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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 35, March 2013

Issue 35, March 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 March quarter 2013 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2011-12 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) grew by 20.4% to $55.8 billion.

In 2012-13, NIEIR’s forecasts indicate that Queensland construction industry activity should increase by 2.8% to $57.3 billion, with declines in both the non-residential and residential sectors and a much reduced contribution to growth from the engineering construction sector. Although NIEIR anticipates a healthy upturn in residential construction the following year, declines in both the engineering and non-residential construction sectors, indicate only a marginal increase in Queensland construction activity for 2013-14 (0.7% to $57.8 billion).

According to NIEIR total dwelling construction decreased by 2.0% to $14.5 billion in 2011-12. The current low level of approvals is unlikely to result in any significant improvement in new private dwelling construction in Queensland for 2012-13 with a further decrease in total dwelling construction of 2.2% to $14.2 billion projected. The outlook for new private dwelling construction is, however, expected to improve in 2013-14 with NIEIR forecasting total dwelling construction to increase by 12.7% to $16.0 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 7.9% to $7.1 billion. NIEIR have forecast further falls in 2012-13 (9.8% to $6.4 billion) and 2013-14 (6.7% to $6.0 billion).

The total increase in engineering construction expenditure in 2011-12 was 43.6% to $34.2 billion. NIEIR have forecast a further increase of 7.5% in 2012-13 to $36.8 billion followed by a decline of 2.6% to $35.8 billion in 2013-14.

Price growth for total construction in Queensland is expected to remain steady through to the end of 2013. NIEIR have also forecast labour surpluses in the construction sector over the next two years.

Department of Housing and Public Works - Contractor Survey

The proportion of contractors who reported overall difficulties employing subcontractors in the March quarter 2013 decreased to 10% from 14% in the December quarter 2012. The proportion of contractors that had difficulty finding suitably experienced or qualified subcontractors decreased to 23% from 29% in the same period.

Of those contractors that experienced subcontractor shortages during the March quarter, the majority (57%) indicated it was an issue in a small number of trades (the remaining 43% perceived this was the case across the trades). The most mentioned trades among those who experienced difficulty employing subcontractors were electrical and concreting.

Among those respondents who experienced subcontractor shortages, 71% identified an ‘increase in subcontractor rates resulting in higher project costs’ and 43% identified ‘project delays’ as the main impacts from a lack of subcontractors.

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

The majority of respondents (43%) reported their workload stayed the same in the past three months, an increase from the previous quarter (23%). Just more than a third believed their workload had decreased (11% slightly, 25% considerably). The remaining 20% said their workload had increased, which was significantly lower compared to last quarter (45%). Looking ahead to the June quarter, 41% of contractors surveyed expected their workload to stay the same, significantly greater than for the last quarter (28%).  Almost four-in-ten (39%) expected their workload to increase, while 17% said they expected their workload to decrease (8% slightly and 9% considerably).

Remaining stable since last quarter 26% of contractors surveyed expected labour costs to rise in the next three months compared to the large majority (60%) who expected them stay the same.

Also remaining stable from last quarter 58% of contractors expected building material costs to rise over the next three months. Just less than a third (31%) of the respondents expected them to stay the same and 8% expected them to decrease.

On average, contractors estimated that 37% of their workload over the past three months was on behalf of government (local, state or federal).

Department of Housing and Public Works - Consultant Survey

On average, consultants estimated they were operating at 68% of their full capacity during the March quarter (up from 66% in the December quarter). The majority of consultants (40%) surveyed thought their workload decreased in the past three months (up from 28%) while 32% thought it had increased (down from 38%). The remaining 28% (down from 35%) thought their workload had stayed the same.

Looking ahead to the coming quarter, 37% of consultants expected their workload to increase (up from 30% in the December quarter) and 42% expected it to remain the same (down from 47%). Remaining unchanged from the previous quarter 18% of consultants expected their workload would decrease.

