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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 47, March quarter 2016

Issue 47, March quarter 2016

Welcome to the Building Industry Bulletin

This 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 2016 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 21.8% to $50.7 billion. This was due to a $14.7 billion decrease in engineering construction, particularly in mining as the LNG project construction phase ends.

Total construction activity is forecast to fall by a further 10.9% to $45.2 billion in 2015-16, with dwelling construction expected to contribute over $2.7 billion to total construction growth. In addition, both non-residential and engineering construction are expected to have negative contributions of $194 million and $8.0 billion respectively, resulting in a decline of $5.5 billion for the total sector. This is forecast, however, to be followed by an increase of 6.6% in 2016-17 with growth in total construction activity expected in the residential and engineering sectors and no change expected in non-residential building from the previous financial year.

The outlook for Queensland's dwelling construction is positive due to continued low interest rates. After increasing by 8.5% to $16.2 billion in 2014-15, total dwelling construction is projected to increase by 16.9% to $18.9 billion in 2015-16 and 5.9% to $20.0 billion in 2016-17. Growth in new private dwelling construction of 19.9% in 2015-16 and 5.5% in 2016-17 is projected. Renovation expenditure is forecast to increase by 11.0% in 2015-16 and 6.2% 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 9.8% to $6.4 billion in 2014-15 and a further decrease of 3.0% to $6.2 billion is forecast for 2015-16. Non-residential activity, is however, expected to remain at $6.2 billion in 2016-17.

Total Queensland engineering construction activity decreased by 34.3% to $28.1 billion in 2014-15. Although a further decline of 28.6% is forecast for 2015-16, a 9.5% increase in activity to $22.0 billion is forecast for 2016-17.

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Department of Housing and Public Works—Contractor survey

The majority of contractors surveyed (78%) did not report overall difficulties in employing subcontractors in the March quarter 2016 (71% in December quarter 2015). In the same period 34% of contractors (up from 31% in December quarter) had difficulty finding suitably experienced or qualified subcontractors.

The most mentioned trades for those experiencing difficulty employing subcontractors were plastering, carpentry, and bricklaying. Among those respondents who experienced subcontractor shortages, ‘increased project costs due to an increase in subcontractor rates’ (61% of contractors up from 47%) and ‘project delays’ (36% of contractors down from 43%) were the most reported impacts mentioned by respondents.

On average, contractors estimated they were operating at 61% of total capacity in the March quarter (down from 71% in December quarter).

Forty one per cent of respondents reported their workload had decreased in the past three months, 31% indicated it had stayed the same and 27% thought it had increased. Looking ahead to the June quarter, 48% of contractors expected their workload to increase (up from 38%), 26% expected it to stay the same (down from 41%) and 20% expected it to decrease (up from 18% in the December quarter 2015).

Almost two thirds of contractors surveyed (65%) expected labour costs to stay the same over the next three months. An increase in labour costs was expected by 28% of respondents and the remaining 4% expected them to decrease in the next three months.

In terms of building material costs 51% of contractors expected an increase in the June quarter, 41% expected they would stay the same and 4% of respondents expected them to decrease in the same period.

On average, contractors estimated that 31% of their workload over the past three months was on behalf of government (local, state or federal).

Note: Percentages may not add due to rounding; Don’t know /Not sure percentages are not shown.

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Department of Housing and Public Works—Consultant survey

In the March quarter 2016 consultants estimated they were operating at 70% of their full capacity (unchanged from the December quarter 2015). Almost half of all consultants reported their workload had stayed the same over the past three months (45% up from 35%), 28% reported it had increased (down from 41%) and 27% (up from 19%) indicated it had decreased (17% slightly decreased and 10% considerably decreased).

Looking ahead to the June quarter, almost two thirds of consultants (60% up from 35%) anticipated their workload would stay the same, 28% predicted it would increase (down from 43%) and the remaining 12% of consultants expected their workload to decrease in the next three months (down from 19% in the December quarter).

The majority of consultants surveyed (73%), stated they would maintain their current staff numbers (up from 71% in the December quarter), 22% of respondents indicated their firm was looking to increase staff numbers (down from 24%) while 5% expected a decrease in staff numbers (up from 3%).

The survey found 45% of consultants were not currently experiencing difficulties finding work (down from 57%), almost a third (30%) of consultants were experiencing difficulties in finding work and 25% believed they were somewhat experiencing difficulties.

