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 September quarter 2011 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2010-11, Queensland’s construction activity is estimated to have increased by 3.2% to $45.8 billion.
According to NIEIR, the short-term outlook is for strong growth in private engineering investment, the outlook for housing investment remains subdued and for non-residential building investment the outlook is pessimistic.
In 2011-12, NIEIR’s forecasts indicate the Queensland construction industry will increase by 8.4%, with the majority of the increase due to the expansion in mining investment, more specifically LNG investment. Flood damage repairs are expected to lead to strong growth in housing expenditures, however, this increase will be offset by the decline in public non-residential building expenditures as the stimulus programs conclude.
In 2010-11, it is estimated that total Queensland private dwelling construction expenditures will fall by 10.2%. According to NIEIR, the level of private dwelling expenditure in 2011-12 is expected to be 6.0% above 2010-11 levels with the major part of the growth occurring over the first half of 2012. The outlook for new residential construction in the next 12 months is one of stagnation. In 2012-13, however, new construction expenditures are projected to rise by just over 7% which will represent the first stage of a new construction recovery from the Global Financial Crisis.
In 2010-11, total non-residential building expenditure increased by 1.0% entirely due to stimulus measures. In 2011-12, activity is projected to decline by 23%, followed by a further 20% decline in 2012-13.
NIEIR projects an increase of 3.4% in total Queensland construction in 2012-13 with private engineering expenditures continuing to contribute strongly to growth. .
[Back to top]
DPW Contractor Survey
During the September quarter the overall level of difficulty reported in employing subcontractors eased slightly to 13% from 15% in the June quarter. The proportion of contractors having difficulty finding suitably experienced or qualified subcontractors also decreased to 20% from 24% in the June quarter.
The split of views among those experiencing shortages during the September quarter was more evenly spread compared to previous quarters. Just over half (53%) of all respondents (up from 46% in the June quarter) believed it was an issue in a small number of trades while the remaining 47% (compared to 55% in the June quarter) perceived it was the case across the trades. The most mentioned trades among those experiencing difficulty employing subcontractors were carpentry and plumbing.
Among those who are experiencing subcontractor shortages, a significant 84% indicated increased sub-contract rates resulting in higher project costs (up from 68% in the June quarter) and project delays (68%) were the main impacts from a lack of subcontractors.
On average, contractors estimated they were operating at 58% of total capacity, which represents a slight decrease from the previous quarter (61%) and a continuation of the general decline that has occurred since June quarter 2010 (68%). Like the June quarter 2011, 38% of contractors surveyed still expected their workload to increase in the coming quarter.
One in two contractors surveyed (50%) expected building material costs to increase over the next three months (down from 73% in the June and 79% in the March quarters 2011). About two thirds of contractors (65%) expected labour costs to stay the same in the next three months, while 28% expected costs would rise.
On average, contractors estimate that 29% of their workload over the past three months has been on behalf of government (local, state or federal), a significant decrease from the 41% in June quarter 2011.
[Back to top]
DPW Consultant Survey
On average, consultants estimated they were operating at 83% of their full capacity during the September quarter. Slightly more than a quarter of the consultants surveyed (27%) thought their workload increased in the past three months while 30% thought it had stayed the same and 43% thought it had decreased during the same period.
Looking ahead to the coming quarter, consultants remain reasonably optimistic with 38% expecting their workload to increase and 37% expecting it to remain the same. There was, however, a significant increase in those respondents expecting their workload to increase rising to 23% from 16% in the June and 10% in the March quarters. The optimistic outlook was mostly apparent among those whose major projects were in both the low and high density Residential Multi-unit and Industrial construction sectors.
Despite consultants remaining reasonably optimistic about their workloads increasing in the coming quarter, only 23% stated their firm was looking to increase staff numbers. The majority (73%) said their company would maintain their current staffing.
The survey found 43% (33% “yes” and 10% “somewhat”) of all consultants are currently experiencing difficulties in finding work (down from 52% in the June quarter). Of these respondents, the main type of consultant work undertaken, multidisciplinary Engineering and Building Project Management firms appeared to be experiencing greater work shortages (67% both vs 43% all type firms).
Of the consultants surveyed, 82% believed consultant fees would stay the same over the next three months (up from 65% in the June quarter), while 8% indicated they would decrease. Only 7% believed the fees would increase.
On average, 24% of consultants’ projects involved the use of online programs. More private sector works were submitted online by consultants over the last three months than public sector works (61% vs 47%). The survey also found 38% of consultants surveyed were satisfied with web collaboration systems.
[Back to top]
PQC Tender Activity
Tender activity for Queensland Government building projects over $250,000 decreased in the September quarter 2011, with an average of 7.9 tenderers per project, compared to 8.9 in the June quarter. This level of activity however, still remains high compared to 5.8 in the March quarter and 6.8 in the December quarter 2010.
Looking at the value of open tenders accepted in the September quarter compared to June quarter 2011, the breakdown by project type was, 25% for Authorities (up from 14%), 17% for residential (down from 41%), 17% for education-schools (down from 33%), 15% for Hospitals/Health/Welfare (up from 3%), 14% for Education - Colleges (0% June quarter) and 12% for Administrative/Offices (up from 8%).
Compared to the June quarter, where the value of open tenders was widely distributed across the regions, September quarter activity was largely confined to the Brisbane (49% up from 27%) and Far North regions (15% up from 13%). A further 7% were located in Moreton North/Sunshine Coast (up from 4%), 6% in Central West (up from 1%), 5% in Mackay (down from 8%), with the remaining 18% spread amongst the remaining regions.
As with the June quarter, tender activity for residential projects during the September quarter was notably higher than the average for all projects. Average tender activity was also significantly higher in the Moreton South/Gold Coast and Brisbane regions with a number of projects attracting more than 20 tenderers.
[Back to top]
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 current index indicates there was no change in building cost movement in the September quarter 2011. Although there is not expected to be any price movement for the remainder of 2011, price rises are anticipated from March quarter 2012, with the Department forecasting quarterly increases of between 0.5% and 1.25% through to September quarter 2014.
[Back to top]
Building Materials Cost Comparison
During the September quarter 2011, the materials monitored by the Department of Public Works that increased in cost were, 200mm standard concrete block (19.8%), reinforcing steel mesh (14%), 25mpa concrete (7.8%) and F8 pine 90mm x 35mm (0.9%).
According to Reed Construction Data, the most significant cost increases between the September quarter 2010 and the September quarter 2011 were in reinforcing steel mesh (25.4%), 200mm standard concrete block (28.8%), mild steel sections - beams (10.7%), 25mpa concrete and F8 pine 90mm x 35mm (5.7%). During this same period, the there was no change in the cost of aluminium windows – fixed, float glass tinted - 4mm thick and face brick - settler range.
[Back to top]