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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 44, June quarter 2015

 Issue 44, June quarter 2015

Welcome to the Building Industry Bulletin

The quarterly 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

The June quarter 2015 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2014-15 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) fell by an estimated 19.3% to $51.7 billion. This was due to a $13.3 billion decrease in engineering construction, particularly in mining as the LNG project construction phase ends.

Total construction activity is forecast to fallby a further 6.6% in 2015-16, with dwelling construction expected to contribute over $2.1 billion to total construction growth. In addition, both non-residential and engineering construction are expected to have a negative contribution of $83 million and $4.6 billion respectively, resulting in a decline of $3.4 billion for the total sector. This is forecast, however, to be followed by an increase of 5.9% in 2016-17 with growth in total construction activity anticipated across all three sectors comprising total construction activity.

The outlook for Queensland's dwelling construction is positive due to continued low interest rates. After increasing by 10.9% to $16.2 billion in 2014-15, total dwelling construction is projected to increase by 12.9% to $18.3 billion in 2015-16 and 8.8% to $19.9 billion in 2016-17. Strong growth in new private dwelling construction of 16.6% in 2015-16 and 7.9% in 2016-17 is projected. Renovation expenditure is forecast to increase by 5.4% in 2015-16 and 10.3% in 2016-17. A fall in confidence due to external factors such as declining coal prices combined with the winding down of the construction phase of the LNG projects has had a negative impact on non-residential construction. Total non-residential building activity declined by 9.1% to $6.4 billion in 2014-15 and a further decrease of 13.6% to $5.6 billion is forecast for 2015-16. Non-residential activity, is however, expected to increase by 6.7% to $6.0 billion in 2016-17.

Finally, total Queensland engineering construction activity decreased by 31.4% to $29.1 billion in 2014-15. Although a further decline of 15.9% is forecast for 2015-16, a 3.5% increase in activity to $25.3 billion is forecast for 2016-17.

View NIEIR June Annual Report (PDF, 5.6MB)

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Department of Housing and Public Works - Contractor Survey

The majority of contractors surveyed (78%) had not reported overall difficulties in employing subcontractors in the June quarter 2015 (83% in March quarter). In the same period 30% of contractors (down from 31% in March quarter) had difficulty finding suitably experienced or qualified subcontractors.

The most mentioned trades for those who experienced difficulty employing subcontractors were carpentry, concreting and formwork. Among those respondents who experienced subcontractor shortages, ‘increased project costs due to an increase in subcontractor rates’ (61% of contractors) and ‘project delays’ (57% of contractors) were the most reported impacts mentioned by respondents.

On  average, contractors estimated they were operating at 67% of total capacity in the June quarter (up from 62% in March quarter).

A third (33%) of respondents reported their workload had increased in the past three months, 34% indicated it had decreased and the same proportion thought it had stayed the same. Looking ahead to the September quarter, 33% of contractors surveyed expected an increase in their workload (down from 58%). Over a quarter (26%) of contractors expected their workload to decrease and 35% expected it to stay the same.

The majority of contractors surveyed (63%) expected labour costs to stay the same over the next three months. An increase in labour costs was expected by 25% of respondents and the remaining 9% expected them to decrease in the next three months.

Almost half the respondents (55% of contractors) expected building materials to increase in the September quarter, 40% expected they would stay the same and 3% of respondents expected them to decrease in the same period. On average, contractors estimated that 34% of their workload over the past three months was on behalf of government (local, state or federal).

View full report (PDF, 795KB)

 

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Department of Housing and Public Works - Consultant Survey

In the June quarter 2015 consultants estimated they were operating at 74% of their full capacity (up from 67% in March quarter). An increase in workload over the past three months was reported by 43 of the respondents (down from 48%), with the same proportion reporting their workload had stayed the same (up from 33%). The remaining 14% thought it had decreased (down from 18%).

Looking ahead to the September quarter, 42% of consultants expected their workload to increase (down from 48%). Forty percent of consultants expected their workload to stay the same (down from 45%) and the remaining 17% anticipated a decrease in their workload (up from 7% in the March quarter).

The majority of consultants surveyed (67%), stated they would maintain their current staff numbers (up from 62% in March quarter), 32% of respondents indicated their firm was looking to increase staff numbers (down from 35%) and 2% indicated a decrease in staff numbers (remained same).

The survey found just under half of the consultants (48%) surveyed were not currently experiencing difficulties in finding work (down from 55%), with 28% experiencing difficulties and 23% reporting they were experiencing some difficulties.

Of the consultants surveyed, 72% believed consultant fees would stay the same over the next three months (up from 68% in March quarter), while 17% expected them to increase (down from 22%) and 8% anticipated a decrease (remained same).

On average, 37% of consultants’ projects involved the use of online programs with the survey also finding 47% of consultants were satisfied with web collaboration systems.

Consultants estimated that 28% of their workload over the previous three months was for the government (36% for local government, 57% for state government and 7% for federal government).

