Earthmovers & Excavators #375

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INDUSTRY VIEW Left: Predatory pricing and an allowance of unusually low tender bids is limiting the growth and true potential of Australian construction. (Image courtesy Civil Contractors Federation QLD) more investment needed Key improvements are being missed or skirted that will ensure a sustainable competitive construction industry in Australia, Damian Long writes Damian Long, CEO CCF QLD The result is low or non-existent profits which put at risk the viability of the contractors. It is a sad observation in our industry that often when the risk gets higher the earned margins get lower – particularly when the market tightens. The construction industry is one of the most important industries to our state and nation. Construction is the third-highest employer sector behind health and retail. It is in the top-fivecontributors to GDP and has one of the highest economic multipliers of all industries. It underpins nearly every other industry. So why is it continually allowed to be under threat of floundering? Key improvements are being missed or skirted that will ensure a sustainable competitive industry that can function at its best to deliver the best outcomes for the country. Some of the negative practices which are continually being observed are predatory pricing; allowance of unusually low bids; overlooking performance in quality, safety and environmental management at the expense of price; unfair distribution of risk; ignoring social and local development; and ignoring the development of the local construction industry. The result is low or non-existent profits which put at risk the viability of the contractors and a long list of other considerations that are often talked about but not fully addressed. These considerations are issues such as security of payments (along the full contract chain); the inability to invest in people through training and experience; the inability to invest in new and innovative capital and systems; the inability to grow the business to tackle larger and more challenging projects; a stifled ability to provide better outcomes in safety, environmental and quality management; and an inequitable discounting of project items to win work which are often not in the best interest of the project. Unfortunately, there seems to be a history of government policy which has blocked the growth and development of the local industry and left it unable compete internationally. The solution is in front of us, but a leap of faith is required to address these problems. COVID has put a microscope on all industries and post COVID, I expect positive changes to occur . It will be an absolute shame if genuine change is not driven through our industry too. CCF QLD has been calling for government policy which sets a framework for the sustainability of our industry. Central to this is the prioritisation of local contractors for local projects through debundling of larger projects by staging or breaking off early works. Where possible, projects that have a size and complexity that meets the local capacity need to be provided. The immediate issue we are seeking commitment on is the prioritisation of local contractors for local projects. Local contractors, who are suitably capable, must be given an opportunity to price works. They spend their profits and overheads locally and stimulate the economy CCF QLD has been calling for a review of the procurement practices which have been proven expensive and restrictive. We have advocated for an end to two-tiered procurement process for construct only projects under $100 million. We are seeking a collaborative contracting culture that enables full partnering of all project stakeholders for the benefit of the project and wider objectives. On a national level, we have been working to address the unfair contract terms that exist in the private sector of our industry. Finally, a secure and growing pipeline of work is needed. To date, the state government expenditure is far from what is needed to support our industry and a post COVID recovery. We have not sighted any government policy on how the perceived lack of support for the local contractor or the contractual imbalance will be addressed. CCF QLD has been in discussion with the state opposition to assess their plans with respect to our industry. We are pleased to confirm their pledge to the local contracting industry, an increased volume of work and to finding a better way of working with industry. So far, the opposition has committed an additional $1 billion to the infrastructure budget and are proposing large infrastructure projects such as the New Bradfield Scheme. We are expecting further announcements from both sides of government as we approach October’s state election. We will stay tuned to see what they have to offer! 40 Trade<strong>Earthmovers</strong>.com.au
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