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What It Takes to Deliver a Decade of Major Projects In Queensland
36 Plays3 days ago
In this episode of the Off Site podcast, Jason and Carlos are joined by Andrew Chapman, CEO of the Queensland Major Contractors Association (QMCA), to discuss the changing landscape of major project delivery in Queensland as the state prepares for a significant decade of infrastructure investment ahead of the Brisbane 2032 Olympics.
The conversation explores the broader pressures facing the construction industry, including workforce capacity, delivery timelines, productivity, and the role of long-term planning in supporting sustainable growth. It also touches on how major events can act as catalysts for infrastructure investment, and the importance of ensuring these projects deliver lasting value beyond fixed deadlines.
A wide-ranging discussion offering context and perspective on what it takes to deliver major infrastructure programs at scale, and what the coming years may mean for Queensland’s construction and engineering sectors.
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Transcript
Queensland's Construction Boom
00:00:00
Speaker
Over the last five years we've seen that increase. um So in 2020 we'll look at five to ten years but we really the report on on a five-year pipeline. um That five four to five-year pipeline in 2020 was $48 billion.
00:00:14
Speaker
The five-year pipeline in this year's report, the 2025 version, is $127 billion. is a hundred and twenty seven billion
00:00:26
Speaker
Welcome back to the Offsite Podcast. I'm Jason Lansini, joined once again by Carlos Cavallo. And today we are talking with Andrew Chapman, the CEO of the Queensland Major Contractors Association about major contract and major project delivery pipeline in Queensland, specifically tied to a big amount of work coming as a result of the Olympics.
00:00:53
Speaker
um Andrew, thank you very much for taking the time. Welcome. um And I won't bring up the the rugby that we were just talking about. no well, thanks for the opportunity, Jason and Carlos. And up looking forward to our chat.
Impact of the 2032 Olympics
00:01:09
Speaker
So maybe to set the scene here, Brisbane 2032, it's the home of the 2032 Olympics. For those in the construction industry, the Olympics usually means one thing, which is like a giant pipeline of work ah with a very, very hard and fixed deadline.
00:01:29
Speaker
um And that has consequences, both good good and bad. ah And we reached out after after seeing the latest pipeline report from the QMCA and highlighted what is about to hit Queensland's construction industry over the next five or so years.
00:01:49
Speaker
um To, I think, quote ah part of the report, it was saying that from here there's something like a 60% lift in annual work ah to be delivered ah just on funded work alone and something like 150% here deliver the peak output.
00:02:04
Speaker
Yeah. ah to deliver the peak output yeah so and be great It'd be great to understand yeah what that, um in your words, what that report has really uncovered is about to land and what it means for the industry in and Queensland.
00:02:20
Speaker
Okay. Thanks, Jason.
Infrastructure Sectors and Funding
00:02:21
Speaker
So the QMCA does the Queensland Major Projects and Pipeline Report every a year. And over the last five years, we've seen that increase. um So in 2020, we'll look out five to 10 years, but we really report on on a five-year pipeline.
00:02:39
Speaker
um That five four and five year pipeline in 2020 was $48 billion. The five year pipeline in this year's report, the 2025 version, is $127 billion. is a hundred and twenty seven billion Now, what that unc includes is all the transport work, all the water, waste water, electricity, the energy transition, all our oil and gas, mining and resources and heavy industry, defence work, marine, et cetera. That's what's included in the report.
00:03:07
Speaker
um This year will include the Olympics in it. and everyone gets excited about the Olympics. And yes, it is something that is a big catalytic event that is going to enable us to to deliver a whole range of infrastructure um and facilities that yeah might not have been done if we didn't have that event.
00:03:29
Speaker
But yeah that pipeline, it only accounts for $7 billion. dollars So $120 billion is the other work. Now of that $127 billion, 63% is funded.
00:03:43
Speaker
um So it's about $70 billion. dollars um And that's spread across the public sector and the private sector. we how So we're going into it what I term as a golden generation, or golden decade of opportunity for our generation to be able to deliver um the amount of work that we have in front of us. And that's across transport, water, power, obviously the Olympics, and the mining and heavy resources industry as well.
