Skip links and keyboard navigation

Skip to primary navigation | Skip to secondary navigation | Skip to content | Skip to content | Skip to footer | Use tab and cursor keys to move around the page (more information)
Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 37, September 2013

Issue 37, September 2013

 

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 Update 

The September quarter 2013 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2012-13 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) grew by an estimated 4.1% to $58.4 billion.

According to NIEIR, Queensland construction activity is expected to remain stable at $58 billion over the 2013-14 and 2014-15 financial years. The average annual growth rate for total construction between 2012 and 2015 is projected at 1.1%, significantly lower than the average annual growth of 6% between 1993 and 2012.

After declining by 7.6% to $13.4 billion in 2012-13, total Queensland dwelling construction is projected to increase by 12.4% to $15.1 billion in 2013-14. The outlook is positive due to continued low interest rates. Strong growth in renovation expenditures of 16.6% in 2013-14 and 11.1% in 2014-15 is projected. Similarly, new private dwelling construction is forecast to increase by 16.2% in 2013-14 and 16.9% in 2014-15.

A continued decline in the short-term outlook for Queensland’s non-residential building sector is projected with falls of 3.6% in 2013-14 and 0.4% in 2014-15. The level of public non-residential building is forecast to decline in 2013-14 and 2014-15 by 30.6% (to $1.3 billion) and 10.2% (to $1.2 billion) respectively. Private non-residential building is forecast to increase in 2013-14 and 2014-15 by 7.5% (to $5.2 billion) and 2.2% (to $5.3 billion) respectively.

Despite growth of 6.7% (to $6.1 billion) and 31.4% (to $8.1 billion) projected for public sector engineering in 2013-14 and 2014-15, total engineering construction for Queensland is forecast to decline by 4.1% (to $36.6 billion) and 5.8% (to $34.5 billion) over these two financial years. Private sector engineering construction is projected to fall by 6.1% (to $30.5 billion) in 2013-14 followed by a further fall of 13.3% (to $26.4 billion) in 2014-15.

The slow construction sector, particularly the labour intensive dwelling construction sector is expected to ensure the Queensland construction labour market will continue to experience labour surpluses over the next two years. During this period construction costs are also not expected to rise. 

 

 [Back to top]

 

Department of Housing and Public Works - Contractor Survey

The proportion of contractors who reported overall difficulties employing subcontractors remained at 13% in the September quarter 2013. In the same period 23% of contractors (down from 29% in June quarter) had difficulty finding suitably experienced or qualified subcontractors.

Of those contractors that experienced subcontractor shortages during the September quarter, the majority (60%) reported this to be in relation to all trades and 40% indicated it was in relation to a small number of trades. The most mentioned trades for those who experienced difficulty employing subcontractors were concreting and electrical. Among those respondents who experienced subcontractor shortages, 55% identified an ‘increase in subcontractor rates resulting in higher project costs’ and 35% identified an ‘influx of unskilled personnel’ as the main impacts from a lack of subcontractors. This is the first time since September 2009 that an ‘influx of unskilled personnel’ has been recorded higher than the third greatest response 

On average, contractors estimated they were operating at 59% of total capacity in the September quarter (up from 58% in the June quarter).

The majority of respondents (40%) reported their workload had decreased in the past three months, a slight increase from the previous quarter (38%). The proportion that indicated that their workload had stayed the same (28%) or increased (33%) remained stable relative to the previous quarter. Looking ahead to the December quarter, 46% of contractors surveyed expected their workload to increase (up from 34% in the previous quarter). A further 41% of contractors expected their workload to stay the same (up from 35% in the previous quarter). Only 8% of contractors expected a decrease in workload, the lowest proportion since the survey commenced.

The large majority of contractors surveyed (75%) expected labour costs to stay the same over the next three months (up from 63%). Almost a quarter of respondents (23%) expected labour costs to increase over the next three months (up from 20%) and no respondents expected any decrease in costs compared to 15% in the previous quarter.

A significantly higher proportion of contractors in September quarter indicated they expected building material costs would increase over the next three months (69% up from 49%). More than a quarter (28%) expected building material costs would stay the same and no respondents expected them to decrease in the same period.

On average, contractors estimated that 33% of their workload over the past three months was on behalf of government (local, state or federal). 

 

  [Back to top]

 
 

Department of Housing and Public Works - Consultant Survey

On average, consultants estimated they were operating at 65% of their full capacity during the September quarter (down from 66% in the June quarter).Thirty-seven percent (37%) of consultants surveyed indicated their workload had decreased in the past three months (up from 30%). Similarly, 32% of consultants thought their workload had increased (down from 38%) while a further 32% thought it had remained the same.

Looking ahead to the next quarter consultants continued to remain positive with 50% of consultants indicating they expected their workload to stay the same (up from 42%). A further 38% (up from 28%) anticipated their workload to increase (up from 28%) and the remaining 12% expected a decrease in workload (down from 27%).

