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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 50 March quarter 2017

 Issue 50 March 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 March quarter 2017 update from NIEIR shows that in 2015-16 Queensland construction activity (or total work done across the residential dwelling, non-residential building and engineering sectors) fell by an estimated 16.6% from $54.2 billion to $45.2 billion. This was due to an $11.6 billion decrease in engineering construction, in particular mining, with the completion of the LNG project construction phase. This fall was partially offset by a $2.5 billion increase in the residential dwelling sector and $0.1 billion increase in the non-residential building sector.

While total construction activity is forecast to remain at $45.2 billion in 2016-17, an increase of 3.3% to $46.6 billion is forecast for 2017-18, with growth expected in the residential dwelling, non-residential building and engineering construction sectors.

The short term outlook for total residential dwelling construction in Queensland remains positive. After increasing by 14.5% to $19.7 billion in 2015-16, total dwelling construction is projected to increase by 4.1% to $19.7 billion in 2016-17 and by 3.0% to $21.1 billion in 2017-18. New private dwelling construction (including apartments) is projected to decline by 1.5% in 2016-17 based on the current low level of building approvals and increase by 11.5% in 2017-18 because of the increase in expenditure on repairs to damage caused by Tropical Cyclone Debbie. Renovation expenditure is forecast to increase by 6.5% in 2016-17 and decline marginally by 0.5% in 2017-18. Total non-residential building activity increased by 1.6% to $7.0 billion in 2015-16 with activity forecast to decrease by 4.5% to $6.7 billion in 2016-17 and increase by 2.8% to $6.8 billion in 2017-18. Total Queensland engineering construction activity decreased by 38.5% to $18.6 billion in 2015-16 due to the completion of major LNG projects which started during the mining boom and falling commodity prices that discouraged further investment. Although a decline of 2.8% to $18.1 billion is forecast in 2016-17, an increase of 3.7% to $18.7 billion is projected for 2017-18.

An estimated 222,000 people were employed in Queensland construction (residential dwelling, non-residential building and engineering sectors including contractors, trade contractors and consultants) in March 2017. 

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Building Industry and Policy Contractor and Consultant tracking survey

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

Contractors

Contractors indicated on average they were operating at 59% of capacity which is the lowest level seen in the past two years.  Consistent with historical findings 36% of contractors reported their workload had increased in the March quarter 2016 and 51% believed their workload would increase in the June quarter 2017. Increasing from 26% in September quarter 2016, 37% of contractors projected labour costs would increase in the June quarter. Representing the highest level recorded in the previous two years almost 70% of contractors predicted that the cost of building materials would also increase in the June quarter. Of significance, 19% of contractors in the March quarter compared with 9% in the September quarter 2016 reported difficulty employing subcontractors overall. In the same period 33% of contractors (29% in September 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 (42%), electrical (29%) and wall and floor tiling (29%). Among those respondents who experienced subcontractor shortages, ‘project delays’ (64% of contractors up from 42% in the September quarter) was the most reported impact mentioned by respondents.

On average, contractors estimated that 33% 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 March quarter 2017, which has shown an upward trend since June quarter 2016 (67%). Two in five consultants (43%), reported their workload had increased in the previous three months, the highest level since March quarter 2015. After a relatively consistent decline between March quarter 2015 and June quarter 2016, 42% of consultants believed their workload would increase, 20% believed it would decrease and 38% thought it would stay the same during June quarter 2017 (compared to 47%, 15% and 38% respectively in September quarter 2016).

Although the net difficulty of consultants finding work increased from 42% in September quarter 2016 to 48% in March quarter 2017 this level was lower than the perceived levels of difficulty reported across the majority of 2016 and 2015. Consistent with September quarter 2016, 42% of consultants believed their workload would increase over the next three months (compared to 28% in March quarter 2016).

While 68% of consultants reported that they would maintain their current staff numbers over the June quarter, 29% indicated they were looking to increase staff numbers, the strongest result since June quarter 2015. Remaining largely unchanged since September quarter 2015, 23% of consultants believed they would have difficulty employing staff over the next three months.