Learning from Past Booms
00:04:14
Speaker
um as Why I say it's that golden decade is that we'll have an opportunity to really change the way we do things, be more productive um and deliver some more legacy outcomes in terms of a capability and capacity uplift with our supply chain, with our fabrication industry, with our precast suppliers, um looking at how we're developing and adopting new technology to help with the delivery of these projects and this level of work more efficiently and more safely.
00:04:52
Speaker
And the last time we did it, we had a big boom like this was 2011 to 16 when um we delivered three big LNG plants in Gladstone in central Queensland, zone ah plus coal seam gas extraction field development, three massive big pipelines, five new coal mines, couple of port upgrades and a couple of rail row upgrades in in hospitals. That equated to $70 billion dollars in those years year figures.
00:05:22
Speaker
$112 billion in today's dollars. So we're moving to a very similar
Avoiding Post-Olympics Bust
00:05:28
Speaker
paradigm again. Now what happened back then was we were very efficient. We did a lot of modularisation, lot of pre-assembly um and prefabrication of the the heavy industry elements.
00:05:41
Speaker
And we'll need to sort of go back to some of that thinking and adopt that into the different style of opportunities that we have here coming forward. Take some great lessons out of um yeah some of the stuff that's happening in the yeah UK and and other places around the world, would have adopted this kind of stuff and they have seen the productivity improvements. It's not just the on-site productivity, it's also the back of house. It's how we we're designing and and developing digital models that can go into, ready into autonomous earth moving equipment and the like. So, resolve which it is.
00:06:15
Speaker
Yeah, it's interesting that you bring up that period of like 2011 to 2016. I entered the construction and infrastructure industry in Queensland in 2011. worked on those LNG plants in in central Queensland.
00:06:29
Speaker
And I remember that period being this period of big boom. And then maybe after that, Queensland, and then there nothing. Yeah.
00:06:43
Speaker
And we can't afford to go through that again. um I liken it back to when Sydney had the Games in 2000. There was a book building, construction boom in the lead up to the Sydney Games and then Nisabelle fell off a cliff after it from 2003 to 2008.
00:07:00
Speaker
We can't afford to do that in Queensland simply because we're in the highest economic growth of all the states in Australia. We've got the highest population growth. um So we have a need to continue to invest in critical enabling infrastructure that can help the economy grow.
00:07:18
Speaker
It's interesting that you you know you said like $7 billion of that pipeline is to say the Olympics or directly attributed to Olympics. Over the five years, yeah. Over the next five years and and that the rest is kind of everything else that you yeah that goes around just infrastructure and resources, et cetera.
00:07:36
Speaker
You know, that pattern that we described from 2011 to 2016 and is possibly coming along ah now again in Queensland is something that we've, you know, ah Carlos and I in in the work that we do see in different places around the world, we're seeing it happening in say a Toronto right now where there's 180 billion worth of infrastructure pipeline that's that's just coming on out of not nowhere, but like it's ah it's a doubling or more of of of spend.
00:08:05
Speaker
Is that like cyclical nature, ah like kind of a feature of how infrastructure gets funded or is there something structurally
Cyclical Funding Challenges
00:08:15
Speaker
wrong there? And and in your role, you know, you're talking, you're representing the contractors and and interacting with with government. Yeah. What's...
00:08:22
Speaker
is that is Should we think about that as the normal way that it should operate or or something? I'd like to think that we could have a lot more steady state approach. And when you go through these cycles, you know, the peaks and the troughs, it doesn't help industry because your rapid will try to to put people on, build capacity in your supply chain, your subcontractors, your engineering workforce, and then suddenly the work's not there. So you're either laying people off or then moving around. And then you suddenly,
00:08:50
Speaker
and then we'll you something we're back into these massive big peaks again. And you've got ramp up your supply chain capacity. It's not been held steady. So that's why we've heard we're seeing these cost increases. um And we've got to manage that better. If it's more steady state, yeah yeah a little wax wane, but if it's a bit more steady state growth,
00:09:15
Speaker
We can um invest in technology, we can invest in um skills development, we can invest in some um different technology, yeah automation and and tools and robotics that can help deliver. it But if you've only got one one or two projects and then everything stops again, there's no incentive, there's no benefit in investing in that kind of stuff. So we've got to change the paradigm
Planning for Industry Stability
00:09:41
Speaker
100%. And we have argued for a long time that ah in the public sector they should be really looking out and giving a 10-year plan so industry can understand what's coming.
