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 Housing and Public Works.
In this issue
Queensland Regional Construction Activity Update
The March quarter 2012 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2010-11, Queensland’s construction activity increased by 5.7% to $45.5 billion.
In the December quarter 2011, Queensland construction increased by 8.5% compared to the September quarter 2011. The driver of the increase in the December quarter was engineering construction expenditure where the increase was 15% greater than the total increase in construction activity. The December quarter also saw falls in housing and non-residential building expenditures.
In 2011-12, NIEIR’s forecasts indicate the Queensland construction industry activity should increase by 15.6% followed by further growth of 3.9% in 2012-13.
Over the next two years, NIEIR projects non-residential expenditures to decline by an average of $1.0 billion per annum. Although private dwelling construction expenditures are projected to increase by $0.1 billion per annum, this is expected to be dwarfed by the projected average annual increase in engineering construction expenditures of $5 billion per annum.
In 2011-12, the level of private dwelling expenditure is expected to be 3% below 2010-11 levels. NIEIR projects the level of residential construction activity in June quarter 2012 will be 33% below the peak of September quarter 2008.
According to NIEIR, the end of fiscal stimulus in response to the GFC and likely further reductions in non-residential expenditures are likely to result in public sector activity returning to the levels of 2007. Queensland’s non-residential building activity is therefore projected to fall by 11% over 2011-12 with a further 15% fall projected for the following fiscal year.
In the December quarter 2011, the level of private engineering construction expenditure was nearly 75% above the level prevailing in the December quarter 2010. Some of this expenditure reflected repair from flood damage in the mining sector. NIEIR projects the growth rate for engineering construction expenditure in 2011-12 at 37% followed by an 8% increase in 2012-13.
As a result of the downturn in the labour-intensive dwelling construction sector, the Queensland employment construction labour market is likely, according to NIEIR, to experience only a marginal increase in labour shortages over 2011-12 and an increase in labour surplus over the following fiscal year.
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Department of Housing and Public Works — Contractor Survey
The overall level of difficulty reported in employing subcontractors in the March quarter 2012 fell to 15% from the 24% reported in the December quarter 2012. The proportion of contractors having difficulty finding suitably experienced or qualified subcontractors was 25% (26% in the December quarter).
The split of views among those experiencing subcontractor shortages during the March quarter showed about a 70/30 spread, with 72% of all respondents (up from 57% in the December quarter) indicating it was an issue in a small number of trades and the remaining 28% (down from 43%) perceiving this was the case across the trades. The most mentioned trades among those experiencing difficulty employing subcontractors were carpentry, electrical and plumbing.
Among those respondents who were experiencing subcontractor shortages; ‘project delays’, ‘increased sub-contract rates resulting in higher project costs’, and ‘inability to accept projects’ were identified as the main impacts from a lack of subcontractors (44% each).
On average, contractors estimated they were operating at 59% of total capacity in the March quarter (down from 63% in the December quarter).
Almost 40% (39%) of contractors surveyed believed their workload increased in the previous three months, while about one third (34%) believed their workload either slightly (16%) or considerably (18%) decreased. Looking ahead to the June quarter, 49% of contractors surveyed expected their workload to increase (up from 34% in the December quarter 2011).
The majority (63%) of contractors expected building material costs to increase over the next three months. About one third (34%) expected the costs to stay the same, increased from 26% in the previous quarter.
On average, contractors estimated that 36% of their workload over the past three months was on behalf of government (local, state or federal), slightly decreased from the 37% in December quarter 2011.
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Department of Housing and Public Works — Consultant Survey
On average, consultants estimated they were operating at 66% of their full capacity during the March quarter (down from 67% in the December quarter). Slightly more than one third of the consultants surveyed (35%) thought their workload increased in the past three months while the 37% thought it had stayed the same. The remaining 28% (up from 23% in the December quarter) thought their workload had decreased during the same period.