Of the consultants surveyed, 76% believed fees would stay the same over the June quarter (up from 73% in September quarter 2016), 13% expected them to increase (up from 12%) and 10% anticipated a decrease (up from 12%).

On average, 41% 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 40% of consultants were satisfied and a further 11% were very satisfied with web collaboration systems.

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PQC tender activity

Tender activity for Queensland Government building projects over $500,000 averaged 4.5 tenderers per project in the March quarter 2017, decreasing from 5 tenderers per project in the December quarter 2016. Looking at open tenders accepted in the March quarter 2017 (by value) compared to the December quarter 2016, the breakdown by project type was 40% for recreational (up from nil), 35% for education-schools (down from 77%),15% for authorities (e.g. police stations, court buildings, up from 5%), 5% for hospitals/health/welfare (down from 9%), 3% for residential (previously 3%) and 2% for administrative/offices (up from 1%). There was nil activity for education-colleges (down from 2%), civic (down from 3%) and industrial/transport (previously nil).

The Brisbane and Far North regions accounted for the largest proportions of all open tenders (by value) in the March quarter 2017 with respective shares of 53% (up from 29%) and 15% (up from 12%). This was followed by the Moreton South/Gold Coast (9% up from 1%), Fitzroy (7% up from 3%), Wide Bay Burnett (5% up from 4%), Mackay (5% up from 2%), Darling Downs (4% up from 1%) and Moreton North/Sunshine Coast regions (2% down from 6%). No activity was recorded in the Northern (down from 39%) and North West regions (down from 3%).

Tender activity in the March quarter 2017 was slightly higher than the average for recreation projects and within the Brisbane and Moreton South/Gold Coast regions.

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Building material cost comparison

In the March quarter 2017, the only materials monitored by the Department of Housing and Public Works that recorded an increase from the previous quarter were 25mpa concrete (1.3%) and mild steel sections - beams. No materials recorded a decrease from the previous quarter. According to the Cordell Building Cost Guide, between March quarter 2016 and March quarter 2017 the most significant cost increases were in float glass tinted – 4mm thick (13.4%), 25 mpa concrete (4.8%) and reinforcing steel mesh (2.6%). During this period no materials recorded a cost decrease.

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Industry news

The Building Construction and Maintenance (BCM) Category team is working with an Industry reference group to improve, support and enable BCM procurement outcomes.  At the most recent meeting the HPW Director-General outlined the role of the CEO Leadership Board and government’s broader objectives.  New technology was trialed at the last meeting that enabled attendees to use their phones to poll share their views on a variety of questions. This provided a collaborative method to start conversations and enabled the group to prioritise the areas on which to focus on into the future. The group was also addressed by the A/Assistant Director-General Queensland Government Procurement on the role of the Procurement Industry Advisory Group and how input from industry is fed into this group. An update on the Queensland Procurement Policy and what this means for industry was also provided.

Queensland Building Plan

The Queensland Building Plan - A discussion paper for industry and consumers  was launched in November 2016 to seek feedback on the building industry reforms being considered by government including security of payment, Queensland Home Warranty Scheme, Plumbing and Drainage Act reform, Queensland Housing Code/Reconfiguring a Lot Code, building certification, non-conforming building products, inclusive communities, liveable housing design, licensing reforms and sustainable buildings.

Over a four-month consultation period which ran from 30 November 2016 to 31 March this year, the Department of Housing and Public Works conducted 15 public consultation sessions, 19 targeted deep dive sessions and 26 promotional events.  The information received at these sessions, along with over 800 written submissions and over 1700 responses to an online engagement website, provided feedback on the ten areas of reform under consideration.

The level of consultation undertaken by the department ensured that Queenslanders were given every opportunity to have their say and be involved with this important plan for Queensland’s future.

The QBP will be a comprehensive, strategic plan for a safer, fairer, and more sustainable industry that creates job opportunities and economic growth, increasing consumer and industry confidence.

 

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Last updated 23 August 2017    Creative Commons Attribution 4.0 International (CC BY 4.0)


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