Of the consultants surveyed, 77% believed fees would stay the same over the next three months (up from 67% in the December quarter), while 17% expected them to decrease (no change from previous quarter) and 5% anticipated an increase (down from 14%).

On average, 43% of consultants’ projects involved the use of online programs with the survey also finding 32% of consultants were satisfied and a further 8% were very satisfied with web collaboration systems.

Consultants estimated that 32% of their workload over the previous three months was for the government (59% for the state government, 34% for local government and 8% for federal government).

Note: Percentages may not add due to rounding; Don’t know /Not sure percentages are not shown.

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PQC tender activity

Tender activity for Queensland Government building projects over $500,000 averaged 3.5 tenderers per project in the March quarter 2016, decreasing from 5.3 per project in the December quarter and 4.7 per project in the September quarter 2015. Tender activity had not averaged over 5.3 tenderers per project as reported in December quarter 2015 since September quarter 2014 when activity reached 6.1 tenderers per project.

Looking at open tenders accepted in the March quarter 2016 (by value) compared to the December quarter 2015, the breakdown by project type was 50% for education-schools (up from 37%), 40% for residential (up from 23%) and 10% for authorities (up from nil). There was nil activity for industrial/transport (down from 14%), hospitals/health/welfare (down from 12%) education-colleges (down from 12%), civic (down from 2%) and authorities and recreational (both previously nil).

Similarly to the previous quarter, the Brisbane region accounted for the largest proportion of all open tenders (by value) in the March quarter with a share of 44% (down from 64%). This was followed by the Far North (41% up from 26%), Moreton South/Gold Coast (9% up from nil), Fitzroy (4% up from nil) and Mackay regions (2% up from nil). The regions that recorded no tender activity in the March quarter compared to the previous quarter were the Darling Downs (down from 8%) and North West (down from 2%) regions.

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Building materials cost comparison

In the March Quarter 2016, the only materials monitored by the Department of Housing and Public Works that recorded a change from the previous quarter were 25mpa concrete which increased by 2.2% and face brick—settler range which increased by 1.0%. According to the Cordell Building Cost Guide, between March quarter 2015 and March quarter 2016 all materials monitored recorded a cost decrease. The most significant decreases were in face brick—settler range (6.9%), aluminium windows—fixed (6.6%), mild steel sections—beams (5.0%) and 25 mpa concrete (4.0%).

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Building news

Repairing or replacing roofs on houses

Damaging winds affect houses in many parts of Australia. So, for the safety and wellbeing of the occupants and to help reduce insurance claims and costs, it is important to ensure roofs on houses perform well under various wind conditions.

The James Cook University Cyclone Testing Station, with support from the Department of Housing and Public Works, recently released videos to provide homeowners and the building and construction industry with information on how to improve roof performance during severe wind events, such as storms and cyclones.

The videos are targeted to those who are building or replacing a roof. They form part of a broader community awareness and educational campaign that aims to increase human safety during storms and cyclones. The videos can be accessed on the JCU Cyclone Testing Station website.

The videos complement guidelines published by the Department of Housing and Public Works for builders and building certifiers to assist them repair or replace storm damaged roofs.

Security of Payment

The Government committed to reviewing security of payment for subcontractors in the building and construction industry, and to consult widely on the issue.

The Minister for Housing and Public Works released the Security of Payment Discussion Paper (discussion paper) on 17 December 2015. The discussion paper outlined options that may improve security of payment, including project bank accounts, retention trust fund schemes and education. The discussion paper also sought feedback on current legislation including the Subcontractors’ Charges Act 1974 and the Building and Construction Industry Payments Act 2004.

The Government conducted extensive consultation, conducting 40 formal and informal consultation sessions right across the State, from Mount Isa to Cairns and many places in between. The length and depth of this consultation shows just how committed the Government is to giving people a chance to have their say to improve security of payment.

Submissions to the discussion paper closed on 31 March 2016. Over 130 submissions were received, as well as extensive feedback which was gathered throughout the consultation sessions around Queensland.

The Government is now analysing the submissions and looks forward to discussing proposals that will bring about positive change for subcontractors.

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Last updated 28 July 2016    Creative Commons Attribution 4.0 International (CC BY 4.0)

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