Will construction tender prices rise?

Tender prices predicted to rise across the Australian construction industry, according to recent reports
With a weakened Australian dollar, there has been an upward pressure on material costs and a strengthening of the construction industry that has cause a rise in tender prices on major construction projects, particularly in the major cities.
While the industry’s activity is increasing overall, this has meant that contractors have been able to be selective in the type of projects they sign on with and the banks have tightened their lending standards, both of which will likely be affected further should the reintroduction of the Australian Building and Construction Commission go ahead.
The cost of some materials has also been affected by the weakened Australian dollar, causing a rise in trade prices.
Queensland, New South Wales and Tasmania are experiencing the stronger tender price pressures and these prices are expected to rise by as much as five per cent over the next three years, primarily due to the following factors:
  • High demand for infrastructure, particularly in public transport and roads, in New South Wales
  • Rise in multi-storey buildings being built to fill shortages of housing across Queensland and the shortage of several trades including tiling, partitioning and formwork
  • Unprecedented number of civil and commercial works in Tasmania, predominately in Hobart, driving an upward movement in labour shortages
  • Tier 2 and 3 contractors bound to metropolitan residential projects, creating a shortage of skilled workers for other projects
  • The Northern Territory is seeing increased tender pricing pressure due to the Ichthys gas project which is winding up

Western Australia is currently experiencing an oversupply of contractors, primarily due to the mining boom which is winding down and in South Australia and the ACT, the pressure is low as demand is mostly meeting supply.