting. After all, directors and chief executives will have huge influence over resourcing, company policy, setting performance targets and a myriad of other things that can affect health and safety.

Take the lead on health and safety

The new law also introduces a requirement on all businesses to engage with workers on health and safety matters

10) 11) 12)

Directors are not expected to be personally on site ensuring that workplace risks such as working at height and asbestos are properly managed, but they need to ensure that their business is well set-up to handle health and safety

To find out more about the Health and Safety at Work Act, including details about worker engagement and participation, visit the WorkSafe website at http://www.worksafe.govt.nz/hswa.

20

lead to financial hardship.

Another risk of cash jobs is, quite simply, the IRD’s interest in them. The IRD usually has a number of tax dollars that it aims to collect when it embarks on a new campaign. In order to meet target amounts, the IRD will closely scrutinise the construction sector through audits and reviews.

Even if the IRD finds no issues, it can still be a costly exercise for the company or person being reviewed. Not only are there expenses involved with having an accountant liaise with the IRD, there are also financial and health costs incurred due to time away from work, stress and late nights at the office.

If the IRD finds income that has not been declared, the person involved could expect to pay shortfall penalties, interest and the unpaid tax amount. The IRD will also put a ‘red flag’ next to that person’s name, which could prove problematic when it reviews future tax returns.

YOUR RESPONSIBILITIESThe majority of tradies may be offended by the IRD’s current focus on this area. Many honest people in the construction sector follow the rules and pay their taxes. Those people have nothing to worry about. Should the IRD request information, they will be able to provide it easily and no action will be taken.

However, there is always a group that ruins it for the rest and the information gathered from the campaign’s pilot program in Auckland suggests it’s

a significant issue. According to a recent front-page article in The New Zealand Herald, 25% of Auckland construction jobs are paid for off the books.

Of these, 57% were initiated by the homeowners, who usually view it as an opportunity to get a discount. They can’t claim the income tax deduction or GST on the payment, it’s just a way to get something done cheaper.

If you find yourself in the position of being asked to do a cash job, keep in mind the risks of accepting:

• Can you afford to go through an audit?

• Can you afford the potential issues and loss of income, if you are injured?

• Do you want the gaze of the IRD permanently on your business?

If you don’t want to take the risk, politely refuse and issue a quote. If you don’t get the contract, you will still be in a far better position than if you had done it and been caught. Let someone else take that risk and spend your time on legitimate work.

This scenario is not too dissimilar to discounting work in order to win it. If you discount too far, the job becomes unprofitable and results in wasted time, energy and money. So, why do essentially the same thing with cash jobs?

If you have any questions about points raised in this article or would like to discuss how your business is tracking, we can help. Please contact Peter van der Heijden at peter.vdh@crowehorwath.co.nz; or your local Crowe Horwath advisor.

21NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

www.crowehorwath.co.nz/

According to the article, who most commonly initiates ‘cashies’?

a) Builders.

b) Homeowners.

c) Apprentices.

What happens if the IRD finds undeclared income during an audit?

a) Nothing.

b) You will be charged premium tax on the income.

c) You might have to pay shortfall penalties, interest and the unpaid tax.

How do cash jobs affect your ACC coverage?

a) Earnings for the year will be under-reported to the IRD, resulting in a smaller payout.

b) The IRD will over-compensate in ACC payments.

c) They have no effect at all.

The Inland Revenue has begun a campaign targeting cash jobs (‘cashies’) in the trades – it pays to know where you stand

Many people working within the building industry will have received a letter from the IRD

notifying them of its latest target area – ‘cashies’.

While some may view it as an unfair notice, others could be feeling a sense of discomfort about what used to be standard practice in the building industry. So, what’s wrong with doing a cash job? What are the risks involved and what are your responsibilities?

When it comes to doing a cash job, the most obvious loser is the IRD. Cash jobs aren’t declared as income; therefore, no income tax, ACC and GST are paid on the amount earned.

“Who cares?” some might say. “It was

only a couple of grand, what’s the harm?”

