Business

Construction Industry in Australia

The Australian construction industry is a significant driver of economic activity in the country. It contributes 8 percent to the total GDP of Australia and $134.2 billion to the national economy. And even with the industry’s not-so-impressive performance in the past year, the only two other sectors that outperform construction are healthcare and retail.

What comprises the construction industry?

The construction industry is largely involved in the preparation, construction, repair and renovation of real estate properties. However, this is not a complete description of the industry, as it operates in both the private and public sectors and comprises three broad categories of activity:

  • Heavy and civil engineering construction which encompasses mining and heavy industries, as well as major infrastructure (roads, bridges, transportation lines, etc.)
  • General construction work on non-residential buildings such as offices, hotels, industrial parks, hospitals, entertainment centres, etc.
  • Construction of residential buildings including houses, apartments, duplexes, townhouses, etc.

One of the most obvious contributions of the construction industry is its role in the development of buildings and infrastructure. It contributes to the wealth and capital stock of Australia and supports the productivity enhancements required to ensure stability and future prosperity.

Construction activity demand, in general, is primarily influenced by specific economic factors which include:

  • Population growth
  • Income growth
  • Technological innovation
  • Industry activity
  • Consumer interest and sentiment
  • Commodity cycles
  • Interest rates
  • Inflation

Government policies and regulations greatly influence residential construction. These include policies and regulations relating to land allocation, taxation, planning. Other key factors in industry growth include the availability of land and the cost of resources (building materials and equipment, and skilled labour).

The construction industry supply chain is complex and involves manufacturing (equipment parts and materials), services (design, engineering, consulting, surveying, lease management) and traditional construction trades. Since Australian construction companies rely on a wide network of suppliers, this means that the economic benefits provided by the sector extend well beyond its immediate functions and activities.

Being the third-largest industry in the country, the construction sector employed almost 1.2 million people in 2018, which is equal to about 9.5 percent of the Australian workforce. The construction industry is expected to continue growing as population growth through natural childbirth and overseas migration fuels demand for more homes now and in the future.

Top 5 construction companies in Australia

So, we have established that the construction industry makes a huge economic contribution here in Australia, but what is driving this? Much of the impetus comes from a key group of industry leaders paving the way and setting standards for others to emulate. These leaders include the following:

1. Buckeridge Group of Companies (BGC)

The Buckeridge Group of Companies, or BGC, started out in the Australian property development arena in the 1960s. This family-owned conglomerate is currently one of the country’s top privately-owned companies. They established their construction arm in 1994 and have since worked on various prestigious projects across a number of states, including the Perth Arena. They also own a mining and civil construction arm called BGC Contracting.

2. ADCO Constructions Pty. Ltd.

ADCO was established way back in 1972. To date, it has over 3,500 projects to its name, delivered all across Australia, with an estimated total value of well over $10 billion. Aside from ranking among the top 50 private companies in the country, ADCO employs 580 people, and its client roster includes not only private institutions but also federal, state and local government agencies.

3. Fulton Hogan Pty Ltd

Having been around for eight decades, it’s no wonder Fulton Hogan operates across New Zealand, Australia and the South Pacific, and now employs nearly 7,000 people. The company is involved in different sectors, with interests in industries such as civil construction and land development infrastructure, transport, mining, water and energy.

4. John Holland

Founded by Sir John Holland in 1948, the company’s operations span Australia, New Zealand and Southeast Asia. John Holland is known to have a project in every single state and all territories in Australia. The $2.5 billion EastLink project, which is the country’s biggest road infrastructure undertaking, is also John Holland’s most substantial project to date and is part of their joint venture with Thiess.

5. Nexus Infrastructure

The Nexus Infrastructure consortium comprises Plenary, Cintra and Acciona. They’ve come together to work on the massive Toowoomba Second Range Crossing project which is being funded by the Australian and Queensland Governments. Nexus also a joint venture with Acciona and Ferrovial for design and construction work on the crossing, as well as a 25-year operation and maintenance contract for the same project.

With the impressive backgrounds of these companies, and the significant results they are able to achieve, it’s no wonder that the industry continues to innovate, scale new heights and achieve major engineering and architectural feats.

And despite the lull in construction activity in 2019, the projections for this year are much more optimistic. Most of the developments this year are expected to be fuelled by transport infrastructure investments, as well as in improving consumer and investor confidence in commercial and industrial projects.

 

 

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