‘Unprecedented’ construction industry challenges stall council projects in regional Victoria – ABC News

Pressures on the construction industry are affecting regional Victorian councils’ capital works programs and holding up key community projects, builders say.

Upgrade works at Creswick Town Hall have been delayed due to a lack of applications for the tender before Hepburn Shire Council’s deadline.

The Warrnambool City Council faced a similar dilemma earlier this year when no submissions were received for its Jetty Flat Pavilion redevelopment by the closing date in February.

This caused delays to the planned construction start date, with the council reaching out to contractors directly to ask if they could complete the project.

A tender was finally awarded this month.

Regional builders have told the ABC skilled labourer shortages, supply delays, price hikes and high demand were affecting daily work.

Richard Nicholson, director of Ballarat-based Nicholson Construction, said many businesses were saying no to new jobs because they were too busy.

“Everyone is trying to get projects that were put on hold and new projects underway — it has all come all at once,” he said.

“Finding resources … is very challenging.”

Timelines renegotiated 

Abode Restoration director Tom Carson said he would have applied for the Creswick Town Hall tender under different circumstances, because his company previously completed upgrade works at Clunes Town Hall.

But he said the company had too much work on to meet council’s desired timelines and difficulties accessing skilled workers and supplies meant he had to pass.

“Our business is in Melbourne,” Mr Carson said.

“We do a fair bit of country work and we have always had the approach to use as many tradesmen in the area [as possible] … but we often find there are just no skilled tradesmen available because they are also flat out.”

Mr Carson said Hepburn Shire Council had since reached out to him directly and he was discussing potential changes to the project timeline.

Hepburn Shire Council has reopened the tender period for the job for another six weeks.

“It is very unusual — usually we get good numbers of tenders,” shire chief executive Bradley Thomas said.

“It is not just a Hepburn Shire challenge — talking to other councils, it is a challenge right across the sector.”

Industry’s ‘new normal’

Master Builders Victoria country sector chairperson and Ballarat builder Stuart Allen said the pressure on the construction industry was unlike anything he had seen in 30 years.

He said the public needed to be educated on the “new normal”.

“Where clients used to call up to get a tradesman to do some work straight away, that is not the case anymore because of the shortages,” Mr Allen said.

“Projects are now taking longer — a nine-month project is now taking 12 months.

Ballarat-based Renovations and Restorations owner Dan Whitmore said customer expectation on price was an issue and he was having to spend more time quoting jobs.

He said the overall number of quote requests had increased, but there was a drop in the uptake of work from those quotes.

“Whilst there are plenty of people looking for renovations to be done, they do get blown away a little when they realise what the price of things are,” Mr Whitemore said.

Bottom lines at risk

Mr Allen said cashflow was a major issue for builders because many were locked into contracts for jobs and had to bear the brunt of skyrocketing material prices.

“Businesses can’t finish those projects in their allotted times, then they are not being able to collect their money and have the cashflow rolling,” he said.

“That is putting pressure on being able to pay their suppliers or sub-trades.

“The cost of materials is going up during construction at an unbelievable percentage rate that we have never seen before.

“Some of the materials are going up 20, 30, 40 per cent during construction and builders are locked into fixed-price contracts.

“We are hoping maybe in six months’ time there might be a bit of a levelling out of a few of these situations, but it is really hard to say.

Mr Nicholson said he was concerned builders going into liquidation could put suppliers and sub-contractors at risk and impact his business in turn, but said the supply issues were “easing somewhat”.

“The shipping container volumes are starting to increase,” he said.

“There is a lot more comfort now around the price increases than what there were four months ago.

Mr Nicholson said the best approach was to get back to work and try and get through the pent-up demand.