Australia’s construction costs remain stable - opportunities lie in the supply chain for greater cost efficiencies
Construction costs in Australia remained stable compared to the rest of the world but more opportunities must be found within the supply chain to find greater cost efficiencies by improving productivity, according to Turner & Townsend’s International Construction Market Survey 2016.
Sydney is now positioned at number 14 with Zurich taking the first spot for the most expensive place to undertake construction activities in the 35 markets surveyed. The 2016 survey also ranked Perth at 18, Melbourne at 20, while Brisbane took the 22nd spot.
The international construction market survey 2016 analyses input costs – such as labour and materials and charts the average construction cost per sq m for both commercial and residential projects.
Gary Emmett, Senior Economist for Turner & Townsend comments: “Since last year’s survey Australia’s construction costs have only increased a few per cent in contrast to other countries where markets are overheated.
“To ensure Australian prices stay at reasonable levels, the construction industry must think differently and look for cost savings within the supply chain where the biggest savings and innovation can be found. These include manufacturing production, design and logistics.
He added, “The industry needs to collaborate with suppliers to look for savings as opposed to traditional adversarial relationships. The use of building information modelling (BIM) will help the industry collaborate to gather data and share plans throughout the lifecycle of an asset to find greater cost saving efficiencies.”
Construction costs in Australia are expected to rise 2.5 per cent on average in 2016 compared to 2.9 per cent globally.
The costs across Australia’s four major markets show Brisbane increased by 4 per cent in the past 12 months, Sydney hit 3.5 per cent while Perth and Melbourne recorded cost increases of 1 per cent respectively.
Mr Emmett continued, “For example, Brisbane and Sydney’s apartment booms have led to the increase in costs in these states. Perth has remained relatively steady due to the mining boom finishing and Melbourne is now experiencing a flat period following a busy apartment boom.
“We are also witnessing increased tender competition which is driving down profit margins. There is an opportunity now for the industry to look at different delivery and commercial models to improve productivity and margin on projects.”