The majority of consultants surveyed (75%), stated they would maintain their current staff numbers (down from 83% in the December quarter). Seventeen percent (17%) of respondents indicated their firm was looking to increase staff numbers and the remaining 7% expected to reduce staff numbers.

The survey found 68% of the consultants surveyed (45% “yes” and 23% “somewhat”) stated they were currently experiencing difficulties in finding work (up from 47% in the December quarter). By main type of consultant work undertaken, Building Designer/Architecture firms appeared to be experiencing greater work shortages compared to other consulting firms (70% of consultants in this sub-group).

Of the consultants surveyed, 68% believed consultant fees would stay the same over the next three months (up from 63% in the December quarter), while 18% indicated they would decrease (down from 22%). The remaining 12% believed the fees would increase (down from 13%).

On average, 30% of consultants’ projects involved the use of online programs with the survey also finding 50% of consultants were satisfied with web collaboration systems (consistent with 52% in the previous quarter).

Consultants estimated that 30% of their workload over the previous three months was for the government (up from 24% in the December quarter).

PQC Tender Activity

Tender activity for Queensland Government building projects over $500,000 averaged 7.2 tenderers per project in March quarter 2013, remaining unchanged from the December quarter 2012. During the period between March quarter 2011 and March quarter 2013 tender activity averaged 7.1 tenderers per project.

Looking at open tenders accepted in the March quarter (by value) compared to December quarter 2012, the breakdown by project type was, 42% for education/schools (up from 21%), 19% for residential (down from 26%), 17% for education/colleges (up from 7%), 13% for authorities (down from 22%), 4% for administrative/offices (up from 0%), 3% for hospitals/health/welfare (down from 24%) and 2% for recreational (up from 0%).

The Brisbane and Wide Bay Burnett regions accounted for the largest proportion of all open tenders (by value) in the March quarter with shares of 36% (up from 21%) and 29% (up from 0%) respectively. This was followed by the Fitzroy (9% up from7%), South West (8% down from 14%) and Central West (7% up from 3%) regions. The remaining 11% of tenders for the March quarter were accepted in the Northern (6% down from 14%), Darling Downs (3% down from 6%) and Far North regions (2% down from 13%).

Tender activity in the March quarter was notably higher than the average in the Brisbane and Darling Downs regions. By project type, the average number of tenderers for education/schools and administrative/offices projects was higher than for other project types during the quarter.

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 March quarter 2013. Price rises are, however, anticipated from June quarter 2013, with the Department forecasting quarterly increases of between 0.5% and 1.5% through to September quarter 2015.

Building Materials Cost Comparison

During the March quarter 2013, the materials monitored by the Department of Housing and Public Works that recorded an increase in cost were reinforcing steel mesh (66.4%), 25mpa concrete (4.7%) and mild steel sections - beams (4.2%). The only material that decreased in cost was face brick – settler range (-1%). The price of the remaining materials remained unchanged.

According to the Cordell Building Cost Guide the most significant cost increases between the March quarter 2012 and March quarter 2013 were in reinforcing steel mesh (66.4%) and mild steel sections – beams (4.2%). During this same period the most significant cost decreases were in F8 pine 90mm x 35mm (-15%), 25mpa concrete (-3.5%) and face brick – settler range (-2.4%). The cost of aluminium windows – fixed, float glass tinted and 200mm standard concrete block remained unchanged.

Building Policy News

The Department of Housing and Public Works’ Building and Asset Services will be launched on 1 July.

Building and Asset Services, as an ‘informed purchaser’ of building works for the Queensland Government, will work closely with industry to provide quality and cost-effective services to government-funded agencies and departments.

The division will procure and contract manage building works, and maintenance and facility services for schools, hospitals, police stations and other public facilities.

Professional services previously undertaken by the department will be outsourced, such as architecture, engineering and surveying.

Information about working with Building and Asset Services will soon be distributed to consultants and contractors listed on the department’s prequalification (PQC) register via email.

For more information, visit www.hpw.qld.gov.au.



Last updated 12 September 2013    Creative Commons Attribution 4.0 International (CC BY 4.0)


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