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Australia Market Update: The State of Play in the Construction Industry

Rlm Australia Market Update Ft

Welcome to RobLawMax’s latest Australian Market Update – an overview of our markets, the challenges we are seeing and future opportunities present. Click your relevant market here:

Queensland Transport Infrastructure
NSW Transport Infrastructure
Victorian Transport Infrastructure
Dams and Water Infrastructure
Energy – Mining, Gas and Renewables

Queensland Transport Infrastructure

South East Queensland is currently enjoying a transport infrastructure bubble that has not been seen since 2007-09, with construction well advanced on a number of projects, including:

  • The Gateway Upgrade North

  • Kingsford Smith Drive

  • Gold Coast Light Rail (Stage 2)

  • Ipswich Motorway (Rocklea to Darra)

  • Logan Enhancement

  • Caloundra Road to Sunshine Motorway

  • M1-M3 merge

  • Mudgeereeba to Varsity Lakes Upgrade

Throw in the airport infrastructure activity at the Brisbane (Dryandra Road, 2nd Parallel Runway, and the BNE Auto Mall), Gold Coast and Sunshine Coast Airports and we have an existing order book that is bursting with industry opportunities.

Outside of South East Queensland, we’re finally starting to see positive progress with the Haughton River Floodplain Upgrade recently awarded to complement the Mackay Ring Road and continual upgrades to the Warrego Highway, Bruce Highway, and ongoing flood recovery works throughout the state.

What next?

Encouragingly, the industry will continue to uphold sustainable opportunities for all of us (supported by State and Federal allocations in recent budgets). That said, we’re not in a Sydney or Melbourne “boom” where you can name your preferred project, employer or location! If you’re not engaged on one of the incumbent South East Queensland projects, then don’t assume that there is an unlimited number of local opportunities awaiting you. Yes, we have headline grabbing projects such as Cross River Rail and Brisbane Metro to come, although unless you have great pre-contracts experience then there will be a long waiting period before we see a greater volume of opportunities on these projects. Tier 2 and 3 contractors continue to offer good scope (given the volume of TMR and Council-sponsored projects in the $1m-$25m range) but a willingness to travel will typically appeal to these employers given their metro/regional project splits.

Australia Market Update: The State of Play in the Construction Industry

Will you travel?

Our Mining and Coal Seam Gas construction booms meant that our construction workforce had a rather imbalanced DIDO/FIFO focus. Furthermore, this focus extended for five or six years, with many professionals unable to break the cycle during that time. Understandably, the effect now appears to be a reluctance (a generalisation of course) to re-engage in this employment model. 

Market feedback is vital for us as we continue to represent construction contractors who possess a balance of metropolitan and rural projects experience. We also have the extremely exciting Inland Rail project on our doorstep – a chance to contribute to what will be an historic network development, but also one which possesses some truly complex tunnel, bridge/viaduct and flood mitigation works to challenge your skill set.

NSW Transport Infrastructure

Sydney continues to experience a boom with existing metro, light rail, and road projects (Westconnex) absorbing a high proportion of our talent. Ironically, after a ‘holding period’ of sorts, things are about to enter another upswing in recruitment activity with the next section of Westconnex to be awarded, coinciding with peak staffing activity on the Sydney Metro tunnelling contract. Further to this, we have continued activity across numerous arterial and suburban roads, coupled with the recent award of the $200m M4 Smart Motorways package. Also, Laing O’Rourke has secured a $955m ‘platforms’ contract at Central Station, with numerous smaller station upgrades under construction across the city.

Outside of Sydney, we have ongoing work on the Newcastle Light Rail project, with the Pacific Complete Upgrade between Woolgoolga and Ballina now well advanced. There is also a recent road and bridge package on the New England Highway and the $450m Princess Highway Upgrade between Berry and Bomaderry; and the $630m Albion Park Rail Bypass which has just been awarded to Fulton Hogan. Recruitment activity on the prior mentioned Pacific Complete Upgrade appears to have settled after a surge in activity at the back end of 2017. The challenge now lies in contractors’ ability to retain staff through to completion dates, as we continually identify a resistance to the DIDO structure of most employment models on that project. We are also awaiting the award of the Parkes to Narramine section of the Inland Rail project, with a decision due in June. 

What next?

Australia Market Update: The State of Play in the Construction Industry

If you ever sought stability as an Engineering professional, then this market offers it in spades. Over and above the aforementioned Westconnex, there is the Parramatta Light Rail, subsequent sections of the Sydney Metro (West), as well as the Construction of the Western Sydney Airport at Badgery’s Creek (congratulations to Bechtel as well as the CPB & Lendlease JV for the recent contract awards). In support of the latter, we will see the development of a new motorway (M12), along with further rail networks to link up with the city and the existing Sydney Airport. The infrastructure sector is showing no sign of slowing and offers our Engineering and Construction community rare geographic security. 

Challenges

Without a doubt, we are now starting to see real pressure on resources – especially in key technical areas such as systems, signalling and rail track professionals. This shortage exists both at consultant engineering level, as well as our construction contractors who are executing (or tendering) these projects. Whilst it is not a new strategy for most, we’re still witnessing a reluctance in companies to expand searches to international locations. To discuss how we can help you build your international recruitment strategy, get in touch with the team.

Victorian Transport Infrastructure

Some real comparisons can now be made to Sydney, with the Victorian transport sector immersed in a boom of its own and experiencing very similar challenges. The flagship projects (Melbourne Metro, Westgate Tunnel and Level Crossing Removal Programme) are well underway, but let’s not forget some of the additional activities that represent major projects in their own right. The OSAR’s project in the west is worth $1.8b, with a further $2.2b approved in the state budget to improve the city’s Northern and South Eastern arterial roads. The Ballarat Line Extension (part of the $1.75b Regional Rail Revival programme) and the Princess Highway West (Geelong to Colac) projects are under construction and the Western Highway duplication (Buangor to Ararat) has also recently commenced. There also remains a strong sub $100m project environment which helps with the flow of opportunities across the board.

