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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 26, December 2010

 Issue 26, December 2010

Welcome to the Building Industry Bulletin

The quarterly Building Industry Bulletin aims to provide updates on the latest trends within the Queensland building industry as relevant to the activities of the Department of Public Works.

In this issue

Queensland Regional Construction Activity Update

The December quarter 2010 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2009-10, Queensland’s construction activity is estimated to have declined by 3.2% to $45.6 billion.

The short term outlook to September 2011 is expected to be one of moderate growth with higher levels of activity compared to the September quarter 2010. Total construction activity in Queensland is projected to decline by 0.4% to $45.4 billion in 2010-11 with the growth in housing expenditures continuing to offset the falls in engineering construction expenditures as major projects are completed. By September 2011 the fall in Queensland construction from the pre-Global Financial Crisis peak in the September quarter 2008 is estimated to be 5.5%.

In 2011-12, Queensland construction is projected to increase in line with GDP growth, at around 4.3% to $47.3 billion. This will be driven by strong growth in housing and engineering construction that will more than offset the fall in non-residential construction as the fiscal stimulus projects are completed.

Regionally, total construction activity in Brisbane is projected to fall by 1.7% and 3.3% respectively for each of the next two financial years, while Moreton’s construction activity is expected to fall by 7.2% in 2010-11, followed by a further decline of 3.1% in 2011-12. For Wide Bay Burnett, construction activity is projected to decline by 14% for 2010-11 followed by a decline of 1.7% in 2011-12. Darling Downs is projected to have strong positive growth for 2010-11 with 12.5% growth projected, followed by a further 6% in the following year, while Fitzroy is projected to grow by a cumulative 80% over the next 2 years provided at least 1 LNG project commences. Construction activity in Mackay is projected to grow by 13.5% in 2010-11 and 2.8% the following year, while Northern is projected to fall by 11% in 2010-11 offset by 2.4% growth in 2011-12.

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DPW Contractor Survey

The proportion of contractors reporting difficulties employing subcontractors overall during the last 2 years has remained fairly consistent at around 10%. In the December quarter the overall level of difficulty reported increased to 13% from 9% in the September quarter 2010. In contrast, the proportion of contractors having difficulty finding suitably experienced or qualified subcontractors decreased quite significantly in the December quarter to 15% from 24% in the previous quarter.

The split of views among those experiencing shortages was approximately 30/70, with 69% believing that it is an issue in a small number of specific trades (compared to 70% last quarter) and the remaining 31% (compared to 30% last quarter) perceiving this was the case across all trades. The most mentioned trades among those experiencing difficulty employing subcontractors were wall and floor tiling and plastering.

The main consequence reported resulting from subcontractor shortages this quarter was ‘project delays’ increasing significantly to 56% of respondents compared to 35% in the September quarter. This was followed by ‘increased project costs due to an increase in subcontractor rates’ reported by 50% of respondents compared to 45% in the previous quarter.

On average, contractors estimated they were operating at 62% of total capacity (a 5% decline from September quarter). Looking ahead to the coming quarter, contractors remained reasonably optimistic with 41% expecting their workload to increase (a 3% rise from September quarter). The optimistic outlook was especially apparent amongst respondents in the hospital/health care and industrial sectors (57% and 56% respectively vs 41% for all).

The December quarter survey showed 68% of respondents believed there was likely to be an increase in building material costs over the next 3 months. One third (33%) of all respondents expected labour costs to rise in the next 3 months.

On average, contractors estimate that 40% of their workload over the past three months has been on behalf of government.

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PQC Tender Activity

Tender activity for Queensland Government building projects over $250,000 increased significantly in the December quarter with an average of 6.8 tenderers per project compared to 4.3 in the September quarter and 4.9 in the June quarter. This represents a return to average tender activity reported in 2009 during the Global Financial Crisis.

Looking at the value of open tenders accepted in the December quarter, the breakdown by project type was, 39% for residential projects (up from 19% in the previous quarter), 14% for hospitals/health/welfare projects (down from 45% in the previous quarter), 12% for authorities (up from 10%), 11% for education-colleges (up from 8%) and 24% in other project types.

Unlike the September quarter where over half of all open tenders awarded by value were located in Brisbane there was a wider distribution of tender activity across the regions. Just under 30% of tenders were located in Brisbane (28.3% down from 54% in the September quarter), 14% in the Darling Downs (up from 3%), 12% in the Far North (up from 6%), 11% in Moreton South/ Gold Coast (up from 2%), 9% in Mackay (up from 2%) and 25.7% in other regions.

The average number of tenderers during the September quarter was notably lower in some regions of Queensland including: Wide Bay Burnett; Northern; Fitzroy; and North West.

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DPW Building Price Index

The Department of Public Works' Building Price Index (BPI) tracks price movement for typical Queensland Government buildings to a maximum of $50M.

The need to fully assess the impact of the recent Queensland floods has led to a delay in finalising the BPI for this Bulletin.

For assistance with estimates relating to budget submissions please contact Peter Kamp, Chief Quantity Surveyor, Project Services on (07) 3224 4887, or alternatively by email Peter.Kamp@projectservices.qld.gov.au.

