🚧 Your Guide to Australian Civil Construction 🚧

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Today’s recap is 535 words… 4 mins reading time.

NSW Announce Infrastructure Budget

A nervous few months for contractors after the government warned of the cancellation of major projects.

However, with holes already being dug on multiple projects, most stayed online an were confirmed in the 2023-24 infrastructure budget.

The budget provides a $116.5 billion investment in public infrastructure over four years to deliver new schools, hospitals and transport projects.

Significant projects for the 2023-24 Budget include $72.3 billion for transport and infrastructure over the next four years;

• $13.7 billion for Sydney Metro West

• $7.9 billion for Sydney Metro – Western Sydney Airport

• $4.7 billion for the Western Harbour Tunnel Upgrade

• $3.3 billion for Sydney Metro City and Southwest

• $3.0 billion for Connecting Sydney Roads

• $1.5 billion for the (M1) to Raymond Terrace project

• $1.3 billion for the Coffs Harbour Bypass

• $532.7 million for the Newell Corridor Upgrade

Construction Costs Update

With construction costs rising at unprecedented levels, consultant firm SMEC has been helping their clients understand the trends and recently shared their findings.

Showing that overall civil construction costs increased by 46.8% between Q2-2018 and Q1-2023.

Factors include;

• Impact of the infrastructure boom and unprecedented levels of government funded infrastructure projects has impacted supply chains and labour shortages.

• Ongoing supply chain issues resulting from COVID19 delays and isolations.

• General price volatility resulting from material/resource cost.

• Continuous increases in fuel cost because of uncertain global economic conditions, driving up costs throughout the entire supply chain.

The key elements of the rise in costs;

• Fuel Price: Impacting running costs on site, particularly during bulk earthworks. Suppliers are also unable to absorb the additional fuel / transport costs and are required to pass these directly onto contractors.

• Quarry Products: Pressure on quarries due to unprecedented levels of development and building activity combined with operating restrictions.

• Precast Concrete: Record demand combined with the retreat from market from Rocla, have resulted in supply constraints. Some common concrete pipe sizes now have a lead time of around 35 weeks.

• Road Construction: High demand for materials and cost of manufacturing and transporting components. In 2022 the price of bitumen increased 26%.

Strategies to combat rising prices;

• Consider timing of construction activities to drier months and share plant resources where possible.

• Pre-order materials to avoid long lead times and project delays, in particular precast drainage.

• Consider recycled materials/site won material where suitable for efficiencies.

• Iterate the design and lengthen the pre-construction stage to ensure sufficient planning is completed.

• Stay in contact with suppliers to understand constraints and external risks.

Thanks for reading!👷