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.
NIEIR Queensland regional construction activity update

According to the latest update from the National Institute of Economic and Industry Research (NIEIR), the immediate short term outlook is one of continued growth for Queensland construction activity, albeit at a significantly reduced growth rate compared to the last few years.

Total activity in the construction sector is projected to increase by 4.7% in 2005-06 and 7.6% in 2006-07, compared to 8.1% in 2004-05.The only significant change to the projections since the December quarter Bulletin has been a downward revision to the forecast for total activity in 2005-06 (6.8% to 4.7%). This is not a result of underlying demand but is due to the likelihood that capacity constraints will restrict the growth in engineering expenditures. The delayed expenditures in 2005-06 have however, increased the projections for 2006-07 from 6.4% to 7.6% growth in total construction activity. According to NIEIR, skilled labour shortages are easing, albeit fairly slowly. Although in December quarter 2005 the level of skilled labour shortage was estimated to be 22,600 persons, which was 11,000 persons less than December quarter 2004. The continued growth in total construction in Queensland is projected to leave the level of labour shortages somewhere between 23,000 and 27,000 persons. As a result of this, NIEIR believe it is difficult to be optimistic about the rate of construction cost inflation. NIEIR project real quarterly cost inflation in Queensland to be around 0.8% per quarter over 2005-06, rising to 1.0% per quarter in 2006-07.
[ View quarterly report ] [View NIEIR Annual Report 2005]
DPW Contractor Survey

The results of the March quarter Contractor Survey indicate that there has been some further easing of the sub-contractor shortage. Fewer than half (44%) of the contractors interviewed were experiencing difficulties obtaining subcontractors, a significant improvement since December 2005 (55%) and especially since the benchmark measure of 65% when the survey commenced in June 2004. Consistent with both the December and September 2005 quarters, the most acute shortages are still being reported in the Fitzroy region, with two thirds of respondents experiencing difficulties. The lowest difficulty rates occurred in the Sunshine Coast (20%) and Darling Downs (33%) regions. While there was a drop in the proportion of respondents experiencing trade shortages, the number of trades these respondents found difficulty engaging appears to have increased.  The sub-contractors most likely to be in short supply were in the carpentry and electrical trades. Contractors estimated that they are currently operating at 81% of their total capacity. There is an increased expectation that workloads will increase, with 66% of respondents predicting an increased workload over the next three months. Areas where workloads were expected to increase over the next three months included the South West and Gold Coast regions. The majority of respondents (64%) predicted an increase in building costs over the next three months, particularly respondents in the Gold Coast, South West and Far North regions.
[ View the full report ]
PQC Tender Activity

The pressure to attract tenderers appears to have eased slightly during March quarter 2006.  Although the total number of projects that went to tender in March quarter (91 projects) was more than double that of the December quarter 2005 (44 projects), the average number of tenderers increased to 2.9 per project compared to 2.6 per project in the December quarter. Difficulties, however, are still being reported with regard to projects in the regional areas of Queensland, with many projects continuing to attract only a single tenderer.

[ View the table ] Building Price Movement Forecast

The Department of Public Works has forecast a 1-2% increase in building costs per quarter in the period to June 2007.
[ View the table ]

Building Materials Cost Comparison

During March quarter 2006 there were cost increases in Aluminium Windows – Sliding (11.6%), 200mm standard concrete blocks (2.9%) and 25mpa concrete (1.0%). According to Reed Construction Data, there has been an increase in the cost of all building materials monitored by DPW in the 12 months to March 2006. The most significant increases have been in sliding aluminium windows (17.2%), 200mm standard concrete blocks (16.1%) and face bricks (settler range) (10.4%).

  [ View the full table ]Building Policy/Legislation News

Capital Works Management Framework Review (CWMF) Maintenance Management Framework Review (MMF)

The Building Policy Unit has developed Issues Papers for both frameworks following a stakeholder consultation phase. The Issues Papers present a series of proposed actions designed to enhance the frameworks and are anticipated to be released shortly for review and comment.

Policy Advice Notes (CWMF)

The three Policy Advice Notes mentioned in the last quarter issue of the Bulletin were released in March. These are available on the Works Division website www.build.qld.gov.au from the page covering the Capital Works Management Framework - refer links following for details:

"Estimate categories: An initiative to improve budget formulation for building projects" http://www.build.qld.gov.au/amps/AmpsDocs/estimating%20categories.pdf

"Forecasting cashflows when budgeting for building projects" http://www.build.qld.gov.au/amps/AmpsDocs/Forecasting%20cashflow.pdf

"Forecasting escalation in building costs: Calculating, documenting and reviewing allowances" http://www.build.qld.gov.au/amps/AmpsDocs/Forecasting%20escalation.pdf