Rail and road projects driving construction Wednesday, 15 June 2016

Strong growth from transport-related infrastructure projects will help drive gradual improvement in the construction sector into 2017, according to a new report from the Australian Constructors Association (ACA) and Australian Industry Group (AIG).

After a sharp 8% drop in construction in 2015, the Construction Outlook survey forecasts that the value of turnover from major non-residential project work is expected to contract slightly (down 0.4%) in 2016 before recovering some ground with a 4.5% rise in 2017.

The survey of leading construction companies indicates that the drag from reduced mining investment is likely to wane with slower falls in turnover derived from mining and heavy industrial construction projects during the year.

However, revenues from rail projects are predicted to rise 14.8% next year and road projects should rise 11.7%. Also strong is multi-level apartment development, which is expected to continue to grow strongly in 2016 (+10.8%), before easing in 2017 (+1.5%).

ACA Executive Director Lindsay Le Compte said infrastructure construction is gathering momentum.

"Importantly, the lift in major project activity will also support commercial and related construction as the private sector looks for opportunities along infrastructure corridors or surrounding major infrastructure facilities," Le Compte said.

"There is also an opportunity for governments and the private sector to review and improve their approach to procurement, and achieve greater efficiencies in the development, delivery and management of projects and facilities.”

AIG Chief Executive Innes Willox reinforced Le Compte's comments.

“The rebalancing of the construction sector is set to continue through the remainder of 2016 and into 2017 with very strong growth from transport-related infrastructure projects expected to gradually offset the further declines in resource-related work," Willox said.

"An easing of apartment-building from current very high levels is expected to be offset somewhat by an anticipated lift in commercial construction. It is vital that workplace relations arrangements in the sector not only assist in containing costs but also have sufficient flexibility to allow the sector to expand as smoothly as possible.”

[Rail projects such as the Sydney Metro (pictured), Melbourne Metro and Brisbane Cross River Rail will help drive construction in Australia. Photo: Transport for NSW]

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