PDF - 5.5 MB - Leighton Holdings

Leighton
Holdings
Quarterly
Update
2nd
Quarter 06
Total road and bridge construction
work done at historical peaks
$bn
15
12
9
Stand-alone bridges
6
Runways and access roads
Subdivisions
Local roads
3
Private toll roads
Highways and arterials
0
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Value of construction work done in 2005/06 constant dollars for year ending June.
Source: BIS Shrapnel
Road construction market
leads the way
The road and bridge construction market is approaching a record
value of $12bn of annual work done, which currently represents
over 20% of engineering construction work occurring nationally.
The immediate future holds very strong and consistent levels of
work, with the major challenges being the availability and cost of
labour and materials.
Traditionally, road construction activity has tended
to follow residential construction cycle trends,
driven by subdivision work undertaken by private
developers and the construction of local roads.
A key component of the current roads 'boom,'
however, has been the $15bn Federal Government
Auslink program, which has directed State and
Federal funding into national arterials, highways
and tollways, with additional contribution from
the private sector. Population growth and the
establishment of regional corridors are two of the
reasons for increased focus on nation-wide long
term roads planning. Additionally, the movement
of road freight in Australia has doubled in the
last twenty years and is forecast to double again
over the next twenty years. Based on the success
of the first five year program, and the incredible
amount of work still to be done, Auslink II is due
to commence in 2009/10 for another five years,
with a record $22bn budget. This is expected to
coincide with a dramatic upturn in residential
activity which would take road construction to
new heights.
The shift from public to private spending
The other significant element of the increase in
road construction is the level and percentage of
work undertaken by the private sector. There has
been a considerable change in the delivery of key
economic infrastructure and the new models are
likely here to stay. The success of alliances and
Private Public Partnerships (PPPs) for tollroads and
major highway upgrades has also seen an increase
in the value of maintenance work outsourced as it
is built into the overall project contract period.
Spending cycles across the States
to diverge
Based on current State and Federal project
commitments, there is considerable difference in
the growth potential of construction work across
the States. Brisbane and its surrounds has a
record, much needed commitment of over $4.0bn
per annum to create and improve transport routes
around the city and between its satellite cities,
as it prepares for a population expansion of over
1.5 million people over the next 20 years. This
includes the $3.0bn Airport Link and the proposed
widening of the Ipswich Motorway estimated to
cost $1.5bn. Bids for the Airport Link closed in