The majority of consultants surveyed (73%), stated they would maintain their current staff numbers (down from 82% in the June quarter). Encouragingly, 25% of respondents (up from 15%) indicated their firm was looking to increase staff numbers and only 2% expected to reduce staff numbers.

The survey found 67% of the consultants surveyed (45% “yes” and 22% “somewhat”) stated they were currently experiencing difficulties in finding work. By main type of consultant work undertaken, Building Designer/Architecture firms appeared to be experiencing greater work shortages compared to other consulting firms (78% of consultants in this sub-group).

Of the consultants surveyed, 73% believed consultant fees would stay the same over the next three months (up from 67% in the June quarter), while 13% indicated they would decrease (down from 27%). The remaining 13% believed the fees would increase (up from 7%).

On average, 32% of consultants’ projects involved the use of online programs with the survey also finding 33% of consultants were satisfied with web collaboration systems (down from 48% in the previous quarter).

Consultants estimated that 31% of their workload over the previous three months was for the government (up from 23% in the June quarter). 

 
 

PQC Tender Activity

Tender activity for Queensland Government building projects over $500,000 averaged 7.2 tenderers per project in September quarter 2013, increasing from 5.2 tenderers in June quarter 2013. Tender activity averaged 5.8 in the March and June quarters of 2012 before rising to an average of 7.5 tenderers per project between September quarter 2012 and March quarter 2013.

Looking at open tenders accepted in the September quarter 2013 (by value) compared to June quarter 2013, the breakdown by project type was, 59% for education - schools (up from 46%), 23% for hospitals/health/welfare (up from 4%), 8% for residential (up from 3%), 7% for education – colleges (up from 6%) and 3% for authorities (down from 40%).

The Brisbane and Northern regions accounted for the largest proportion of all open tenders (by value) in the September quarter with shares of 36% (down from 44%) and 24% (up from nil) respectively. This was followed by the Moreton South/Gold Coast (13% up from 2%), Darling Downs (11% up from 3%) and Fitzroy regions (5% down from 27%). The remaining 11% of tenders for the September quarter were accepted in the Wide Bay Burnett (5% up from nil), North West (2% down from 3%), Mackay (2% up from nil), Far North (1% down from 14%) and Moreton North/Sunshine Coast regions (1% down from 7%).

Tender activity in the September quarter was notably higher than the average in the Brisbane, Moreton South/Gold Coast, North West and Northern regions. By project type, the average number of tenderers for authorities and education - schools was higher than for other project types during the quarter. 

  

 
 

Building Materials Cost Comparison

During the September quarter 2013, the material monitored by the Department of Housing and Public Works that recorded the largest increase in cost was reinforcing steel mesh (17.4%). Mild steel sections – beams, F8 pine 90mm x 35mm and float glass tinted – 4mm thick recorded smaller increases of 3.2%, 1.3% and 0.33% respectively. The materials that decreased in cost were 200mm standard concrete block (-3.9%), 25mpa concrete (-2.3%) and aluminium windows – fixed (-0.43%).

According to the Cordell Building Cost Guide the most significant cost increases between the September quarter 2012 and September quarter 2013 were in reinforcing steel mesh (107.1%) and face brick – settler range (5.0%). During this same period the most significant cost decreases were in F8 pine 90mm x 35mm (-10.2%) and 25mpa concrete (-4.7%). 

  

 
 

Building Policy News

Amendment to the Capital Works Management Framework

The Capital Works Management Framework is the key policy for managing risks in the planning and delivery of government building projects. It gives effect to the Whole-of-Government Prequalification (PQC) System for building industry contractors and consultants.

To streamline and improve government procurement processes, the Department of Housing and Public Works has recently amended the Capital Works Management Framework in relation to maintenance contracts.

Low risk maintenance contracts (PQC service risk rating 1 or 2) will no longer be subject to the requirements of the Capital Works Management Framework, including those related to the PQC System.

However, high risk/significant maintenance contracts (PQC service risk rating 3 or 4) will continue to be subject to the requirements of the Capital Works Management Framework including the requirement for departments to use the PQC System to engage prequalified contractors for such contracts that exceed $500,000 in value.

While not being subject to the requirements of the Capital Works Management Framework, any future low risk maintenance contracts exceeding $500,000 should be procured in line with the general requirements prescribed in the Queensland Procurement Policy.

The Capital Works Management Framework is available on the Department of Housing and Public Works website. It accompanies the Government’s policy for managing the maintenance of government buildings, the Maintenance Management Framework, in promoting best practice building asset management in the public sector.

If you have any queries, please contact Building Policy Unit on 3224 5482. 

 
 
 
 


Last updated 04 November 2013    Creative Commons Attribution 4.0 International (CC BY 4.0)


Copyright |  Disclaimer |  Privacy |  Right to information |  Accessibility |  Jobs in Queensland |  Other languages

© The State of Queensland – Department of Housing and Public Works 2009–2019

Queensland Government