In Aotearoa New Zealand, cost blow‑outs and company liquidations in the construction sector have reached alarming levels. In the past 12 months alone, 546 construction companies were liquidated, despite representing just 12 percent of all registered firms, they accounted for 26 percent of liquidations nationwide. Non‑residential builders saw a 78 percent spike in failures year‑on‑year, and construction made up 31 percent of all insolvencies in February 2025. Meanwhile, formal insolvency proceedings against construction businesses jumped by 53 percent in the three months to March 2025, with 90 entities collapsing, more than any other industry.
Economic & Social Impact These insolvencies ripple far beyond balance sheets. When companies fail:
Job Losses: Hundreds of skilled tradespeople and professionals suddenly find themselves unemployed, exacerbating labour shortages and social stress.
Supply‑Chain Disruption: Subcontractors and suppliers face unpaid invoices, triggering knock‑on cash‑flow problems across the industry.
Housing & Infrastructure Delays: Projects stall or cancel, driving up costs for developers, public agencies, and ultimately homeowners.
Investor Confidence: Frequent failures deter capital inflows, slowing growth and innovation.
In 2024, NZ recorded a record 2,500 business liquidations, the highest annual total since 2014, with many stemming from construction’s squeeze on margins and rising input costs. Each liquidation represents lost livelihoods and stalled projects that affect communities nationwide.
The Hidden Culprit: Information‑Flow Lag
A critical yet under‑appreciated driver of insolvency is the disconnect between what’s happening on site and what management sees. When estimating and managing costs from the office, decision‑makers often lack timely, accurate insight into actual site conditions, errors, rework, weather impacts, supply delays, and more.
Academic research has quantified the toll of this information lag: on two observed sites, 59.6 percent of all working time was lost to activities stemming from poor information management, changes, rework, suspensions, and waiting for clarifications. Of that wasted time, 71 percent resulted from inconsistent data, 21 percent from dislocated information (right data, wrong person/time), and 6 percent from ambiguity in instructions.
The consequence? Estimators and managers miss the “tipping point” when cost overruns first emerge, making late interventions far more expensive or impossible, by then, projects can be beyond rescue.
Why the Industry Remains Exposed
Despite the clear link between information‑flow breakdowns and financial distress, no industry‑wide solution has yet achieved critical mass in NZ construction. While Building Information Modelling (BIM), digital platforms, and advanced project‑management tools promise real‑time visibility, adoption outside major contractors remains patchy. A 2022 BRANZ study confirms that sub‑optimal cost‑estimation practices, exacerbated by labor shortages, supply issues, and siloed data, continue to drive blow‑outs and insolvencies, with no standardized processes or guidelines widely in use.
A Call to Action
The sector cannot afford to let information lag remain its Achilles’ heel. We need:
Integrated Data Platforms: Centralise site reports, cost updates, and change logs in a single, accessible system.
Standardised Protocols: Establish clear workflows for site‑to‑office communication, including mandatory real‑time reporting of key metrics.
Wider BIM Adoption: Go beyond design to deploy BIM for ongoing cost tracking and clash detection in the field.
Training & Culture Change: Empower project teams and estimators to prioritise information accuracy and timeliness.
Only by closing the gap between ground‑level realities and board‑room decisions can we turn the tide on cost blow‑outs and liquidations, protecting jobs, safeguarding projects, and securing New Zealand’s economic future.
References
Ministry of Business, Innovation & Employment (MBIE). “Latest Company Statistics – Monthly Commentary for May 2025.” New Zealand Companies Office, 2025. companiesoffice.govt.nz
Insolvency and Trustee Service. “April 2025 Liquidation Notices.” Ministry of Justice, April 2025. insolvency.govt.nz
Pronk, K. “Insolvency by the Numbers #52: NZ Insolvency Statistics March 2025.” MVP Insolvency Insights, 2025. mvp.co.nz
Cheng, J.C.P., Liu, J.Y., Fang, D.P., & Wong, C.K.W. “The Information‑Related Time Loss on Construction Sites: A Case Study on Two Sites.” SAGE Open, 2013. researchgate.net
Building Research Association of New Zealand (BRANZ). “Building Industry Federation of NZ Newsletter – June 2025.” BRANZ Newsletters, 2025.
