A mid-term snap shot on the outlook for major engineering construction projects and activity in Queensland, undertaken by BIS Shrapnel, has found the State’s civil and engineering construction industry is headed for more challenging times than previously expected.
The report, commissioned by the QLD Major Contractors Association (QMCA) and Construction Skills QLD (CSQ), found the amount of civil and engineering construction work carried out on major projects (with a total cost of $100m or greater) would fall by 53 per cent from 2013/14 to 2016/17 rather than the 40 per cent earlier predicted.
The report updates the 2013 Major Projects Report: Queensland Engineering Construction Outlook released in February this year.
“Since the 2013 Major Projects Report was released economic conditions have worsened more than anticipated both at the global and Australian level,” BIS Shrapnel’s Adrian Hart said.
“Weaker commodities prices coupled with a high cost base has seen further project deferrals in the mining sector, resulting in a weaker major project forecast over the next two years than previously anticipated.”
The report shows that following a peak of $17.9 billion in 2012/123 Major Project work done is anticipated to decline each year, with work done falling to $8.5 billion by 2016/17. This represents a 53% decline from the 2013/14 peak.
Queensland Major Contractors Association President Tony Hackett said the report confirmed there would be serious challenges for industry over coming years.
“With construction a key pillar of the State’s economy, sustaining thousands of Queensland jobs, sustainability of the industry is critical. A slow-down in civil and engineering construction will also impact an extensive supply network,” he said.
Mr Hackett argued that key priorities of all governments should include research into non-government infrastructure funding models, and developing programs of “shovel ready” projects to fill out the anticipated decline in order books.
“This needs to be supported by complimentary changes to key productivity levers, including reducing unnecessary industry regulations, resolving unaligned elements of the Workplace Health and Safety and Coal Mine Safety and Health Acts, streamlining unproductive workplace practices, re-considering inefficient contracting arrangements and ensuring the industry has the right mix of skills and competencies to meet future demand,” added Mr Hackett.
The challenges faced by industry in managing structural change are mirrored by the changes in industry training and development. Construction Skills Queensland CEO Brett Schimming said that the report continues to signal the next big shift in skills development for the industry.
“Because what we build changes what we train, this has seen a distinct shift in our training pipelines from traditional trades to occupations such as plant operators, electricians and welders – trades in high demand on major projects,” said Mr Schimming.
“Making that shift has been difficult for industry, with existing workers needing to access upskilling and gap training to remain attractive to employers. Now it’s clear that there will be a shift back from major infrastructure activity, which will in turn realign training priorities.”
“Construction is already a volatile industry; any steps that can be taken to smooth out the boom/bust cycle for major project activity would have a profoundly positive effect on sustainable skilling strategies, including apprenticeships and traineeships,” concluded Mr Schimming.