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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 51 June quarter 2017

 Issue 51 June quarter 2017

Welcome to the Building Industry Bulletin

The Queensland Building Industry Bulletin provides 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 Department of Housing and Public Works (HPW) engages economic research consulting firm, the National Institute of Economic and Industry Research (NIEIR) to provide independent, updated data and analysis on the profile of the Queensland building and construction industry using regional economic modelling and forecasting techniques.

The June quarter 2017 economic update from NIEIR shows that in 2016-17 Queensland construction activity (or total work done across the residential building (houses and units), non-residential building and engineering construction sectors) was $44.9 billion. In 2017-18 total Queensland construction activity is forecast to increase to $48.9 billion.

This represents a forecast increase of 9% from 2016-17, due to increases of almost $3.5 billion in engineering construction, $532 million in residential building and $8 million in non-residential building.

In 2018-19 total Queensland construction activity is forecast to increase by a further 7% to $52.3 billion with growth anticipated in the engineering construction and non-residential building sectors and a forecast decline for the residential building sector.

Rising interest rates are expected to force a downturn in the dwelling cycle.  After increasing by 1.3% to $19.8 billion in 2016-17, total residential building is projected to increase by a further 2.7% to $20.3 billion in 2017-18 and then decline by 3.2% to $19.7 billion in 2018-19. New private residential dwelling construction increased by 3.6% in 2016-17 with decreases of 3% in 2017-18 and 0.6% in 2018-19 projected. Renovation expenditure decreased by 4% in 2016-17 with an increase of 16.5% in 2017-18 to be followed by a further decline of 8.5% in 2018-19 projected.

Total non-residential building activity (e.g. offices, shops and hotels) declined by 6.8% to $6.5 billion in 2016-17 with only marginal growth of 0.1% forecast for 2017-18. By 2018-19 stronger growth in private sector non-residential building activity is forecast with total growth in the sector of 12.7% to almost $7.4 billion as new projects move to the construction phase.

Total Queensland engineering construction activity (e.g. roads, bridges, water, sewerage and mines) increased by 0.8% to $18.5 billion in 2016-17. Further increases of 18.7% to $22.0 billion in 2017-18 and 14.6% to $25.2 billion in 2018-19 are forecast, due to the commencement of heavy industry projects that were stalled or cancelled at the completion of the last LNG construction phase.

An estimated 220,000 people were employed in Queensland construction (residential dwelling, non-residential building and engineering sectors including contractors, trade contractors and consultants) in 2016-2017. 

Building Industry and Policy Contractor and Consultant tracking survey

To help understand the state of the building and construction industry cycle in Queensland, the Department of Housing and Public Works conducts quarterly research surveys with contractors and consultants registered with the department’s prequalification (PQC) System. In the June quarter 2017 Kantar Public surveyed respondents across conditions including employment supply, workloads and labour costs.

Contractors

Contractors indicated on average they were operating at 71% of capacity in the June quarter 2017 which represents an increase of 12% from March quarter 2017 and is the strongest result for the sector since December 2015. Almost half of all contractors (46% compared to 36% in March quarter 2017) reported their workload had increased in June quarter. There was a softening in perceived future workload in June quarter with 22% of contractors anticipating a decrease in their workload over the next three months compared to 11% in the March quarter. Most contractors (59%) felt labour costs would remain the same over the next few months, however 35% believed they may still increase. Remaining consistent with the previous quarter, 60% of contractors felt that building material costs would continue to increase over the next three months (66% in March quarter 2017).

Representing no change from March quarter, 19% of contractors in the June quarter reported difficulty employing subcontractors overall. In the same period 37% of contractors (33% in March quarter) had difficulty finding suitably experienced or qualified subcontractors. The majority of contractors (55%) suggested the difficulty employing subcontractors was amongst a small number of specific trades.

The most mentioned trades for those experiencing difficulty employing subcontractors were carpentry (37%), electrical (32%) and concreting (29%). Among those respondents who experienced subcontractor shortages, ‘project delays’ (63% of contractors down from 64% in the March quarter) was the most reported impact mentioned by respondents.

On average, contractors estimated that 34% of their workload over the previous three months was on behalf of government (local, state or federal).

Consultants

Consultants indicated on average they were operating at 72% of capacity in the June quarter 2017, maintaining the upward trend since June quarter 2016 (67%). There has been a slight softening of workload amongst consultants with 29% indicating their workload had decreased over the last three months (22% in March quarter). Projected future workloads for consultants have also softened with 29% indicating their workload would increase and 44% indicating it would stay the same (compared with 42% and 39% respectively in the March quarter).

The net difficulty of consultants finding work continued to remain lower than the perceived levels of difficulty reported across the majority of 2016 and 2015 decreasing to 42% in June quarter from 48% in the March quarter 2017.

While 70% of consultants reported that they would maintain their current staff numbers over the next quarter, 25% indicated they were looking to increase staff numbers. Remaining largely unchanged since September quarter 2015, 26% of consultants believed they would have difficulty employing staff over the next three months.

