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 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 5.3% 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 should increase by 16.3%, with the majority of the increase due to the expansion in mining investment, more specifically LNG investment. Flood damage repairs are also expected to lead to strong regional growth in housing expenditures.
In 2011-12, the growth in total dwelling construction is projected to increase by 3.8%, followed by a 6.1% increase in 2012-13.
In terms of new private construction, NIEIR’s outlook for the next 12 months is one of stability, with modest growth in new construction expenditure for 2011-12 compared to 2010-11. The trend in recent approvals for new construction is consistent with this expectation. In 2012-13, however, private new construction expenditures are projected to rise by a little over 11% which will represent the first stage of a new construction recovery from the impact of the GFC.
In 2010-11, total non-residential building expenditure is expected to have increased by 4.3% entirely due to stimulus measures. The ending of stimulus measures is now fully reflected in public sector approvals and construction and accordingly, activity in 2011-12 is projected to decline by 11%, followed by a further 17% decline in 2012-13.
NIEIR projects an increase of 3.8% 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 December 2011 quarter the overall level of difficulty reported in employing subcontractors almost doubled to 24% from 13% in the September quarter. The proportion of contractors having difficulty finding suitably experienced or qualified subcontractors also increased from 20% in the September quarter, to 26% in the December quarter 2011.
The split of views among those experiencing subcontractor shortages during the December quarter showed about a 60/40 spread, with 57% of all respondents (up from 53% in the September quarter) indicating it was an issue in a small number of trades and the remaining 43% (down from 47%) perceiving this was the case across the trades. The most mentioned trades among those experiencing difficulty employing subcontractors were again carpentry and plumbing.
Among those respondents who were experiencing subcontractor shortages, 64% indicated project delays and 61% indicated increased sub-contract rates resulting in higher project costs as the main impacts from a lack of subcontractors.
On average, contractors estimated they were operating at 63% of total capacity in the December quarter (up from 58% in the September quarter).
Slightly less than one third (31%) of contractors surveyed believed their workload increased in the previous three months, while slightly more than one third (34%) believed their workload either slightly (15%) or considerably (19%) decreased. Looking ahead to the March quarter, 34% of contractors surveyed expected their workload to increase, staying reasonably consistent with the 38% in the previous two quarters.
The majority (69%) of contractors expected building material costs to increase over the next three months. Only 29% expected labour costs to stay the same compared to 40% in the previous quarter.
On average, contractors estimated that 37% of their workload over the past three months was on behalf of government (local, state or federal), an increase from the 29% in September quarter 2011.
[Back to top]
DPW Consultant Survey
On average, consultants estimated they were operating at 67% of their full capacity during the December quarter (down from 83% in the September quarter). Slightly more than a quarter of the consultants surveyed (28%) thought their workload increased in the past three months while the majority (48%) thought it had stayed the same. The remaining 23% thought their workload had decreased during the same period.
Looking ahead to the coming quarter, consultants remain reasonably optimistic with 27% expecting their workload to increase (down from 38% in the September quarter) and 50% expecting it to remain the same. Staying consistent with the previous quarter, however, 23% stated their workload would decrease.
The majority of consultants surveyed (68%) stated they would maintain their current staff numbers, whilst 27% indicated their firm was looking to increase staff numbers and the remaining 5% expected to reduce staff numbers.
The survey found just over half (55%) of the consultants surveyed (43% “yes” and 12% “somewhat”) stated they were currently experiencing difficulties in finding work (up from 43% in the September quarter). By main type of consultant work undertaken, Building Designer/Architecture and Quantity Surveying firms appeared to be experiencing greater work shortages compared to other consulting firms (67% both vs 43% all type firms).
Of the consultants surveyed, 55% believed consultant fees would stay the same over the next three months (down from 82% in the September quarter), while 28% indicated they would decrease (up from 8% in the previous quarter). The remaining 17% believed the fees would increase (up from 7%).
On average, 42% 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 (67% vs 57%). The survey also found 50% 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 remained fairly constant in the December quarter 2011, with an average of 7.8 tenderers per project, compared to 7.9 in the September quarter. This level of activity however, still remains high compared to 4.3 in the September quarter 2010 and 4.9 in the June quarter 2010.
Looking at open tenders accepted in the December quarter (by value) compared to September quarter 2011, the breakdown by project type was, 32% for residential (up from 17%), 26% for administrative/offices (up from 12%), 14% for authorities (down from 25%), 11% for education - colleges (down from 14%), 8% education/schools (down from 17%), 7% for hospitals/health/welfare (down from 15%) and 1% for industrial/transport (0% in the September quarter).
Similar to the September quarter, open tenders (by value) in the December quarter were largely confined to the Brisbane (45% down from 49%) and Far North regions (20% up from 15%). A further 19% were located in Moreton South/Gold Coast (up from 4%), 7% in Mackay (up from 5%), with the remaining 9% spread amongst the remaining regions.
Tender activity in the December quarter, like the previous quarter, was notably higher than the average in the Moreton South/Gold Coast and Brisbane regions. By project type, the average number of tenderers for education – colleges was significantly higher than for other project types during the quarter.
[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 December quarter 2011. Price rises are, however, anticipated from March quarter 2012, with the Department forecasting quarterly increases of between 0.5% and 1.25% through to December quarter 2014.
[Back to top]
Building Materials Cost Comparison
During the December quarter 2011, the only material monitored by the Department of Public Works that increased in cost was 25mpa concrete (4.5%). Conversely, there was a significant decrease in the cost of both reinforcing steel mesh (-58.9%) and mild steel section - beams (-26.7%), resulting from a decline in steel production due to weakened global consumption in the second half of 2011.
According to Reed Construction Data, the most significant cost increases between the December quarter 2010 and the December quarter 2011 were in 200mm standard concrete block (23.8%) and 25mpa concrete (12.7%). During this same period, there was no change in the cost of aluminium windows – fixed, float glass tinted - 4mm thick and face brick - settler range.
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.
Guide to Integrated Strategic Asset Management
The Guide to Integrated Strategic Asset Management was released publicly at the annual Australian Asset Management Collaborative Group (AAMCoG) Forum on Friday 4 November 2011.
The Guide is the result of a review of the Australasian Procurement and Construction Council’s (APCC) Asset Management Guide 2001 by the AAMCoG with the support and assistance of the Cooperative Research Centre for Infrastructure and Engineering Asset Management (CIEAM). It reflects advances in asset management since the previous guide was developed and aims to bring it in line with the contemporary asset management environment.
The Guide to Integrated Strategic Asset Management is available on the AAMCoG website.
Workplace Health and Safety
On 1 January 2012, Queensland’s Work Health and Safety Act 2011 (the WHS Act) came into operation, replacing the Workplace Health and Safety Act 1995. The WHS Act forms part of a new system of nationally harmonised work health and safety laws that is replacing existing legislation in all states, territories and the Commonwealth. The WHS Act operates within a regulatory framework also comprising of the Work Health and Safety Regulation 2011 (the WHS Regulation) and national codes of practice.
Further information on the new work health and safety laws can be found at the Department of Justice and Attorney-General website.
[Back to top]