If every taxpayer got a ‘couple of grand’ tax-free in their pocket, it would quickly become a huge problem for the country. It would also be hypocritical, given that a common complaint among New Zealanders is that high-income earners don’t pay their share of taxes. Furthermore, cash jobs aren’t just a simple matter of saving on a tax bill, as there are a number of issues associated with them.

RISKS OF CASH JOBSThose who get into the habit of doing cash jobs run the risk of not being paid ACC. While ACC may be viewed by some as just another tax, it is extremely important should a workplace accident

occur – not an uncommon occurrence in the building industry.

If you are injured and cannot work, payouts by ACC are based on your previous year’s earnings. If you’ve done quite a few cash jobs, earnings will have been under-reported to the IRD. As a result, if you are injured and can’t work, the ACC payment you receive won’t reflect your true income, which could

If you begin accepting cash jobs regularly, make sure you’re prepared to deal with the risks that come with it

CROWE HORWATHTIPS

Is cash in hand worth it?

If you are injured and cannot work, pay-outs by ACC are based on a person’s previous year’s earnings. If a lot of cash jobs are done, earnings are then under-reported to the IRD

13) 14) 15)

22 NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

THE SUCCESSFUL BUILDERTIPS

23

Why is it important to advertise your company’s culture when recruiting?

a) It’s a requirement under The Employment Relations Act 2000.

b) Because few people stay in a situation that’s a poor fit.

c) Because social activities are the most important part of the job.

17) What is NOT a question you should consider when reviewing your job ads?

a) What is the career progression?

b) Do you offer training?

c) Can I get away with offering less money?

16) Why is it recommended you look further afield when recruiting?

a) Because the best local candidates may already be employed.

b) It adds cultural diversity to your business.

c) They’re cheaper to employ.

The demand for housing is growing, and not just in Auckland. However, growth presents a challenge when it comes to finding skilled staff – so how do you attract the best people?

The Hays Quarterly Report (2016 Q1) predicts that skilled foremen will continue to be in

short supply throughout this year. Skilled foremen are critical to a building company’s ability to manage more projects.

The law of supply and demand suggests you should offer the highest salary to ensure you get the people you need on your team, but it’s not that simple: you want people who are worthy of the additional cost. The following guide will help you attract the best people to your business.

CREATE BIG OPPORTUNITIESWhen Steve Hansen became head coach of the All Blacks in 2012, his vision was to win the rugby world cup again in 2015 – something that had never been achieved before, making it a history-making opportunity.

I suspect his vision attracted great players to join him in the quest.

If you want to attract the best people, you need to offer them opportunities – not just big salaries. Put yourself in an applicant’s boots by asking the following questions:

• What is the career progression?

• Where are the opportunities for advancement?

• What training is on offer?

How to find skilled staff

18)

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

If you want to attract the best people, you need to offer them opportunities – not just big salaries

Graeme Owen, based in Auckland, is a builders’ business coach. Since 2006, he has helped builders get off the tools, make decent money, and free up time for family, fishing, and enjoying sports. www.thesuccessfulbuilder.com

Experienced tradesmen are in high demand, so they don’t need to stay with a company that doesn’t suit them

www.thesuccessfulbuilder.co.nz

To attract the best people, you need to offer them a complete package that recognises their skills and offers them further development opportunities

• What challenging jobs are coming up?

The best people – who will add the most value to your company – are more likely to apply for jobs that offer them the best opportunities.

TELL YOUR COMPANY’S STORYThe Hays report noted that candidates are not just interested in higher salaries or career pathways, but also in the company itself. Although they may not say so in as many words, they want to know who you are, what you’ve done and how you’ve managed your business. Just as people buy from people they like, employees want to join a company with a respected history.

Tell candidates your business story. Are you a young company focused on renovations or are you an established company with 20 years of experience – let your prospective employees know.

HIGHLIGHT YOUR COMPANY’S CULTUREExperienced tradesmen are in high demand, so they don’t need to stay with a company that doesn’t suit them. That’s why showcasing the culture of the company is important – few people stay in a situation that’s a poor fit.

