I recently attended the Civil Contractors Federation (CCF) launch of the NSW 2020 10 Year Civil Infrastructure Report (which I must say was well worth the price of lunch at Parliament House).
The headlines of the BIS Oxford Economics report are broadly in alignment with trends the subject of one of my earlier articles:
- A 23% increase in spend over the coming decade compared with the last; and
- A 38% “peak to peak” increase in total work from FY2019 to FY2024.
It’s also worth noting that the forecasts, whilst taking into consideration longer-term trends such as increased maintenance due to Climate Change, don’t factor in estimated additional works associated with recent Bushfires reconstruction. Nor do they consider Coronavirus effects (your guess is as good as mine right now in this regard….).
From an infrastructure perspective, what’s not so obvious in the headlines is the extent to which work is concentrated in major projects. This trend – which has been which has been intensifying for some time – is driving:
- increased competition for subcontract work on major projects; and
- A lack of smaller projects for Tier 2 & 3 firms to target.
At the risk of stating the obvious, this is exactly what “margin squeeze” looks like…..