Welcome to the Building Industry Bulletin

Queensland regional construction activity update

The June quarter update from the National Institute of Economic and Industry Research (NIEIR) shows that total Queensland construction activity grew by 11.5% to $31.9 billion in 2006-07. The projected growth for Queensland construction in 2007-08 is 8.9% followed by an estimated 5.9% growth in 2008-09. 

In 2006-07 engineering expenditures explained half of Queensland’s construction industry growth rate and this is expected to increase to over 60% in 2007-08. These percentages reflect the continuation of the resource development boom and the increase in large scale infrastructure projects to support the growth in Queensland’s population. 

NIEIR estimates that the skilled labour shortage reached 34,000 persons in December 2006. Although increases in engineering and non-residential building activity are forecast through to 2009-10, NIEIR anticipates that labour shortages will be contained and remain between 20,000 and 30,000 due to the continued inflow of workers from NSW and Victoria.

Cost pressures in the Queensland construction sector eased over 2006-07 with the annualised rate of real price increase falling from over 4% to between 1 and 2%. It is expected that they will intensify over the next few years moving towards 5% per annum though 2008.

[View NIEIR Annual Report 2007] (PDF 6,362kb)

DPW Contractor Survey

Results from the June quarter Contractor Survey showed a continued improvement in the outlook for subcontractor availability and its impact on construction projects. Less than four in ten (36%), the lowest level since the survey commenced in June 2004, experienced difficulties employing subcontractors. This is almost half the level recorded during the height of subcontractor difficulties in 2004 and early 2005.

The Far North region continued to be much more likely than other regions to report shortages with 62% of contractors experiencing difficulties, up from 46% last quarter. Whilst there were also shortages reported in the regions of Mackay (50%) and Wide Bay Burnett (50%), the Gold Coast (17%) and Sunshine Coast regions (0%) indicated much lower levels of difficulty.

Although the trades most likely to be in short supply were carpentry (55%), plastering (48%) and electrical (45%), the survey showed there was also pressure to attract plumbing, concreting and tiling subcontractors. This is the first quarter however, where decreases have been recorded across all trade categories suggesting a general improvement in subcontractor availability, even among those experiencing difficulty.

Contractors continue to operate under strong workloads, at approximately 79% of their total capacity. Whilst this is steady (80% in March quarter 2007) it does indicate a slight downward trend since the survey began. Forward workloads are seen as strong, with 61% anticipating increased workloads in the coming quarter and 34% expecting workloads to stay at current levels.

The survey showed widespread agreement among contractors (75%) that building material costs would increase in the short term. In contrast, the outlook for labour costs was less certain with 44% expecting labour costs to increase and 51% expecting them to stay the same.

[ View the full report ]

PQC Tender Activity

Tender activity remained steady during June quarter 2007, with the average number of tenderers per project staying at 4.6, representing no change from March quarter 2007. As with the previous quarter, this largely appears to be the result of the type of work available to tender for during the quarter.

Once again there was strong interest from prequalified contractors to tender for housing and commercial fit-out projects, particularly within the Brisbane region. Difficulties are however, still being reported with regard to projects in the regional areas of Queensland, with many projects continuing to attract only a small number of tenderers.

[ View the table ]

Building Price Movement Forecast

Whilst the Department of Public Works did not anticipate any increase in building costs during June quarter 2007, increases of between 1.5% and 2.5% per quarter have been forecast during the period between September quarter 2007 and June quarter 2008.

[ View the table ]

Building Materials Cost Comparison

During the June quarter 2007, F14 structural timber was the only building material monitored by the Department to increase in cost, rising by a significant 11.8%.

According to Reed Construction Data, there has been an increase during the last 12 months in the cost of all building materials monitored except for aluminium windows - fixed and float glass tinted - 4mm thick.

The most noteable increases during this 12 month period have been F14 structural timber (11.8%), 25mpa concrete (8.4%) and mild steel sections - beams (7.6%).

[ View the full table ]

Building Policy/Legislation News

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

On 1 July 2007, amendments to the Workplace Health and Safety Act 1995 commenced which impose new workplace health and safety obligations on persons with responsibility for construction work. The amendments create two new classes of obligation holder – clients and project managers – and strengthen the existing obligations of designers and principal contractors.

The Department of Public Works has released a Capital Works Management Framework (CWMF) News Brief titled New workplace health and safety obligations for persons involved in construction work, which outlines these new obligations and their implications for government departments. The News Brief is available here.

In addition, Workplace Health and Safety Queensland has released a Guide to the workplace health and safety obligations of designers of structures to assist designers to understand and comply with their new obligations. The guide is available from the Department of Employment and Industrial Relations website.

Stage 2 of the Australian Government Building and Construction OHS Accreditation Scheme

The Building and Construction Industry Improvement Act 2005 (Cth) established the Building and Construction OHS Accreditation Scheme (the Scheme) for head contractors wishing to undertake Australian Government building projects. Stage 1 of the Scheme, which commenced on 1 March 2006, requires head contractors working on directly funded Australian Government building projects valued at $6m or more to be accredited with the Office of the Federal Safety Commissioner (OFSC).

Stage 2 of the Scheme will lower the threshold for directly funded projects to $3m, and will extend the application of the Scheme to projects indirectly funded by the Australian Government, subject to financial thresholds. It is proposed that Stage 2 of the Scheme will commence on 1 October 2007.

The introduction of Stage 2 of the Australian Government's Scheme will not affect the existing OHS requirements for building industry contractors under the Prequalification (PQC) System in regard to Queensland Government building projects fully funded by the State.

A Fact Sheet on Stage 2 of the Scheme is available here. More general information on the Scheme can be obtained on the OFSC website at www.fsc.gov.au.

Introduction of Contractor PQC: Entry Level Application Form for Registration on the Prequalification (PQC) System

The Department of Public Works' PQC Registrar has recently released a new entry level application process for building contractors seeking prequalification for projects estimated to cost from $250,000 to $500,000.

For information on the entry level application process click here.