Construction works in progress reach decade highs

by Sophie Berrill
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Unprecedented construction activity is being seen across all sectors, in all Australian states and territories, according to a report from Rider Levett Bucknall. This trend is being led by decade highs in the value of work yet to be done, commencements, and projects under construction.

The Third Quarter 2022 report from the global independent construction, property and management consultancy says the Australian construction industry is at a “pivotal point”.

One of the key metrics measured, ‘Work Yet to be Done’, gives an indication of the building work yet to have been completed within the industry in Australia. According to the report, this has risen rapidly over the past five quarters, bringing it up to a record high of $187 billion (as at 31 March 2022). This value of these works in progress (cost to complete) has risen by $41 billion in the past twelve months, with all states contributing to these increases.

“This adds pressure on the already stretched workforce to complete the current undertakings and to provide sufficient resources to new projects commencing,” the report says.

Director Domenic Schiafone says this activity surge is being fuelled by “post Covid-19 legacies, including government funding of major projects (both state and federally led), delayed commencements of projects put on hold during the lockdown periods, and a slowdown in actual output of the industry on the East Coast due to labour shortages and abnormal weather conditions”. 

With already significant levels of work not being completed, the industry’s current and future capacity to deliver projects on time, on budget and on specification is fundamental for all property development decisions, RLB says. But these principles are now under stress.

Looking ahead

According to the report, supply chain instability, shipping costs and the battle to secure appropriate levels of skilled labour are all set to remain constant obstacles as we see out 2022 and move into 2023.

“Given the significant rise in both commencements and work yet to be done for 2022 across the country, strong activity should be seen in 2023,” says Schiafone. 

“Looking forward into the later stages of 2022 and into 2023, we should see the pressure points in supply chains starting to ease as global demands soften with inflationary pressures in all main economies curtailing demand. This easing of demand should allow manufacturing and logistics to get back to ‘normality’. The easing of demand should also see a softening of material prices with the high levels of ‘demand-led price premiums’ reducing.” 

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