Q1 2024 Oceania Market Construction Update [Perth]: Pricing escalation continues to be a challenge across Western Australia, particularly in regional areas and for complex metropolitan projects.
In the second half of 2023, pricing stabilised for short-duration, low-risk projects in Perth. Although, there was still a typically broad range of prices across most trade and head contractor preliminary costs.
However, pricing escalation continues to be a challenge across Western Australia, particularly in regional areas and for complex metropolitan projects.
Factors such as labour shortages, high demand, productivity issues, and challenging economic conditions have continued to drive market volatility into the first quarter of 2024.
Key factors impacting escalation
- Market volatility continues, with supply chain and labour issues impacting pricing and partially offsetting material price stabilisation
- Insolvency of major subcontractors and economic concerns are driving higher pricing
- Contractors show significant variations in trade pricing, reflecting differences in risk assessment and future work projections
- Project durations are extending by approximately 25%, due, in part, to skilled labour shortages and reduced productivity
- Head contractor preliminaries costs are increasing particularly due to higher levels of site management and supervision to limit productivity losses
- Head contractor margins are continuing to rise, especially on projects with longer durations and a higher risk profile
- The above issues are magnified by varying degrees in regional locations
Photo: RLB provided quantity surveying services on Design & Built Environment, Western Australia, a Curtin University education development.
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