Construction Industry likely to halt in upcoming weeks

News this week has been somewhat dire for the construction and building industries, with discussions in the media about the likelihood of the industry grinding to a halt over a lack of supplies and workers. Russia’s involvement in the war on Ukraine has been one of the factors as materials are not arriving from their Russian base. Timber shortages continue from the previous year and look set to cause issues again. Costs of concrete, steel and labour have continued to increase. Overseas (Visa) workers are another issue as these have also dwindled over the past 24 months due to border closures and the pandemic. The skilled worker shortage is now an international issue and has resulted in pushing up the labour costs significantly. In some instances, costs have blown out by 40%. The result is that many small construction companies are finding themselves in dire straits with a number now out of business.

There was a push for the Victorian Government to allow the construction industry to add in an “escalation clause” into fixed-price contracts worth less than $500,000 to cover the increased materials and labour costs. Unfortunately, this has been rejected, which has led to further disappointment for builders.

The next three to six months will certainly be challenging to say the least.

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