Queensland’s major construction projects set to decline 40%

Major construction projects in Queensland are predicted to decline by more than $7.5 billion, the President of the Queensland Major Contractors Association (QMCA) has said.

The 2013 Major Projects Report - Queensland Engineering Construction Outlook has found the amount of construction work carried out on major projects in the state will fall from $18.5 billion in 2012-2013 to $10.9 billion in 2016-2017 - a decline of 40%.

Tony Hackett, President of the QMCA, said that, while the report is only a forecast, it is based on reliable current data and highlights many serious challenges for industry over the next four years.

“Importantly, the report finds that the total volume of work over the forecast period has remained relatively unchanged but acute uncertainty now surrounds the timing of a significant number of new projects, with many pushed back and a large number remaining unfunded,” Hackett said.

“This will herald many new complex challenges for the industry as it seeks to adjust to this shifting landscape.”

The report’s major findings include:

• Major projects employment will peak over the next 12-18 months at some 24,700 people before declining to around 17,000 by 2017;
• Heightened global economic turbulence will continue to factor heavily in investment decisions in major projects;
• Escalating costs over several years and falling commodity prices have combined to undermine the competitiveness and financial feasibility of the next round of projects;
• Labour costs have grown substantially in Queensland over the past decade; in 2003 the state had construction wages 4.3% lower than the national average, but the forecast reveals they are likely to be 8.6% higher by 2017.

Hackett said the challenges industry will confront over the next five years will require a new level of cooperation between all industry stakeholders. He called on governments to take the lead in coordinating efforts to assist industry grapple with the high levels of uncertainty.

The report was prepared by BIS Shrapnel for QMCA and Construction Skills Queensland.