Welcome to the Building Industry Bulletin

Queensland regional construction activity update

The March quarter update from the National Institute of Economic and Industry Research (NIEIR) shows that total Queensland construction activity grew by 13.7% to $34.3 billion in 2006-07. The projected growth for Queensland construction in 2007-08 is 4.8% to $36.0 billion, followed by an estimated 5.4% growth to $37.9 billion in 2008-09. There has been a downward revision from the December quarter 2007 report in the estimates for 2007-08. Heavy rainfall received in Queensland between December and March has resulted in a decline in the projected level of activity for 2007-2008 with many projects now expected to be completed during the 2009 fiscal year.

In 2007-08 the contribution of private and public engineering expenditures to total Queensland construction activity is expected to remain high at a 140% contribution. A net contribution for engineering of greater than 100% is due to both the dwelling and non-residential building sectors making small negative contributions to total construction growth. The dominance of engineering construction in driving the growth in Queensland construction is likely to continue into 2008-09, with engineering expenditures projected to contribute 83% to overall growth, non-residential construction expenditures explaining 27% and dwelling construction making a contribution of -9% to total growth. This reflects the continuation of the resource development boom, and the significant increase in large scale infrastructure projects to support Queensland’s population and industrial growth, as well as rising interest rates.

NIEIR estimates that in March 2008 the skilled labour shortage in the Queensland construction industry was around 14,000 persons and this is projected to increase to 21,000 by the end of 2008. According to NIEIR, the real rate of inflation averaged 1.7% (at annual rates) over the September and December quarters, and on a trend basis the increases have been fairly consistent across the sectors with the most significant gains in dwelling construction.

[View quarterly report] [View NIEIR Annual report 2007]

DPW Contractor Survey

The underlying trend in subcontractor shortages continues to improve with the results from the most recent Contractor Survey reporting the lowest shortages since the survey commenced in June 2004. In the March quarter 2008 survey 35% of PQC contractors reported difficulties sourcing subcontractors, down from 49% in December 2007 and 43% in September 2007.

For those experiencing shortages during the March quarter, this was evenly divided between those saying it was an overall shortage (44%) and those feeling it was concentrated in a small number of specific trades (56%). This is compared to the December quarter 2007 survey where 74% of respondents indicated shortages were being experienced across all trades. The carpentry, plumbing and electrical trades were mentioned most amongst those experiencing difficulty employing subcontractors and this was most likely to be within the residential and multi-level office sectors.

Workloads remain strong for PQC contractors, estimating on average they were operating at 81% of their total capacity, up from 79% in December quarter 2007. Although most contractors (85%) expected building material costs to increase over the next three months to June 2008, there was less certainty regarding increases to workloads (54% down from 66% in December quarter) and labour costs (60% compared to 66% in the December quarter).

The main impacts from subcontractor shortages continued to be increasing project costs and delays (noted by around 8 in 10 of those experiencing difficulties). Regions experiencing above average shortages during the March quarter included Far North, Mackay, South West and Wide Bay Burnett.

[ View the full report ]

PQC Tender Activity

Tender activity remained stable during the March quarter 2008 with a similar number of tenders called and total tenderers to December quarter 2007. This resulted in the average number of tenderers per project decreasing slightly to 4.0 from 4.3 in the previous quarter.

Whilst there was continued strong interest from prequalified contractors to tender for housing projects during the quarter, the average number of tenderers also increased for a wider range of project types including office accommodation and educational facilities.

Difficulties are however, still being reported with regard to projects in regional areas of Queensland, with many projects continuing to attract only a small number of tenderers

[ View the table ]

Projected Programmed Spend Per Week – Construction (New)

Information held in the whole-of-Queensland Government’s PQC System and Online Project Search can be used to project the dollar spend per week to meet current programmed milestones for government building projects.

Looking at the twelve month period between March quarter 2008 and March quarter 2009, the average weekly spend to meet the current construction program, on a straight line analysis, is approximately $18M per week (as at 23 April 2008).

It is projected that this weekly construction spend will peak to approximately $20M per week during the month of August 2008 with lower levels of approximately $15M at the end of the 2007-08 financial year and the beginning of December 2008.

Education, corrective services and health projects account for 62% of these projects by dollar spend over this time.

The Department of Public Works uses this data to identify opportunities for workload smoothing or bundling in regional areas of Queensland.

 [ View the graphs ]

Building Price Movement Forecast

The Department of Public Works forecasts indicate building cost movement for the March quarter increased 1% and it is anticipated that through the period to June quarter 2008 a further cost increase of around 1% will occur. Building cost rises are expected during 2008-2009 with the Department forecasting quarterly increases of between 1.5% and 2.5%.

[ View the table ]

Building Materials Cost Comparison

The only significant increase in Queensland building materials monitored by the Department of Public Works during the March quarter 2008 was in 25mpa concrete (5.4%).

Over the last 12 months, there has been no increase in the cost of aluminium windows – fixed, float glass tinted – 4mm thick and the 200mm standard concrete block.

According to Reed Construction Data, the most prominent increases during the last 12 months have been in F14 structural timber (28.7%) and 25mpa concrete (5.4%).

[ View the full table ]

Building Policy News

Maintenance Management Framework

The Maintenance Management Framework (MMF) is the Queensland Government's policy for managing building maintenance. The MMF comprises the policy document and a series of associated guidelines and policy advice notes.

The policy document has been recently revised and is available by clicking here. Briefings on the revised MMF are now available by arrangement.

Building Policy Unit is currently realigning the number, structure and content of the MMF guidelines and policy advice notes to reflect the changes made to the content and structure of the MMF policy document. Proposed activities for the next period include finalisation and progressive release of:

• Building Maintenance Policy, Standards and Strategy Development (a consolidated guideline comprising updated content from four existing guidelines)
  
• Building Condition Assessment (a revised guideline)
  
• Scope of Building Maintenance (a revised policy advice note)
  
• Capital or Expense (a revised policy advice note)
  

All revised guidelines and policy advice notes will be issued to departments in electronic format and made available on the Department of Public Works’ website, at the following link www.build.qld.gov.au.

For further information or to arrange a briefing on the revised MMF, please contact the Acting Principal Policy Manager, Building Policy Unit on telephone: 3224 8673.

2008-2009 Industry Guide: Queensland Government Building Projects

The Department of Public Works informs the building industry on the latest information about current and future capital works projects.

This is achieved, in part, through the production of the annual Industry Guide and the regular updating of the Online Project Search facility. The Online Project Search provides unrestricted access to updated information on the status of building projects undertaken across Queensland. This information is drawn from the PQC System.

While the 2008-2009 State Budget (Budget Paper 3) is being prepared and anticipated to be released in early June, it is timely that Queensland Government departments are reminded of the current policy requirement 1 within the Capital Works Management Framework, which relates to creating and maintaining accurate and current project records in the PQC System. All departments need to ensure that records of their building projects (where these are estimated to exceed $250,000) are created and maintained in the PQC System as soon as an allocation has been made in the budget. This will enable a seamless update of the Online Project Search with the 2008-2009 financial year data.

Should you have any queries with regards to recording programs, projects, contracts and tenders in the PQC System, please do not hesitate to contact the PQC Development Officer on 322 46553 or email BPU@publicworks.qld.gov.au.

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.