Construction News Round-Up - September 2024
Australia & New Zealand Construction News
Australian construction industry faces 130k worker shortage
Master Builders Australia warns of a significant worker shortage in the construction industry, estimating a need for 130,000 additional workers over the next five years. This shortage poses a risk to the National Housing Accord's target of delivering 1.2 million homes by 2029.
Despite workforce growth, construction productivity has dropped by 18% over the past decade. To address the crisis, the organisation is urging the government to fast-track skilled migration and provide more support for apprenticeships in the sector.
Australia could fall 166,000 houses behind construction targets
Australia is expected to fall 166,000 homes short of its target to build 1.2 million extra homes by 2029, according to new modelling from Master Builders Australia. Contributing factors include rising interest rates, high inflation, supply constraints, and a shortage of construction workers.
Housing Minister Clare O'Neil has stated that the worker shortage is now “chronic”, calling for bold action, while critics accuse the government of slow progress on housing commitments.
Caution on linking subcontractor retentions release to head contract completion in NZ
A recent article from MinterEllison highlights the legal and practical risks of linking subcontractor retentions to the completion of head contracts. This practice can delay the release of retention payments to subcontractors, potentially leading to disputes and cash flow issues.
The firm advises contractors to ensure subcontractors' retention terms are clear, fair, and not dependent on head contract milestones. It encourages reviewing contracts carefully to avoid unnecessary complications and legal risks.
Building consent reforms are 'new era' for NZ construction industry
New Zealand's Property Council welcomes building consent reforms, calling them a "new era" for the construction industry. The changes aim to simplify the process, improve efficiency, and reduce costs, benefiting developers, builders, and homeowners.
The reforms include modernising consent applications and inspections, ultimately speeding up project timelines. While optimistic, the council notes the need for careful implementation to ensure the changes deliver real results.
United Kingdom & Ireland Construction News
ISG collapse 'devastating' for UK construction industry
The collapse of construction giant ISG has sent shockwaves through the UK construction industry, with 2,200 workers immediately made redundant. The company's fall is linked to financial struggles and halted government projects, which had accumulated more than £1bn in contracts.
Smaller firms in ISG’s supply chain now face potential ruin due to unpaid debts. Industry leaders warn this could trigger further collapses, echoing the impact of Carillion's 2018 failure, and highlight the ongoing challenges of thin profit margins in construction.
Pre-Covid contracts blamed for ISG demise
ISG's collapse has been attributed to large, pre-COVID contracts that led to significant financial strain, particularly due to cost overruns and halted projects. The construction giant, which held major government contracts, faced cash flow issues after clients suspended two key projects.
ISG’s failure highlights ongoing challenges in the construction sector, where thin profit margins and delayed payments can quickly lead to insolvency. Industry insiders warn of further repercussions for suppliers and smaller firms in the supply chain.
Climate and industry leaders lay out new rules to prove buildings meet net zero carbon
Climate and industry leaders have introduced new guidelines to ensure buildings meet Net Zero Carbon (NZC) targets. These rules aim to standardise the process of verifying whether buildings are truly meeting NZC goals, covering operational energy, whole-life carbon, and renewable energy sourcing.
The guidelines come as part of broader efforts to combat climate change by reducing emissions from the built environment. Industry experts believe the framework will be essential in holding the construction sector accountable for its carbon impact.
Construction industry reacts to UK NZC Building Standard
The UK construction industry has reacted positively to the new Net Zero Carbon (NZC) Building Standard, which sets guidelines for reducing carbon emissions in both new and existing buildings.
Industry leaders believe the standard will help meet climate goals but emphasise the need for clear regulations and support to make compliance achievable.
Concerns have been raised about the costs and challenges of retrofitting existing buildings, though many view the standard as a critical step toward a sustainable future.
Construction industry reacts as Keir Starmer gives first keynote speech as leader
UK construction industry leaders have responded to Keir Starmer’s first keynote speech as Labour leader. Starmer emphasised the need for green growth and infrastructure development, calling for collaboration between the public and private sectors.
Industry figures welcomed his focus on sustainability and investment in construction, particularly around net-zero goals and housing. However, there is concern about how Labour will balance its ambitious targets with practical solutions, especially regarding planning reform and addressing skill shortages.
450,000 homes needed in a year to meet government target
The UK needs to build 450,000 homes annually to meet government housing targets, according to the National Housing Federation and Crisis. Current construction levels are falling short, producing only around 250,000 homes per year.
The shortfall is attributed to rising costs, labour shortages, and delays in planning approvals. The report stresses the importance of ramping up construction to meet demand, particularly for affordable housing, if the government hopes to address the country's housing crisis.
Irish builders unlikely to come home from UK despite state's efforts
The UK planning system is being criticised by Irish construction director Tom Denning, who calls it a "disaster" due to inefficiencies and delays that hinder progress on critical projects.
Denning highlights the need for a major overhaul, stressing that the system's complexity and slow decision-making are preventing timely delivery of housing and infrastructure.
He urges the UK government to introduce reforms that will streamline the process, allowing for faster development and improved outcomes in the construction sector.
Clea Boyd-Eedle