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 Public Works.

Reader Survey

In the next month or so, we'll be seeking readers' feedback to help improve and develop the Bulletin. By taking a few minutes to complete this quick survey, you'll be helping us to make sure the Bulletin better suits your needs.
Queensland regional construction activity update

The December quarter update from the National Institute of Economic and Industry Research (NIEIR) shows that total Queensland construction activity is estimated to have grown by 11.9% in 2005-06. The projected growth for Queensland construction in 2006-07 is 7% followed by an estimated 7.3% growth in 2007-08. The main driver of construction activity in Queensland during 2005-06 was engineering construction which represented 65% of the total growth in activity, compared to non-residential and residential building which represented 28% and 7% of growth respectively. In 2006-07 engineering construction and non-residential building expenditures are expected to contribute 40% and 38% respectively to total construction growth, with an expected recovery in dwelling construction increasing this sector’s share of total growth to 22%. With non-residential approvals remaining at high levels in late 2006, the growth in non-residential building between 2005-06 and 2007-08 is projected at 26%. NIEIR estimates that the skilled labour shortage reached 30,000 persons in 2005-06 and although increases in engineering and non-residential building activity are forecast through to 2009, it is anticipated that labour shortages will remain around 34,000 persons through to June 2008 due to the continued inflow of workers from NSW and Victoria.  As a result of this NIEIR advises that capacity constraints will continue and the growth in total construction costs is forecast to remain around 2% per annum until an expected economic decline post 2009.

[View quarterly report ] [View NIEIR Annual Report 2006]
DPW Contractor Survey

After showing improvement through the course of 2006, the extent of subcontractor shortages appears to have worsened slightly in the December quarter. Over half of the contractors interviewed in the December quarter experienced difficulties employing subcontractors (55%, compared with 44% in September 2006) matching the December 2005 level. It does however remain below the highs seen in 2004 and 2005. Regions reporting difficulties obtaining subcontractors were those of Far North (78%), Wide Bay Burnett (100%), Fitzroy (75%) and Darling Downs (100%), with the Sunshine Coast continuing to show much lower difficulty (14%). Other regions better placed than average were Brisbane (47%), Mackay (50%), Gold Coast (50%) and the Central West (50%). Like September quarter 2006, subcontractors most likely to be in short supply were carpentry (43%), plumbing (48%) and electrical trades (48%). Plumbing remained at an all time high, with increases also reported for concreting (48%) and wall and floor tiling (46%). Consistent with the September quarter, project delays and increasing project costs were reported by 75% of contractors experiencing subcontractor shortages. Contractors in most regions continue to operate close to capacity, with this estimated at 81% on average, of their total capacity, easing marginally over the last quarter, down from 86%. Half continue to anticipate workloads increasing over the coming quarter, particularly residential multi-unit high density contractors, where all felt workloads would increase in the short term. The outlook for building costs has improved over the last six months, although higher costs are still anticipated by the majority. Currently 65% feel costs will rise, compared to 71% in September, 81% in June and 64% in March.

[ View the full report ]
PQC Tender Activity

Although the total number of tenders more than doubled in December quarter 2006 from September quarter 2006, the average number of tenderers per project declined only slightly from 4.2 to 3.8 respectively. Similarly to the previous quarter, this appears largely to be the result of the type of work available to tender for during December quarter. There was strong interest from prequalified contractors to tender for housing projects, particularly within the Brisbane region. Difficulties however, are still being reported with regard to projects in the regional areas of Queensland, with many projects continuing to attract only a small number of tenders.

[ View the table ] Building Price Movement Forecast

The Department of Public Works has forecast building cost increases of between 1% and 2.5% per quarter in the period to June 2008.

[ View the table ]

Building Materials Cost Comparison

During December quarter 2006 there were cost increases in 25mpa concrete (3%) and mild steel sections – beams (0.3%). According to Reed Construction Data, there has been an increase during the last 12 months in the cost of all building materials monitored by DPW except for F14 structural timber and float glass tinted – 4mm thick. The most significant increases have been in mild steel sections – beams (7.5%), aluminium windows - fixed (7.2%), 200mm standard concrete block (4.2%) and 25mpa concrete (4%).

[ View the full table ]Building Policy/Legislation News

Online Project Search

The Department of Public Works is committed to keeping the building industry up to date with the latest information about current and future capital works building projects. This is achieved through the regular updating of the Online Project Search facility.

The Online Project Search facility can be accessed by anyone and provides:

• updated information on the status of current and future Queensland Government capital works building projects undertaken across Queensland;
• full searchability of all building opportunities utilising a wide range of criteria;
• the ability to search for individual projects by name;
• customised lists of projects created by the user; and
• project commentary.

Capital Works Management Framework (CWMF)

On 18 December 2006, the Building Policy Unit released a new CWMF Policy Advice Note titled Rectification of building defects or omissions after final completion. The purpose of the Note is to provide advice to government departments to assist them in addressing defects or omissions that emerge after final completion of their building projects.

A CWMF News Brief titled Increase to the monetary threshold for financial capacity assessments of building industry contractors was also released in December 2006. This covers the increase to the threshold for financial capacity assessments of building industry contractors for government building projects to $500,000 from the previous threshold of $250,000, in line with the significant increases that have occurred in building costs since the introduction of the CWMF in 1999.

Both documents are available on the www.build.qld.gov.au website under the Capital Works Management Framework.

Independent Contractors Bill 2006

On 5 December 2006, Federal Parliament passed the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Among other things, the legislation overrides state and territory laws which deem independent contractors as employees and prohibits sham arrangements whereby employers knowingly seek to disguise employment relationships as independent contracting arrangements. For further information, click here.

New workplace health and safety obligations for clients, designers, project managers and principal contractors

In November 2005, the Workplace Health and Safety Act 1995 was amended to align the regulatory requirements for construction work with the National Occupational Health and Safety Standard for Construction Work (NOHSC: 1016, 2005). Among other things, these amendments extend workplace health and safety obligations to persons with responsibility for construction work such as clients and project managers in addition to existing obligations on designers and principal contractors. These new obligations take effect from 1 July 2007. For more information click here.

Financial requirements guideline being revised

The guideline outlining how financial capacity assessments are undertaken on building industry contractors seeking to undertake Queensland Government building projects is currently being revised. For more information click here.