What next?

Work on the M80 continues with EOIs out for the remaining sections, the Modiallac Freeway ($375m) has recently been shortlisted, and the Monash Freeway (stage 2) business case being fast-tracked to ease congestion in the south-east. We also note the exciting news of the $110m project that has been budgeted to fast-track the planning and design for the $16.5b North East Link. We also have the remaining packages of the Level Crossing Removal and Regional Rail Revival programmes.

Challenges

Australia Market Update: The State of Play in the Construction Industry

Without a doubt, there are certainly significant resourcing challenges within the state – across all levels (consultant, contractor and client). We’ve noted a significant upswing in remuneration packages being offered, especially within the tier one/major project environment. This has put substantial pressure on smaller businesses who are delivering sub $50m projects (with higher sensitivities to these fluctuations). Unfortunately, in a few instances we have noted a lack of acceptance of this upswing with a gap, then appearing between employer and candidate expectations. If you can’t compete with the tier ones on remuneration, then sacrifices will need to be made in terms of candidates considered. Furthermore, you need to be able to sell your point of difference in the market. What is your elevator pitch? We continue to have interested applicants from interstate, New Zealand and abroad, so if this of interest then please don’t hesitate to make contact.

Dams and Water Infrastructure

While our transport sector leads the way, we are seeing some encouraging opportunities emerging within dams and water. The national dam safety improvement programme provides substantial opportunities for consultants (initially) and construction contractors in due course. As seems to be the case in Queensland (I can’t vouch for other states), we seem to find many projects recycling through different stages of study/design without always converting to awarded projects in a timely manner. Fingers crossed this trend will change in the future with some truly interesting and complex projects that will attract strong interest from construction contractors. We also note there is a large volume of engineers on current road infrastructure projects who crave more varied projects to challenge their engineering skills.

They will be suitably attracted to the complexity and scale of projects such as Snowy Hydro and the Kidston Hydro and Solar project, which we hope will reach a final decision on investment later this year. 

Challenges

Australia Market Update: The State of Play in the Construction Industry

It’s very hard to find dam specialists given the lack of recent momentum in the sector – outside of mine water, sedimentation, tailings and evaporation dams/ponds that support our mining and coal seam gas sectors. Be mindful of managing expectations when you start recruiting in this area. You will be competing within a shallow pool of willing DIDO/FIFO workers so set yourself apart from industry peers.

Energy – Mining, Gas and Renewables

The mining, resources and energy sectors have experienced strong growth in demand over the past six months, albeit at different phases and requiring different skillsets. The renewables sector still holds key opportunities in construction – particularly in wind and solar projects, with  Crudine Ridge Wind (NSW), as well as Coopers Gap Wind Haughton Solar and Yarranlea Solar (all Queensland) as examples. The hydro-energy sector will be next to join, with key tenders shortlisted on the mega Snowy 2.0 project (Snowy Hydro) and Kidston Hydro projects. In the mining sector, there’s sustained investment in studies, primarily for key brownfield infrastructure upgrades/expansions, covering coal, iron ore and metals. We’re seeing more advanced development in metals projects due to sustained forecasted prices for copper, gold, nickel and zinc.  BHP’s Olympic Dam, Oz Minerals’ Carrapateena, and Northparkes are pushing major projects through the tollgates. Lithium, cobalt and rare earths projects also have some strong momentum and we’ll continue to keep an eye on Clean Teq’s Sunrise Project and Alkane Resources’ Dubbo project over the next six months. Further to this in the oil and gas sector, Santos’ recent announcement of $400mill in new well sites and processing facilities in Queensland’s Bowen Basin, the proposed LNG Import facility in NSW, and the mega second phase of Gorgon LNG are very welcome news for the sector as the Ichthys project continues to demobilise from peak construction.

What next?

Australia Market Update: The State of Play in the Construction Industry

In the renewables sector, several opportunities in construction will remain on either FIFO or temporary relocation basis on the east coast. Keep an eye on mega projects such as the Snowy 2.0 Hydro project in NSW, Kidston Energy Hub in North Queensland, the 265MW Aldoga Solar Farm project near Gladstone, Queensland, the Moorabool 321MW wind project in Victoria, and the potential 800MW Golden Plains Wind project in Victoria. In the mining sector, there are real opportunities in mining house project teams if you’re willing to consider relocating to regional centres, or on EPC / EPCM / D&C brownfield projects on a FIFO basis in the coming six months. Sustaining capital works such as tailings dam raises, process plant debottlenecking exercises and medium-sized expansions are where we’ll see the most growth in the medium term. 

Challenges

The industry’s main challenge is the move towards a reliance on FIFO. With pressure to promote regional employment, it’s resulting in fewer opportunities for FIFO professionals, especially interstate. Demand and timeframes are a major force here though and with multiple concurrent projects projected to move into execution in the coming six months, this will bring more pressure on companies’ resistance surrounding FIFO. Job security also comes into question in the projects environment so be sure to think of the bigger picture if you’ve got the luxury of choice in pursuing opportunities – how long does this initial project last? Does this company have a history of staff retention in cyclical periods? Is my discipline/skillset in demand? Furthermore, be realistic with salary expectations given the downturn we’ve experienced. Resource sector business have learnt a lot and this will remain until there’s a clear shift in supply/demand.​