00:09:53
Speaker
It doesn't all have to be funded. We we know there'll be waxes wines in that. but If you understood that yeah the first four years, which is the budgetary cycle, is not much fixed.
00:10:05
Speaker
The next three years is the stuff that is being worked on and planned now to feed into it. And then the the outer three years might be the stuff that we're thinking about.
00:10:16
Speaker
You can see a relevant pipeline like that. You can actually start to invest. because you've got confidence that there is stuff coming. um And Treasury can can map that a lot better themselves because they'll know what the requirements are.
00:10:30
Speaker
And look, as the economic conditions wax away, and they may have to change things around or they might to get some more private centre money into it. But it enables that conversation to happen. The problem with the short outlook at the moment of four years of which the first two are fixed and the next two are variable doesn't help industry, um particularly get to that point where you look can invest properly you can in a um and you can invest in people, invest in skills, invest in technology that is going to deliver you productive benefits. It's all about, shoot, we've got to deal with what's coming now.
00:11:09
Speaker
It's a pattern that we see in other countries as well. And it's it's a it's it seems to be a struggle everywhere because you've also got the political ah element to it as well, where priorities can shift on ah on ah on a dime or and or an election. Yeah.
00:11:27
Speaker
you've hit
Political Impact on Projects
00:11:28
Speaker
it on the head. on Political um cycles are quite the most challenging because um you basically, if there's a change of government, there's often, which we have seen in Australia over the last couple of years, in 2022, there was a change of government federally, 2024, there was a change of government, um ah the state And what happened was that when the federal government changed, they then in 2023 did a review of the infrastructure spend.
00:12:01
Speaker
Now that was supposed to be 90 days. It took them 210 to the bureaucratic time. um And then they changed the funding arrangements with the states and the councils.
00:12:13
Speaker
um da is The states then had to understand what that meant to their budgets. That then took till June 2024 to flow through in budgets.
00:12:28
Speaker
And in Queensland, we had an election in October that year. So a lot happened for about two years. We had a change of government at the state level, and they'd come in and go, well, we need to review those priorities, et cetera. Now that has flowed through, they had the budget, we're now mooting on things.
00:12:46
Speaker
But the combination of those two elements has seen products delayed by three years and are a time when we needed to actually get them going a lot earlier.
00:12:58
Speaker
It's really tough because um think in the UK we had a bit of a run which... I don't know whether it was orchestrated or by chance, but but we had the Olympics cross for our HS2. So this is like steady so stream of people moving through these big projects. How involved would say an Olympic committee be it with you guys in government around that sort of conversation on when or is it?
Olympic Project Sequencing
00:13:21
Speaker
Like suddenly this thing appears with this hard deadline and then you're scrambling to think about how do we actually manage this pipeline? As an industry, we've had um ah very good discussions and engagement with um it's a strange term, it's called GECA, the Gaines Independent Infrastructure Coordination Authority, um and Brisbane 2032, the old low cog there, the BCOG for the the Brisbane GAPs.
00:13:50
Speaker
ah So we've had good engagement with GECA around how the projects can be procured, the timeframes, the sequencing, so that we're not absolutely overloading everything at once. it's it's But it's not sequential, but it's done in a way that um we're making sure that we can get the right parties on board early.
00:14:12
Speaker
They can work with the architects, work with the client, work with the engineers to develop the right buildable solutions um and how it's going to be done with, you know,
00:14:24
Speaker
and taking into account things like pre-assembly, modularisation, et cetera. ah but So that yeah we've got probably four or five of these indoor sports facilities to build in different scales and sizes.
00:14:40
Speaker
Don't do them all at once. you do them in a bit of more of a sequential because they're sort of an 18-month build. um You can do them a bit more sequentially rather than all at once.
