A case for reinvesting in mines, strong growth in rail, telecommunications and renewable energy generation and skilled labour availability are some of the key challenges and opportunities for Australia’s civil construction sector, according to Adrian Hart, Construction, Maintenance and Mining Associate Director at BIS Oxford Economics.
Mr. Hart is a Senior Economist with more than 15 years’ experience undertaking and overseeing research into Australian economic conditions.
In discussing challenges to prepare for, Mr. Hart cited unpredictable market fluctuations driven by explosive growth in multiple sectors as an area of key concern.
“The biggest challenge is the high level of volatility we’re seeing in the market overall,” he said.
“Going forward from here, I think the challenge will be to try and provide a more sustainable, smoother pipeline of work into the future.
“But I suspect we’re going to see a lot more cycles before this all plays out.”
Ahead of his presentation at the National Construction Equipment Convention (NCEC), Mr. Hart highlighted rail as the sector to watch — but it still remains to be seen whether the industry can effectively execute on the huge number of projects.
“We don’t expect to see rail construction activity peak until the early 2020s.
“But that’s subject to the risk of whether we have the capacity and capability to deliver all this rail work in such a short space of time.”
In terms of equipment supply and demand projections, Mr. Hart advised that construction companies prepare for increased equipment demand, and the higher prices that come with it.
“There’s going to be a challenge in certain markets where we may not have the equipment that we need, when we need it. So we’ll be paying probably a bit more for it.”
Digging deeper into skilled labour availability, an aging population will carry the risk of workers staying in roles longer, and therefore becoming harder to replace when they eventually leave.
“The population aging story is one that will continue to impact on the industry over the next 10 years, and we’re going to need people not just to meet growing demand, but also to replace those that have had many years or experience leave the industry,” Mr. Hart said.
“So that will be a challenge. I believe we’ll get through it, but it may mean risks to quality and often putting people into positions that might have been held by people with many, many more years of experience.”
Failing to take heed of industry trends and economic indicators can lead to avoidable mistakes in construction planning. Some of the most common mistakes ultimately come down to communication issues and unrealistic demands put on equipment suppliers.
“I think the biggest mistakes we’ve been making is just assuming that governments can get whatever they want, whenever they want it. It’s a real challenge to supply the market at the moment,” Mr. Hart said.
“What we’re starting to see is more engagement of governments with the construction industry, so that they plan out their pipeline of projects better, but also that they procure them better. So it’s a more collaborative approach where risk is allocated effectively.”
Mr. Hart emphasised that collaboration is a two-way street — equipment suppliers have an equal responsibility to engage with government and share potential issues that could create deployment challenges.
Fortunately, all sides are beginning to realise the substantial benefit of such dialogue.
“You probably won’t find a better time where governments are actually quite receptive at the moment to hearing about challenges from industry, and how best to overcome it.”
Adrian Hart will be discussing these issues and more in his presentation at the National Construction Equipment Convention (NCEC). This must-see industry event will run from 15-17 November in Sydney, featuring an expert speaker lineup and leading companies showcasing new equipment. To register, visit www.ncecaustralia.com.au/ncec.