Little Growth for Civil, Commercial Construction: Survey 1

Wednesday, October 30th, 2013
liked this article
Dulux Exsulite Construction – 300 x 250 (expire Dec 31 2016)
commercial construction
FavoriteLoadingsave article

As the resource boom peaks, almost no growth in activity is expected for civil and commercial construction over the next two years as the stimulus from telecommunications work associated with the National Broadband Network.

Furthermore, strong activity in oil and gas projects is expected to be offset by declining work associated with mining, petrochemical plants, pipelines, and water and sewerage works as well as slowing growth in electricity generation and supply developments, a survey of 100 companies employing a combined total of almost 74,000 people throughout the industry indicates.

Following growth of 10.6 per cent in civil and commercial construction work in 2012/13, respondents to the Australian Industry Group/Australian Constructors Association Construction Outlook survey say they expect overall sector growth of just two per cent in the current financial year and one per cent in 2014/15.

Having recorded a blistering growth rate of 12.9 per cent in 2012/13, engineering construction activity is set to drop back to just 1.9 per cent this year and 0.4 per cent in 2014/15 (albeit with this growth coming off an extremely high base), while commercial construction is expected to remain flat in the short term but pick up a little in 2014/15.

The survey does not include the stand-alone residential sector, where leading indicators have pointed to a recovery of late.

While Australian Industry Group chief executive officer Innes Willox said the report highlights concerns about where economic growth will come from as resource activity drops back, Australian Constructors Association executive director Lindsay Le Compte said the survey underscores the need for serious conversation between a range of industry stakeholders.

“The projected drop in the value of work highlights the need for public and private sector clients to engage with the industry to identify more effective strategies to support greater reliability of the construction pipeline,” Le Compte said. “Issues such as the financing of projects, the cost of construction – including the cost of tendering – and how projects are incorporated within an overall sustainability framework, are important discussions that need to occur.”

The latest survey comes as Australian Construction Industry Forum forecasts set to be released next month indicate a seismic shift is expected away from resource construction activity and toward home building.

Other key points highlighted by the survey are as follows:

  • Notwithstanding uncertainty over the future of the National Broadband Network, the telecommunications sector is expected to be the star performer, with the value of work done expected to expand by 25.6 per cent in 2013/14 and 13 per cent in 2014/15 respectively.
  • With survey participants expecting to reduce headcount by two per cent in the last six months of this year and 1.4 per cent in the first half of 2014, slowing growth expectations are expected to impact upon the sector’s workforce.
  • Almost 60 per cent (58.8 per cent) of survey respondents expect to experience difficulty in the sourcing of sub-contractors.
  • Profit margins remain under pressure as cost increases continue. Over the six months to March 2014, 60 per cent of firms anticipate major or moderate increases in costs associated with construction materials while 57.1 per cent expect significant rises in both sub-contractor rates and direct labour costs.
FavoriteLoadingsave article


 characters available
*Please refer to our comment policy before submitting
  1. Bill Smith

    And I thought Tony Abbot had billed himself as infrastructure Prime Minister