00:14:51
Speaker
So they the Geeker have engaged a lot with with industry around that, um the best kind of procurement approaches, um the timeframes, the challenges they've got, and understanding some of the risks and getting them understood well early.
00:15:08
Speaker
um Olympics has always had that challenge. And Brent Fleiberg in his book, How Big Things Get Done, does identify that Olympic projects um have an overrun of a hundred and so on average 167% with a fairly fat tail to it.
00:15:29
Speaker
ah And that is because there's a whole range of factors that that ah drive that. You've got a fairly fixed deadline. You've got a lot to do. um The new norms that Brisbane is working under is to use as much existing infrastructure as possible. Now, we are warming to new facilities, definitely. But they're not just for the games.
00:15:51
Speaker
They're for legacy for the city, but we will use them for the games. So the indoor centres that are going in Moreland Bay and Logan, the upgrades to Barlow Stadium and and the Sunshine Coast Stadium, they're stuff that will be used forever in a day. The new Wolfsburg Stadium at Victoria Park will be used forever in a day for cricket and AFL.
00:16:14
Speaker
um It'll just happen to also be used for the Olympics, but we're delivering it prior to when we did it. Yeah, such a so it's a lot of that acceleration of of investment early.
00:16:27
Speaker
um So it's how you sequence it to make sure that you, to have to build some extra capacity in supply chain. We have to build some extra capacity in our industry capabilities to deliver anyway.
00:16:37
Speaker
um But you're not overloading it all at once and then it's just left. Yeah, yeah, building it all other than having that nice steady stream to consistently continue to deliver. Yeah, okay. um I guess um if I think about ah the QMCA, and it' it's hard to think of an equivalent in the UK of the type of organization, we have big institutions that sort of represent professional um individuals, and we have sort of unions that represent the workforce on the ground and I can't think of a
Contractors and Industry Advocacy
00:17:09
Speaker
well-known body that represents the contractors. So I'm keen to know a bit more really around how, like what does QMCA look like on a daily basis? What are you actually, obviously we've read through the report, but what is the organization like and how do you actually sort of work with contractors and governments on a sort of daily basis?
00:17:26
Speaker
Okay. So the QMCA, there's a number of sort of industry associations in Australia um that are in the construction industry. So we've got the master builders, which deals with yeah anyone from residential builders all the way up to your um yeah you big guys doing vertical major high-rise construction and and the like. um We've got the Civil Contractors Federation that deals with similarly on this in the civil side, anyone from yeah um a mum and dad, ah plant operator, all the way through to a very sophisticated civil contractor. The QMCA sort of overlaps then at the CCF a bit with the head contractors.
00:18:05
Speaker
And the way we're structured is we have executive membership and or executive executive general membership and then um associates. So our executive and general members are head contractors.
00:18:17
Speaker
um They're the ones who are doing yeah those large engineering construction projects. um They have direct um contractual arrangements with clients.
00:18:28
Speaker
Our associate members are yeah subcontractors, suppliers, engineers, um other professional services, um technology companies who support and work with the head contractors in their delivery.
00:18:44
Speaker
um We have a lot of overlap obviously with the CCF, but that doesn't mean we're in competition. We actually work hand in glove with the CCF. um around a whole range of advocacy. So what does life look like for the QMCA? We represent the industry to government, to private sector, um about key issues around procurement, around risk, around project and contractual arrangements,
00:19:10
Speaker
um and in aspects like that. We do a lot of advocacy such as the the Major Products Pipeline Report that you alluded to. um We do a whole heap of events, network events that ray yeah might be on different topics, for instance, that are in of illter interest to the industry and not just head contractors, our entire industry.
00:19:33
Speaker
then yeah We've had um ah presentations on engineering failures in the lessons. We've had um discussions on nuclear energy. We've had discussions on um the new critical minerals development and what that means to to our industry.
00:19:49
Speaker
Water, waste water, energy, you name it, we've done it. We'll also do discussions around labour, being able to how we're going we need to upskill and also increase the number of like people in the long industry.