Of the consultants surveyed, 72% believed fees would stay the same over the next three months (down from 76% in the March quarter), 14% expected them to increase (down from 13%) and 11% anticipated a decrease (up from 10%).

On average, 51% of consultants’ projects involved the use of online programs (web applications accessed over the internet or intranet, e.g. webmail) with the survey also finding 32% of consultants were satisfied and a further 7% were very satisfied with web collaboration systems.

PQC tender activity

Tender activity for Queensland Government building projects over $1 million averaged 4.5 tenderers per project in the June quarter 2017, representing no change from March quarter 2017. Looking at open tenders accepted in the June quarter 2017 (by value) compared to the March quarter 2017, the breakdown by project type was 41% for residential (up from 3%), 34% for education-schools (down from 35%),13% for authorities (e.g. police stations, court buildings, down from 15%), 6% for hospitals/health/welfare (up from 5%), 6% for administrative/offices (up from 2%). There was nil activity for recreation (down from 40%) and education-colleges, civic and industrial/transport (all previously nil).

The Brisbane and Far North regions accounted for the largest proportions of all open tenders (by value) in the June quarter 2017 with respective shares of 54% (up from 53%) and 13% (down from 15%). This was followed by the Moreton South/Gold Coast (8% down from 9%), Fitzroy (6% down from 7%), Darling Downs (5% down from 4%), Moreton North/Sunshine Coast (5% up from 2%), Wide Bay Burnett (5% representing no change), Mackay (4% down from 5%). No activity was recorded in the Northern, North West and South West regions (all previously nil).

Tender activity in the June quarter 2017 was slightly higher than the average for Education -school projects and within the Moreton North/Sunshine Coast and Wide Bay Burnett regions. 

Building material cost comparison

In the June quarter 2017, the only materials monitored by the Department of Housing and Public Works that recorded a notable increase from the previous quarter were F8 pine 90mm x 35mm (1.9%) and 25mpa concrete (1.7%). No materials recorded a decrease from the previous quarter. According to the Cordell Building Cost Guide, between June quarter 2016 and June quarter 2017 the most significant cost increases were in float glass tinted – 4mm thick (13.4%), 25 mpa concrete (3.8%) and reinforcing steel mesh (2.6%). During this period, no materials recorded a cost decrease.

Industry news

Building industry fairness legislation

On 22 August 2017 the Minister for Housing and Public Works introduced the Building Industry Fairness (Security of Payment) Bill 2017 (PDF, 1MB) which establishes a comprehensive regime to help ensure security of payment for subcontractors.

The suite of reforms simplifies the progress payment system, modernises subcontractors’ charges, takes action against phoenixing and introduces project bank accounts to help protect money for subcontractors. 

Non-conforming building products

On 24 August 2017, legislation addressing non-conforming building products was passed by the Queensland Parliament. This legislation is the first of its kind in Australia.

Non-conforming building products (NCBPs) are building products and materials that are not of acceptable quality, do not meet Australian laws and standards, are not fit for their intended use, or contain false or misleading claims.

The Building and Construction Legislation (Non-conforming Building Products—Chain of Responsibility and Other Matters) Amendment Bill 2017 (PDF, 846KB)

  • establishes a chain of responsibility, placing duties on building supply chain participants (including designers, manufacturers, importers, suppliers and installers) to ensure building products used in Queensland are safe and fit for intended use
  • expands the compliance and enforcement powers of the Queensland Building and Construction Commission (QBCC), and the responsible Minister. 

National Construction Code 2016 Volume One Amendment 1

The Australian Building Codes Board (ABCB) is seeking feedback on the proposed NCC 2016 Volume One Amendment 1.

These changes are the result of a Building Ministers' directive to advance the completion and adoption of actions from a comprehensive package of high rise fire safety measures, developed following the Lacrosse Apartments fire.

This consultation will help shape societal outcomes for safety, health, amenity and sustainability in the built environment.

For more information about the consultation and how to provide your comments, visit the ABCB website.

Building Construction and Maintenance Category

The Building Construction and Maintenance Category have been holding focus groups with Industry groups representatives to develop improvement opportunities on how it can better:

  • utilise the standard suite of government contracts
  • define value for money.

An action plan has been developed with further updates to be provided in the next bulletin.

Changes to the Prequalification (PQC) System

The recently released Queensland Government Procurement Strategy sets out the Queensland Government’s vision and new approach to procurement.

A key focus of the Strategy is to make it easier for local businesses to work with government.  One of the key actions to support this focus is a change to the Prequalification (PQC) System.

On 1 September 2017, the Queensland Government implemented changes to the PQC System by raising the project dollar value thresholds (relating to the use of prequalified contractors and consultants on government building projects). The revised thresholds are as follows:

  • the threshold for contractors has increased from $500,000 to $1M
  • the threshold for consultants has increased from $30,000 to $60,000.

The PQC System is administered by the Building Industry and Policy division within the Department of Housing and Public Works. If you would like further information on these changes or the PQC System in general, you can contact the PQC team via PQCRegistrar@hpw.qld.gov.au or phone 1800 072 621.



Last updated 21 November 2017    Creative Commons Attribution 4.0 International (CC BY 4.0)


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