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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 32, June 2012

Issue 32, June 2012

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 June quarter 2012 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2010-11 and 2011-12 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) grew by 5.3% to $45.8 billion and 16.4% to $53.4 billion respectively.

In 2012-13, NIEIR’s forecasts indicate that Queensland construction industry activity should increase by 5.8% to $56.4 billion with all growth contributed by the engineering construction sector. Following the completion of a number of engineering projects in 2013-14 a decline of 1.3% to $55.7 billion is projected for the industry.

The outlook for dwelling construction expenditure continues to remain subdued. NIEIR’s forecasts indicate total private dwelling construction decreased by 1.4% to $13.8 billion in 2011-12. The current low level of approvals is unlikely to result in any significant improvement in new dwelling construction in Queensland for 2012-13 with total private dwelling construction projected to increase by only 0.1% to $13.9 billion.

Significant falls are expected in the short-term outlook for the public and private non-residential building sector.  2011-12 represented the first decline since 2003 in total non-residential building construction expenditures with a fall of 12.7%. NIEIR have forecast further falls in 2012-13 (11.4%) and 2013-14 (7.1%).

Resource-based engineering expenditures are expected to be the driver for Queensland’s construction industry in the short term. The total increase in engineering construction expenditure in 2011-12 was 38.5% to $32.6 billion with heavy industry contributing 93% of the growth. In 2012-13 NIEIR forecast a further increase of 11.8% to $36.5 billion with heavy industry explaining half the growth and the remainder coming from contributions from roads, rail and harbours and electricity generation.

Department of Housing and Public Works — Contractor Survey

The proportion of contractors reporting overall difficulties employing subcontractors in the June quarter 2012 fell to 13% from the 15% reported in the March quarter 2012. The proportion of contractors having difficulty finding suitably experienced or qualified subcontractors was 24% (25% in the March quarter).

The split of views among those experiencing subcontractor shortages during the June quarter showed about a 55/45 spread, with 55% of all respondents (down from 72% in the March quarter) indicating it was an issue in a small number of trades and the remaining 45% (up from 28%) perceiving this was the case across the trades. The most mentioned trades among those experiencing difficulty employing subcontractors were carpentry, electrical and concreting.

Among those respondents who were experiencing subcontractor shortages, 55% identified an ‘increase in subcontractor rates resulting in higher project costs’ and 45% identified ‘project delays’ as the main impacts from a lack of subcontractors.

On average, contractors estimated they were operating at 64% of total capacity in the June quarter (59% in the March quarter).

Just over 20% of contractors surveyed believed their workload increased in the previous three months. Almost half the respondents (51%, up significantly from 39% in the March quarter) believed their workload had either slightly (22%) or considerably (29%) decreased. Looking ahead to the September quarter, only 24% of contractors surveyed expected their workload to increase (down from 49% in the March quarter 2012). About two thirds expected their workload either to stay the same (35%) or decrease (34%) in the next three months.

Forty-four percent (44%) of contractors surveyed expected labour costs to rise and 45% expected labour costs to stay the same in the next three months.

The majority (78%) of contractors expected building material costs to rise over the next three months while only 16% expected them to stay the same (down from 34% in the March quarter).

On average, contractors estimated that 42% of their workload over the past three months was on behalf of government (local, state or federal); up from 36% in the March quarter 2012.

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Department of Housing and Public Works — Consultant Survey

On average, consultants estimated they were operating at 70% of their full capacity during the June quarter (66% in the March quarter). Twenty-seven percent of the consultants surveyed thought their workload increased in the past three months while the 25% thought it had stayed the same. The remaining 48% (up from 28% in the March quarter) thought their workload had decreased during the same period.

Looking ahead to the coming quarter, 22% of consultants expected their workload to increase (down from 37% in the March quarter) and 45% expected it to remain the same. Significantly increasing from 17% in the previous quarter, 30% of consultants expected their workload would decrease.

The majority of consultants surveyed (63%) stated they would maintain their current staff numbers, whilst 30% indicated their firm was looking to increase staff numbers and the remaining 7% expected to reduce staff numbers.

The survey found 67% of the consultants surveyed (40% “yes” and 27% “somewhat”) stated they were currently experiencing difficulties in finding work (up from 65% in the March quarter). By main type of consultant work undertaken, Building Designer/Architecture firms appeared to be experiencing greater work shortages compared to other consulting firms (58% for both vs 40% all type firms). Multi-disciplinary Engineering firms appeared less likely to be experiencing work shortages compared to other consulting areas (67% vs 33% all type firms).

Of the consultants surveyed, 50% believed consultant fees would stay the same over the next three months (down from 70% in the March quarter), while 33% indicated they would decrease (up from 17% in the previous quarter). The remaining 17% believed the fees would increase (up from 13%).

On average, 21% of consultants’ projects involved the use of online programs and the survey also found 47% of consultants were satisfied with web collaboration systems.

Consultants estimated that 31% of their workload over the previous three months was for the government (up from 28% in the March 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 June quarter 2012, remaining the same as the March quarter 2012. Although this figure represents a decline from an average of 8.2 tenderers per project between June quarter 2011 and December quarter 2011, it is 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 June quarter (by value) compared to March quarter 2012, the breakdown by project type was, 29% for residential (down from 40%), 25% for hospitals/health/welfare (down from 26%), 18% for administrative/offices (up from 16%), 13% for education/schools (up from 3%), 13% for education/colleges (up from nil) and 2% for authorities (down from 15%).

The Brisbane and Far North regions accounted for 42% (up from 19%) and 15% (down from 18%) of open tenders (by value) respectively in the June quarter. The Mackay region represented 11% (up from 3%) and Wide Bay Burnett and the Northern regions 8% each (up from 2% and down from 20% respectively) The remaining 16% was dispersed across the other regions.

Tender activity in the June quarter was notably higher than the average in the Moreton South/Gold Coast and Moreton North/Sunshine Coast regions. By project type, the average number of tenderers for hospitals/heath/welfare 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 June quarter 2012. Price rises are, however, anticipated from March quarter 2013, with the Department forecasting quarterly increases of between 0.5% and 1.5% through to March quarter 2015.

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Building Materials Cost Comparison

During the June quarter 2012, the only material monitored by the Department of Housing and Public Works that increased in cost was 25mpa concrete (6.1%). There was a decrease in the cost of both f8 pine (-15%) and face brick – settler range (-4.4%). The cost of the remaining materials remained unchanged.

According to Reed Construction Data, the most significant cost decrease between the June quarter 2011 and the June 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%) and 25mpa concrete (19.5%). The cost of both aluminium windows — fixed and float glass tinted remained unchanged.

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Building Policy News

Engagement of Building Industry Consultants by Government – Contract Update

The Department of Housing and Public Works’ suite of building contracts has recently been updated to provide, as the standard form consultancy agreement for use on government building projects for the engagement of building industry consultants, the use of the General Conditions of Contract for Consultants AS 4122 – 2010 (‘AS4122’) as amended by Special Conditions of Contract and Annexure.
 
A copy of the Special Conditions of Contract and Annexure to be read with AS4122 is available on the Department of Housing and Public Works website. If you have any queries, please contact the Contract Services unit on 3224 5256.
  
 


Last updated 07 September 2012    Creative Commons Attribution 4.0 International (CC BY 4.0)


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