Looking ahead to the coming quarter, consultants continue to remain reasonably optimistic with 37% expecting their workload to increase (up from 27% in the December quarter) and 47% expecting it to remain the same. Decreasing from 23% in the previous two quarters, 17% stated their workload would decrease.
The majority of consultants surveyed (67%) stated they would maintain their current staff numbers, whilst 28% indicated their firm was looking to increase staff numbers and the remaining 5% expected to reduce staff numbers.
The survey found 65% of the consultants surveyed (50% “yes” and 15% “somewhat”) stated they were currently experiencing difficulties in finding work (up from 55% in the December quarter). By main type of consultant work undertaken, Building Designer/Architecture firms appeared to be experiencing greater work shortages compared to other consulting firms (89% both vs 65% all type firms).
Of the consultants surveyed, 70% believed consultant fees would stay the same over the next three months (up from 55% in the December quarter), while 17% indicated they would decrease (down from 28% in the previous quarter). The remaining 13% believed the fees would increase (down from 17%).
Almost 40% of consultants’ projects involved the use of online programs and the survey also found 50% of consultants were satisfied with web collaboration systems.
On average, consultants estimated that 28% of their workload over the previous three months was for the government (up from 26% in the December quarter).
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PQC Tender Activity
Tender activity for Queensland Government building projects over $250,000 averaged 5.8 tenderers per project in March quarter 2012. Although this figure represented a decline from 7.8% in the December quarter 2011, it was consistent with March quarter figures reported in 2011 (5.8) and 2010 (5.7). 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 March quarter (by value) compared to December quarter 2011, the breakdown by project type was, 40% for residential (up from 32%), 26% for hospitals/health/welfare (up from 8%), 16% for administrative/offices (down from 26%), 15% for authorities (up from 14%) and 3% education/schools (down from 9%).
Unlike open tenders (by value) in the December quarter, which were largely confined to the Brisbane and Far North regions, the value of open tenders in the March quarter 2012 was widely distributed across the regions. The Brisbane region accounted for only 19% of open tenders (by value) down from 45% in the December quarter 2011. The Northern region represented almost 20% (up from 2%), Fitzroy 18% (up from 1%) and the North West 15% (up from 2%). Both the Moreton South/Gold Coast and Fitzroy regions accounted for a further 9% each (down from 19% and up from 1% respectively). The remaining 10% was dispersed across the other regions.
Tender activity in the March quarter, like the previous two quarters, was notably higher than the average in the Moreton South/Gold Coast region. By project type, the average number of tenderers for authorities and residential projects was higher than for other project types during the quarter.
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Department of Housing and Public Works — Building Price Index
The Department of Housing and 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 March quarter 2012. Price rises are, however, anticipated from September quarter 2012, with the Department forecasting quarterly increases of between 0.5% and 1.50% through to December quarter 2014.
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Building Materials Cost Comparison
During the March quarter 2012, the materials monitored by the Department of Housing and Public Works that increased in cost were face brick-settler range (9.6%) and 200mm standard concrete block (7%). Conversely, there was a decrease in the cost of both reinforcing steel mesh (-6.2%) and mild steel section - beams (-2.4%).
According to Reed Construction Data, the most significant cost decrease between the March quarter 2011 and the March quarter 2012 was in reinforcing steel mesh (-56.1%). During this same period the most significant cost increases were in 200mm standard concrete block (28.2%), 25mpa concrete (12.7%) and face brick–settler range (9.6%) and the cost of both aluminium windows — fixed and float glass tinted remained unchanged.
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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.
Designer Written Reports under Work Health and Safety Regulations 2011
Workplace Health and Safety Queensland has recently released a new guide to assist designers of structures, including building design consultants, to understand the requirement set out in Part 6.2, section 295 of the Work Health and Safety Regulation 2011 (Qld).
Among other things, the guide explains that a written report is only required for designs of structures that have unusual or atypical features which present hazards and risks during the construction phase that are unique to the particular design. The Guide can be found on Workplace Health and Safety Queensland’s website.
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