One builder I know highlights the fact that everyone in his team is mad about outdoor pursuits. They don’t work weekends because that’s when they’re

going hard out cycling, running, skiing, etc. A candidate wanting weekend work would be out of luck with this crew.

Tell prospective employees about your workplace culture; let them know what it’s like to work in your company. If you’re not sure, ask your current staff. What do you stand for? What are your non-negotiables? What’s common about your team?

SHOWCASE YOUR UNIQUENESSIsolate your areas of specialty. Trying to be all things to all people often results in you being nothing specific to anybody. So promote your strengths:

• What is your company really good at?

• What do you do really well that sets you apart from others?

• What is it about your company that makes you proud?

Great employees want their efforts to achieve more than just a pay packet – they want to make an impact. Different companies do that in different ways.

For example, one company I work with challenges its staff to volunteer for community projects overseas and contributes to costs.

LOOK FURTHER AFIELDSome of your prospective candidates will be down the road at Bob’s Building Business, but in a tight market attempting to poach from your building colleagues might not suffice. You may have to cast your net in unfamiliar waters.

The Hays survey found that there was much interest from candidates in Germany, France, the UK and Canada. Be open to candidates from abroad, because most of New Zealand’s best local talent may already be employed. Recruiting overseas does take longer and has some challenges, but they aren’t insurmountable.

GET BEYOND TITLESFinally, avoid merely focusing on job titles. Instead, detail the tasks that need doing and look for the people who have the talent to do what needs to be done.

You might be surprised at where your next leader comes from; some of your best talent could be right there in a young apprentice, just waiting for the opportunity to prove his ability.

24

xxx you know it. If you’re experiencing cash problems, it’s tempting to put off paying the IRD for other creditors.

This is dangerous, because it can easily spiral out of control. PAYE and GST are considered money held in trust for the IRD, and if you can’t afford to make your payments regularly you will likely face penalty charges and interest. Many of the cloud-based payroll systems will manage your PAYE. This is a good option for many businesses. They will deduct the gross pay from the business’ bank account and file the PAYE return monthly. One less hassle!

AVOID THE INCOME TAX TRAPBeware of the year two income tax trap. New businesses are not expected to pay provisional tax in year one, but the following year they’ll need to pay any terminal tax along with the new year’s provisional tax. A double whammy!

KNOW WHAT’S YOURSJust remember that if you have money in the bank, it’s not all yours. To help manage your tax, consult your accountant and make sure you are putting sufficient funds aside to cover your tax liabilities. Managing customer debt is quite often the main contributor to companies running out of cash. Too often we see the attitude of “bill it and they will pay”. Remember, a sale is not a sale until it is paid!

CHASE ‘EM UPIf your terms of trade are ready to go, you’ve got to enforce them or appoint

a team member or professional credit manager to do it for you. They are more cost-effective than you think. Good clients understand value; if someone isn’t paying, they’re either struggling for cash themselves or are not good clients. Then it’s time to toughen up!

USE THE RIGHT PEOPLEIf you’ve just bought a business, it’s natural to get excited and let the emotions take over before you’ve had a chance to do your due diligence. But without it, you’re in trouble. If you’re buying a business, the vendor will naturally overemphasis the positives – it’s your job to make sure everything is in order.

Your accountant can help you analyse any forecasts, financial accounts or check appropriate systems are in place to generate reliable financial information. They can also cast an eye over your purchase agreement to make sure there are no hidden tax issues.

Use a valuer to make an assessment of the condition and value of any equipment. Use a lawyer to help with the purchase agreement and possible

guarantees from the vendor, in case there are any undisclosed skeletons in the closet.

If you’re purchasing a company, make sure you set up a new company and purchase the assets and client list rather than buy the shares. If you purchase the shares and then become the director, you will become liable for any historical issues before your time. This includes any IRD debt or audit and any other contingent liability of the company. Yikes!

You don’t know what you don’t know, right? Good, proactive advice doesn’t have to cost a fortune and it truly is an investment. While the ‘she’ll be right’ Kiwi attitude has its place, find the balance in your business by getting advice before you hit a roadblock.

NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.

Tick the correct answers below and record what you’ve learnt in the record of learning on the back page! Evidence of actual learning rather than just ‘participation’ is a key requirement of the LBP renewal process.

BUSINESS TIPS

www.rightway.co.nz

Tricks of the trade see you right

RIGHTWAY

20) What does the article NOT recommend when preparing to pay tax?

a) Use an accounting system such as Xero.

b) Consult your accountant to ensure you can cover your tax liabilities.

c) When necessary, put off paying the IRD to pay other creditors.

19) When purchasing a company, why should you set up a new company instead of buying shares?

a) To avoid becoming liable for any historical issues before your time.

b) Shares are likely to be overvalued.

c) So you can choose your own company name.

What is the year two ‘income tax trap’ referred to in the article?

a) Businesses are expected to pay provisional tax before their second year.

b) Businesses in their second year need to pay any terminal tax along with the new year’s provisional tax.

c) Businesses do not have to pay any tax for two years.

Kiwis love a bit of DIY, but applying the Number 8 Wire mentality in your approach to business doesn’t cut it

Whether you’re buying a franchise or an existing business, starting a new

venture or buying out a business partner, jumping into things without the right advice or systems in place can lead you down a path of recurring nightmares and stress. Here are some tricks of the trade to see you right.

LOCK IN SLICK SYSTEMS Too many businesses start out operating manually, using their bank statements to manage their business. Suddenly all this money comes in and you’re as happy

as a pig in the proverbial: “I can afford that new twin cab I’ve always wanted!” Can you? Can you tell from your bank balance how much you have to pay your creditors next month? Do you know when and how much GST and income tax you’ll need to pay?

If you’re running your business from bank statements, you run a high risk of making poor business decisions. Implementing a good accounting system, such as Xero, from the beginning is a smart decision that will save you time and money.

You won’t be up all night or working through the weekend preparing your GST return and you won’t need to pay your accountant for hours of bank statement coding and processing. Good accounting systems enable you to manage your customers, suppliers and bank accounts. They generate good monthly financial information to help you manage your business.

PUT THE IRD FIRSTGST and PAYE payments are the main taxes that businesses struggle with. They are regular, but creep up on you before

Implementing a good accounting system from day one will not only save you time and money, it’ll take some of the stress out of running your own business

21)

To help manage your tax, consult your accountant and make sure you are putting sufficient funds aside to cover your tax liabilities

Keen to earn more and stress less?

Grab a coffee and free

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More than 1,500 Blues fans turned up for the rugby club’s local Open Day in February, held at its new training grounds at Alexandra Park

A s official community partner, PlaceMakers was on hand to support the event by manning

the BBQ and organising a fun rugby activity. Everyone who attended had the chance to meet their favourite players, as well as the rising stars, and the kids even learned a few tricks from the professionals during the ‘skills and drills’ session.

The park’s new purpose-built training facility, which is a world-class building, will now be the Blues HQ.

The standalone facility, built by PlaceMakers customer Canam Construction, includes a high-tech gym near Campbell Crescent and a training field in Alexandra Park’s inner-track. Covering approximately 1800m2, it also has a ‘prehab/rehab’ area, rooms for seminars, medical and physiotherapy treatment, sports science and changing rooms, a cafe and offices for coaching, team management and administration.

The Blues board hopes this new facility will take the franchise to the next level.

“We aspire to be a world-class organisation both on and off the playing field – and we need appropriate facilities for the team and all of our staff,” said Blues chairman Tony Carter. “This is a once-in-a-generation opportunity to reposition the entire Blues organisation towards achieving our long-term goals.”

The Blues are thankful to have great support from their fans and sponsors such as PlaceMakers.

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The new facility, which Blues chief executive Michael Redman hopes will help with retention and recruitment

Everyone who attended had the chance to get signatures from their favourite players, as well as the rising stars Blues fans enjoying PlaceMakers ‘Score Big’ rugby game

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