Major construction projects set to boost casual construction work for labourers and create a scramble for building materials, resources and a skilled workforce.
Right across Australia, future and in-construction infrastructure projects are likely to create a challenge for the government’s upcoming healthcare initiatives, who rely on the same labour solutions, trades and construction provisions.
A recent report by international consultancy company, Turner & Townsend (T&T) has revealed that the surge of real estate, rising inflation for asset holders and major transport infrastructure projects are set to create challenges for the government’s healthcare goals. T&T advise that in order to ensure the success of key national healthcare programs, improved asset management and improved visibility of the construction supply chain are required.
Key healthcare projects may compete with other infrastructure projects for labour and resources.
Projects must be managed carefully to avoid blowouts.
Pay rates already rising for construction foremen.
The rest of the workforce is likely to follow. Connect with Globe Group for labour hire services in Queensland, New South Wales and Victoria.
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The challenges
According to T&T’s Australian Real Estate Market Insight for Q2 2019, a plethora of major infrastructure projects and the blooming real estate sector is set to escalate construction costs. In 2019, Construction costs are set to rise at 5% in Victoria and 3.5% in NSW. QLD has avoided the brunt of the blow, with an estimate of construction cost inflation at 2.7%. However, Source able highlights that this will rise to 4% by 2021. To mitigate ballooning costs causing major project blow-outs, strong asset management is crucial.
Major transport infrastructure projects are also contributing to escalating costs within the construction sector. Currently, there is high demand for skilled workforces to work on the Sydney Metro, the Gold Coast’s airport terminal expansion and Brisbane’s Cross River Rail. Naturally, The high demand for workers equates to a greater cost for labour. While this could mean a healthy pay day for labourers and other members of the construction workforce, it also adds to pressure on project managers, who need to keep their budgets for major infrastructure projects in check, while facing the rising costs of construction resources and a qualified workforce.
T&T’s report has also revealed that supply chain capacity concerning structures, façade, fit-out and services are either at or above capacity for Victoria, NSW, QLD and WA. With the only exception being services in WA, which is slightly slower than normal. Most notably, Victoria’s supply chain capacity for structures is almost at critical, and the supply chain capacity for facades in NSW is also verging on critical.
In Victoria, NSW and Queensland, the costs relating to site forepersons have risen by 12%, 17% and 3% respectively.
Over six months, inflating costs of reinforcement are also notable, with NSW seeing a 9% inflation, QLD with a 5% increase and Victoria with a 22% increase.
Completing major infrastructure projects while facing a seemingly uphill battle against costs is undoubtedly a challenge. However, with strong asset management and quality frameworks, it is possible, claims T&T.
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Plans for healthcare
By international standards, Australia has high-performing social infrastructure sectors. This is supported by the UN, who ranked Australia third in countries with the highest quality of life and standard of living in the 2018 Human Development Index. However, Australian Infrastructure Audit 2019 posits that our social infrastructure assets are often ageing and not fit for purpose. They also claim that the ease of access to and quality of social infrastructure varies for different types of social infrastructure, especially for vulnerable groups. This applies to fast-growing cities, rural communities and remote areas.
In short, Australia’s social infrastructure is good, but for it to be great, it requires investment.
Under the umbrella of social infrastructure is health.
Announced in the 2019 federal budget was a $1.3 billion spend for the Community Health and Hospitals Program. This includes drug and alcohol treatments, preventative health, primary care and chronic disease management and mental health.
This massive spend is set to put the squeeze on construction resources and the cost of the associated workforce.
According to Pip McGlinn, there is also a growing demand for private hospital care.
As it stands, private hospital demand continues to exceed the levels of its public counterpart. This indicates a pressure on existing facilities and the demand for expansion.
The government’s $1.3 billion spend for health infrastructure and the private sector’s imminent expansion is going to pit healthcare infrastructure projects against the much bigger projects, namely in the transport sector.
The current and near-future landscape for infrastructure spend and project development is certainly a challenge. However, despite the critics’ view, it can be done with clear asset management and an improved supply chain.
While there’s clear challenges for all upcoming major infrastructure projects, one thing’s for sure, trades are in high demand right now. With seemingly endless opportunities to work on major projects, there’s never been a better time to brush up on your safety training, hone your skills and join a labour solutions group that will connect you with key initiatives.
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Written by Amelia Fynes-Clinton for Globe Group