In our Projects in Focus series, over the past six months, we have been focusing largely on significant construction and infrastructure developments and projects in our home markets of NSW and Queensland. We now take a wider view of the marketplace in the first of a four-part Market Wrap series looking at the last financial year (FY19/20) and ahead to the coming year.
David Hope, Queensland Director for Building, Billy Versey, Director, Building and Infrastructure, and Carmel Jones, Associate Director Building, contribute to our overview of strong growth areas, key take-outs for clients and candidates; and the trends and initiatives impacting Australia’s construction industry.
The State of the Construction Market – an overview
Our expert team agreed that in early 2020 continued government spending was a key driver of the health of the construction market across several strong-performing sectors, with education, health, and aged care at the forefront.
The ‘hero’ in terms of economic demand is government consumption, which bolstered the growth rate over the past year, registering an increase of some 5.1% over the past 12 months. Government-led projects mean that transport infrastructure will be one of the strongest performers, but prospects for new home building are more mixed, and some areas of commercial building will be doing it tough. Master Builders Australia Building & Construction Forecasts to 2023/24
From the perspective of construction companies, we see industrial and data centres as strong, and logistics as a growing space as more and more businesses move online. And our experts believe that data centres and defence are both going to be significant opportunities going forward. Whilst COVID-19 has led to recruitment, placement and onboarding challenges largely speaking the market has been less impacted than others.
‘Must have experience’ is the CGC message for candidates at senior levels, with companies competing for Senior Project Managers / Project Directors with contract management expertise and new generation skills at the top of the market. In the junior ranks, the talent pool is strong, with not all candidates able to be placed in the current market.
In the Queensland market, CGC expects government spending to continue, positively influencing the start of this financial year. On top of this government funding, data centres have been big and will continue to see investment from the private sector, while the logistics space is expected to grow later in this financial year.
Last year residential was a strong performer but has been very competitive, and builders struggled with margins. New home building is currently undergoing a cyclical downturn, and we forecast that a trough will be reached during 2020/21 when work on about 168,000 new homes is expected to begin. This would still represent a strong volume of new home building activity by historic standards.
The prospects for residential building in Australia will be determined by the combined interplay between macro and micro-economic conditions, as well as local issues in each of the different geographic markets around the country. Master Builders Australia Building & Construction Forecasts to 2023/24.
CGC’s Queensland Director for Building, David Hope, sees clients looking for top professionals all encountering the same issue in the state’s construction market.
“When you’ve got high demand, candidate supply shrinks, because everyone is jumping on the recruiting bandwagon, whether that is government or private sector spend, or other investment.”
What we’re seeing across the board is building companies trying to diversify into new sectors and projects. And those senior strategic appointments are key to opening doors in new areas.
Similarly strong, on the back of government spending in NSW, the Aged Care sector is continuing to exceed growth expectations. This area’s growth is fuelled by an ageing and healthier population, baby boomers downsizing, improvements in the style of aged care developments, and the availability of cheap funding.
The biggest demand from NSW companies is to fill senior construction roles. Other high demand-recruitment areas include contractors in the workplace space and builders across the industrial, data centre, health and education sectors.
CGC’s Associate Director, Building, Carmel Jones, comments that in early 2020, there is already a shortage of candidates with solid experience across these strong sectors.
“As more projects are released, it will be a booming market, and this shortage will only increase. But as CGC has good networks in these sectors, we will be well placed to recruit experienced candidates.”
Late last year, businesses also experienced an impact on project flow due to clients pushing projects back, not pushing the ‘go’ button because of new development application issues, or clients not giving them the sign-off. The early months of 2020 didn’t really get going as quickly as anticipated, so from a relatively low base, there is some pent-up demand for talent.
Positive signs for the next six months and beyond
If we see some of these projects come along reasonably quickly, on the back of government spending and strategic investment to stimulate the economy, there are positive signs for the next six months and beyond. Combined with all the associated activity around infrastructure projects, there's a lot of reason for optimism.
However, there are senior and experienced candidate shortages. “You’ve either got that leadership experience as a senior project manager or commercial manager, or you haven't. It’s that classic thing, how to actually get the experience that’s needed,” said Jones.
Senior requirements are primarily around the compliance space for defence, health and education. Project directors and project managers really need to know the contracts and understand the client’s expectations from both the commercial and contract point of view, plus be aware of potential risk factors.
Once you do pick up that work and have an experienced leader in place, you can recruit and train at more junior levels. Right now, there is almost too much junior talent, with CGC probably having more candidates that we can place.
Looking Ahead to Financial Year 2020/21
Thanks to infrastructure investment in Australia, from the federal government, to push Australia's economy out of recession, there’s good confidence in the construction industry. Some will, of course, outperform others, however, attracting/retaining key project staff with crucial experience may be a challenge and result in lost contracts.
At CGC, we understand the big recruitment issues, and this depth of insight can give both our clients and candidates confidence to make the right decisions.
To get a full breakdown of key construction recommendations plus CGC’s view on the year ahead, download our full CGC in Focus Report.
CGC in Focus - Infrastructure Opportunities
At CGC Recruitment, our team of experienced consultants specialise in all major infrastructure, engineering and construction sectors. We help clients throughout Australia deliver their projects by attracting the best candidates and talent.
FY20 was a difficult year for some businesses – elections in 2019 (state and federal), rising unemployment, the drought, record national bushfires and, of course, COVID-19. It was a medical, a financial and a leadership crisis, all in one. That’s why we developed CGC in Focus, as a response to the unprecedented business environment, demonstrating where we see recruitment challenges and opportunities for both our clients and candidates to achieve positive personal, professional and commercial outcomes.
To download CGC in Focus, click here, or connect with CGC today and one of our experienced consultants will be happy to help.