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An upturn in major project work is set to drive construction activity over the next two years.
An upturn in major project work is set to drive construction activity over the next two years.

Major works to drive two-year construction growth

A new report has indicated the construction industry will grow over the next two years as major rail and road projects lift demand.

The latest Australian Industry Group (Ai Group) and Australian Constructors Association (ACA) Construction Outlook survey released last month suggests an upturn in transport infrastructure activity will drive an increase in major project work across the 2016-17 and 2017-18 financial years.

Following a sharp 9.8 per cent drop in the total value of major construction work in 2015-16, the survey projects activity will increase 4.6 per cent in 2016-17 and 4.5 per cent in 2017-18.

Revenue rises of 11.7 per cent in road projects and 14.8 per cent in rail are set to drive a 5.5 per cent increase in engineering construction in 2017, after a fall of 2.9 per cent in 2016.

There was not such good news for resources-related engineering construction, however, as the survey anticipated a further decline in 2016-17.

The only positive for mining/mineral-related activity is the rate of decline is expected to lessen, from a 31 per cent drop in 2015-16 to a 7.3 per cent fall in 2016-17 and a 5.9 per cent decline in 2017-18.

The report forecast a gradual rise in commercial construction over the next two years and solid levels of apartment construction following a recent spike.

Momentum gathering

“The rebalancing of the construction sector is set to continue through the remainder of 2016 and into 2017 with very strong growth from transport-related infrastructure projects expected to gradually offset the further declines in resource-related work,” Ai Group chief executive Innes Willox said.

“An easing of apartment-building from current very high levels is expected to be offset somewhat by an anticipated lift in commercial construction.

“It is vital that workplace relations arrangements in the sector not only assist in containing costs but also have sufficient flexibility to allow the sector to expand as smoothly as possible.”

ACA executive director Lindsay Le Compte agreed infrastructure construction is gathering momentum, adding state and territory governments would implement capital works to support local economies and upgrade community amenities.

“Importantly, the lift in major project activity will also support commercial and related construction as the private sector looks for opportunities along infrastructure corridors or surrounding major infrastructure facilities,” Le Compte said.

“There is also an opportunity for governments and the private sector to review and improve their approach to procurement, and achieve greater efficiencies in the development, delivery and management of projects and facilities.”

More information
Construction Outlook November 2016 report

More reading
Building construction up, engineering down
Construction expected to grow from next year
Housing leads positive construction industry performance

Tuesday, 23 October, 2018 10:54pm
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