View full report (PDF, 822KB)

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PQC tender activity

Tender activity for Queensland Government building projects over $500,000 averaged 3.3 tenderers per project in June quarter 2015, decreasing from 3.6 per project in the previous quarter. March quarter 2015 represented the first time tender activity had averaged under 4.0 tenderers per project since December 2006 with 3.8 tenderers per project reported.

Looking at open tenders accepted in the June quarter 2015 (by value) compared to March quarter 2015, the breakdown by project type was 31% for authorities (down from 39%), 26% for education – colleges (down from 36%), 21% for education – schools (up from 3%), 8% for hospitals/health/welfare (up from nil), 5% for administrative/offices (down from 10%), 5% for maritime (up from nil), 3% for civic (up from nil), 1% for recreational (remained same) and nil for residential (down from 11%).

The Far North region accounted for the largest proportion of all open tenders (by value) in the June quarter 2015 with a share of 38% (up from 5%). This was followed by the Moreton South/Gold Coast (27% up from nil) and Darling Downs (24% up from nil) regions. Further tender activity was recorded in the South West (5% down from 7%), Brisbane (3% down from 25%), Central West (2% down from 4%) and Moreton North/Sunshine Coast (1% down from 10%) regions. The regions that recorded no tender activity in the June quarter were Wide Bay Burnett (27%), North West (13%) and Fitzroy (9%) regions.

Tender activity in June quarter 2015 was slightly higher than the average for education - schools projects and within the Darling Downs and Moreton South/Gold Coast regions.

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Building materials cost comparison

In the June quarter 2015, the materials monitored by the Department of Housing and Public Works that recorded increases in cost were F8 pine 90mm x 35mm (1.4%) and aluminium windows – fixed (1.1%). No materials recorded a decrease in cost during the quarter.

According to the Cordell Building Cost Guide the most significant cost increases between June quarter 2014 and June quarter 2015 were in reinforcing steel mesh (9.6%) and aluminium windows – fixed (7.7%). The only material to record a decrease in cost over the 12 months was 200mm standard concrete block (-1.9%).

View the table (PDF, 138KB)

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Building news

Review of the Building Act 1975 and building certification

The review of the Building Act 1975 and building certification is continuing and potential improvements are currently being considered by the Department of Housing and Public Works. The improvements are based on feedback received by the department during extensive consultation on a discussion paper in mid-2014 and an independently prepared report on the review that contained 122 recommendations. Changes are being considered in the following key areas:

  • Supporting building certification
  • Supporting consumers
  • Increased accountability
  • Improving processes

Regulatory reforms for the building and construction industry

From 1 July 2015, amendments were made to the Queensland Building and Construction Commission Act 1991 and its subordinate legislation and the Domestic Building Contracts Act 2000 was repealed. These amendments:

  • reduced the regulatory requirements governing domestic building contracts and clarified contractual terms and requirements, including prescribing the form of the consumer building guide and the threshold contract prices for level 1 and 2 contracts. These amendments simplified the building process for licensees and homeowners.
  • improved the effectiveness and flexibility of the Commission’s demerit point system for building licensees by removing the current demerit offences from the Queensland Building and Construction Commission Act 1991 (QBBCA) and the limit on the number of points that may be allocated for an offence. A wider range of offences and corresponding points are now prescribed under the Queensland Building and Construction Commission Regulation 2003. The wider range of demerit offences is targeted at activities where non-compliance can have significant impacts on consumers.

On 1 June 2015 the following amendments were made to the Building and Construction Industry Payments Regulation 2004:

  • introduction of mandatory transition training for adjudicators. The training is to improve the quality of adjudication decisions and align skills and training of existing adjudicators with those of new applicants.
  • prescribed two Queensland Building and Construction Board Policies, ‘Adjudicator Responsibilities Policy 2015’ and ‘Adjudicator Grading and Referral Policy 2015.’ The first policy ensures that adjudicators are aware of their responsibilities as an adjudicator. The second policy was amended to provide guidance to adjudicators regarding a reasonable adjudication fee.

Both amendments are aimed at improving the quality of adjudication decisions.

Project Assessment Framework and Market-led proposal guidelines approved

The Government has introduced a streamlined project assessment process to encourage infrastructure investment and development. The revised assessment process and Market-Led Proposal (MLP) guidelines replace the previous Project Assurance Framework (PAF) and unsolicited proposal guidelines. The revised PAF and MLP guidelines are available on Queensland Treasury’s website at the following links:

The Building Industry and Policy Division in the Department of Housing and Public Works worked closely with Queensland Treasury during the revision of the PAF to improve the alignment between the revised PAF and DHPW’s Capital Works Management Framework (CWMF). The CWMF and related building policies have been revised and are scheduled to be considered by the Government in the near future.

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Last updated 16 September 2015    Creative Commons Attribution 4.0 International (CC BY 4.0)


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