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Building Materials Cost Comparison

During the December quarter 2010, the materials monitored by the Department of Public Works that increased in cost were, mild steel sections - beams (10%), reinforcing steel meshes (9.9%) and F8 pine 90mm x 35mm (4.7%).

According to Reed Construction Data, the most significant cost increases between the December quarter 2009 and the December quarter 2010 were in mild steel sections - beams (13%), reinforcing steel meshes (9.9%), F8 pine 90mm x 35mm (4.7%) and 200mm standard concrete block (2.9%). During this same period the largest cost decrease was in 25mpa concrete (-6.0%) There was no change in the cost of aluminium window - fixed and float glass tinted - 4mm thick.

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Building Policy News

For further information or contacts on any topics listed below, please contact us at BPU@publicworks.qld.gov.au. All documents are available on this website.

Capital Works Management Framework – Contractor PQC Financial Requirements Guideline

An updated version of the Capital Works Management Framework guideline: Contractor PQC Financial Requirements became effective on 15 November 2010.

The guideline provides detailed information about financial criteria considered in determining the prequalification status of a contractor, the financial capacity of a preferred tenderer, and the financial capacity assessment process for government building projects.

First published in January 2001, the guideline has been updated and revised to improve clarity on existing financial criteria, incorporate additional definitions and requirements, and to specify additional information a contractor must provide for a financial capacity assessment.

Capital Works Management Framework – Contractor PQC Tendering and Selection Process Guideline

A revised version of the Capital Works Management Framework guideline: Contractor PQC – Tendering and Selection Process was released in February 2011.

The Contractor PQC Tendering and Selection Process guideline has updated information on conflict of interest disclosure requirements, awareness and deterrence of contractor collusion and changed tender price weightings for traditional projects where there are non-price criteria. The recently released policy advice note on the Indigenous Employment Policy (IEP 20% Policy) has been reflected in this guideline.

Capital Works Management Framework - New Policy Advice Note - Indigenous Employment Policy (IEP 20% Policy)

The aim of the Indigenous Employment Policy for Queensland Government Building and Civil Construction Projects (IEP 20% Policy) is to maximise the employment, training and community development opportunities for local Indigenous people created by Queensland Government building and civil construction projects being undertaken in their communities. This policy advice note, released in November 2010, outlines the key features and requirements of the IEP 20% Policy and presents new processes that support its implementation on government building projects.

Capital Works Management Framework - Revised Policy Advice Note - Building and Construction Payments Act 2004

A revised version of the policy advice note: Building and Construction Payments Act (BCIPA) 2004, released in October 2010, consolidates two previous versions of this policy advice note and informs departments of the general provisions and critically important timeframes under the BCIPA.

Maintenance Management Framework

In the light of the recent flooding that has occurred across Queensland it is timely to reinforce the way in which departments should mitigate the impact of natural disasters on their building portfolio. The Maintenance Management Framework (MMF) policy and the associated Building Condition Assessment guideline have been revised to incorporate references to the mitigation of natural disasters. The updated guideline advises agencies, inter alia, that all buildings impacted by a natural disaster should be fully assessed as soon as practical after the event.

Maintenance Management Framework Policy Advice Notes

Minor revisions to the following have been completed:

National Prequalification System for Non-residential Building

A National Prequalification System for Non-residential Building (NPS) commenced on 1 January 2011 and applies to non-residential building contracts where the construction cost is $50 million and over.

The NPS has been developed by the Australasian Procurement and Construction Council (APCC) in conjunction with State and Territory jurisdictions. Objectives of the NPS are to harmonise the prequalification systems of jurisdictions across Australia to avoid duplication of effort by contractors and jurisdictions, and also provide mutual recognition (where possible) of contractor prequalification by jurisdictions.

Contractors already prequalified under the Queensland Government’s PQC System (that are eligible to tender for contracts $50 million and over) have been transitioned across to the NPS for continued eligibility to tender for Queensland Government building contracts. However, any such contractor that wishes to access the benefit of mutual recognition across a number of jurisdictions (other than Queensland) will need to apply under the NPS and then seek registration with those jurisdictions.

Contractors seeking prequalification for the first time for contracts $50 million and over, will need to apply under the NPS.

Further information on the NPS can be obtained by either contacting the PQC Registrar on 3224 5241 or from the APCC website at www.apcc.gov.au.

The Strategic Asset Management Framework - Best Practice Guidelines for the Management of Queensland Government Buildings

The Strategic Asset Management - Best Practice Guidelines (the SAM Guidelines) were originally published by the Department of Public Works between 1996 and 1998. Since that time there have been considerable reforms and developments in policies and legislation with an increased focus on integrated planning, whole-of-life costing and environmental sustainability.

The SAM Guidelines have been reviewed and updated and are now available online. The main concepts have been consolidated into the Strategic Asset Management Framework - Best Practice Guidelines for the Management of Queensland Government Buildings which comprises 16 individual guidelines. The term ‘assets’ (which included infrastructure, dams, roads, plant and equipment in the original guidelines) now only refers to government buildings.

The Framework complements other whole-of-Government building asset-related policy documents and provides agencies with a systematic and consistent approach to managing their buildings to meet their service delivery requirements by disseminating relevant policy advice in all phases of the asset life-cycle: planning, investment/procurement, management-in-use and disposal.

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Last updated 05 July 2012    


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