The cost of construction is on the rise across Australia as demand for commodities such as steel and concrete increase along with a decline of workers in skilled trades. Whilst the activity in the industry is welcomed by all, experts warn that builders on both commercial and residential projects must tighten their on site efficiencies to prevent overspending.

Canberra construction volumes rose by 12% to $3.7 billion in 2017 as building approvals continued to increase and unexpectedly saw non-residential approvals exceed residential. As new projects begin to commence along the path of the Light Rail, Canberra is seeing the birth of new urban hubs and the revitalisation of existing residential centres. “Construction volumes remained strong across the country in 2017 at $222 billion, the highest volume seen in the last 5 years” states the RLB Oceania report and all indicators suggest that the growth is only going to continue in coming years. However this substantial growth could cost the industry financially as the cost of labour and staple building materials soar.

Director of a construction cost consulting firm, Peter Clack, has warned the industry that tender prices could continue to escalate close to 6% by the end of 2018 and that cost pressures are being seen in measures that the industry has not seen in 35 or 40 years. Trades such as formworkers, concreters and steel workers are expected to be in high demand in the coming years as large scale infrastructure projects inevitably draw skilled contractors away from the residential and commercial building projects. Alex Angelucci, manager of A&G formwork in Sydney has said that in his local market the pay rates for form workers have risen between 6-10% and companies will need to offer a higher rate of pay to attract the best talent.

Unfortunately the rise in prices have seen some builders collapse under the strain of these increasing costs. Bayside Construct, a home builder located in Victoria who only won the Master Builders Award for a medium density residential project last year, have gone into voluntary administration stating they were unable to continue trading beneath a crippling debt of upwards of $20 million due to running very tight margins on their projects.

At CE Construction Solutions we are doing our part to offset the increasing cost of construction with a range of technical solutions which optimise timelines and result in remarkable cost savings on labour and raw materials. If you’re interested in exploring how we can help incorporate some of these systems into your next project, we’d love to have a chat.

Sources:
RLB says construction costs to rise: formwork in Sydney, demolition in Adelaide
Growing demand pushing up construction costs