This Mitchell Brandtman Quarterly Construction Cost Update has been put together to help keep you informed on the movements of the market to better position yourself for your current and future projects.
Head contractor confidence, capacity and appetite for risk continue to wreak havoc across larger scale private developments, with attention being largely turned to the less speculative public spending commitments mounting on the horizon.
This is distinguishable from the small scale residential and industrial sectors which both appear to have rebuilt enough competitive tension across trades to keep the fair value for money position somewhat in check. This will create a pricing divide and we expect to be dealing with a ‘two-speed’ economy in terms of construction pricing until healthy competition returns to the mid and upper tier tender market – at both a sub-contract and head-contract level.
Public spending commitments across all parts of Queensland are at stimulus measure levels, with a clear sight of work until post Brisbane Olympics and Paralympics. This will absorb more than the capacity we currently have to deliver our current volume of work. Regional areas are already struggling to make anything not just ‘stack up’ but actually meet the fundamental fair value equation.
Opposing forces usually lead to sparks, which we have already seen across the institutional and private sectors. However expect that to remain the case across the typical tender market for some time yet – and for it to likely get worse before it begins to improve.
Projects that are successfully traversing the feasibility and procurement minefield are leveraging strong relationships or simply have the ability to be dynamic based on their own unique set of challenges.