00:20:03
Speaker
um So, a large different topics in that area. And we'll also have a series of working groups and they're on critical sort of, areas that are relevant to our industry. So we've got a ah working group on safety, we've got our working group on industrial relations, one on um technology and innovation, um one on industry culture, one on sustainability, and sustainability is more than just environmental sustainability, it's also um financial sustainability and site what we call spatial sustainability, how you work with the local communities that you're working in.
00:20:41
Speaker
And we have a young construction professionals group as well. So there the working groups that we have that are different areas. um And if I look at the technology innovation working group, we hold a technology forum every second year.
00:20:56
Speaker
They run that. But they've also just produced a ah draft white paper on the path to automation in the civil construction sector. and so Some interesting sort of areas that we we get involved in and try to be that thought leader um and industry advocate, but take the industry along you know in a mature and help them mature a lot more to deliver the amount of work that we've got to do.
00:21:24
Speaker
Andrew, i I read this report um the other day. I think it was from the IMF, but I'll have to get, we'll get the actual record in the in the notes of the show.
Financial Distress in Booms
00:21:35
Speaker
But it talked about how more construction contractors tend to go into financial distress during a boom.
00:21:43
Speaker
that at a period of ah like lower trading um due to like over capacity and you know price hikes e etc etc you know with this pipeline that you've described coming down the the pipe how do your like members and how how do the the general contractors that all have to deliver a bunch of it think about the the impact on it and how they most sustainably approach it yeah and look it's a good point because you find when you're in a burn period, um unfortunately, input costs can and rise quite substantially. And we saw that massive cost increases um during the COVID period. um
00:22:27
Speaker
And we are still seeing cost increases all in key elements across the the engineering construction sector are around about 7% this year. And it'll run somewhere 6% 8% for the next of time.
00:22:40
Speaker
period of time ah That is a challenge for the industry, for sure. And waiting well and the building sector is the one that has been really affected by this. When you are locked into a lump sum price and you're taking all the risk, that means you're taking supply supply risk.
00:22:58
Speaker
And if those costs are going up more than ah you've anticipated, you've you've budgeted for, or you've risk allocated, then it can burn you. and that's um And if you're locked into a half dollar lump sum contract with no opportunity to renegotiate due to things that are falling outside of your control, um it can leave some people in a very bad situation. We have seen a number of liquidations and companies falling into administration um in Australia in the the construction industry due to those input costs, be that labour, be that pay that materials.
00:23:38
Speaker
um But it also, i think, is amplified when we have poor productivity um on our projects. And whatever your input costs are, if you've got poor productivity in the way that the products are being delivered, it just amplifies those costs massively.
00:23:54
Speaker
um it It again reminds me of the that period in in Queensland, 2011 to 2016. If I think even just from ah from from people that work in the industry today and ah the labour cost component, you know you would see a lot of a lot of hiring. People would win big projects. They would have to hire into to support those projects. Now they've got kind of like a a fixed cost base inside of the business to support that. Wage is usually... you know, your salaries go up and there's a lot of like, uh, people stealing people from other contractors. Uh, so there's this big competitive dynamic that just pushes the like labor cost base and inside of a contractor. Sometimes they're like the fixed cost of the business.
00:24:36
Speaker
Um, and, uh, and it goes back to like, um, is the cyclical nature of the industry, like ah a feature or or a bug, um, I'm here. It's the cyclical nature of the the fact that yeah supply and demand drives a lot of this this pricing. And if if we're able to sustainably grow elements in the in the supply chain, labor capacity,
00:25:02
Speaker
And obviously the workload helps with that. We can better manage those costing prices too. and And also where you mentioned earlier, like we even within like a project like the Olympics to stagger projects so they don't all have the same end date. You can imagine getting to the end.
00:25:19
Speaker
Everyone's got this same deadline. Everyone's scrambling for labor. They'll start to overpay. The rates go up and up and up. And then it's even for the individuals, the Olympics state ah ends and then suddenly you're you're looking jobs at 30% below what you're being paid the month before. Yeah. that's really that's good I think the Olympics is a function of um when people estimate early on, they go, oh, you will estimate this, it it would benchmark it on this this pride previous project or whatever. um The Olympics are very, very complex. um
00:25:52
Speaker
The requirements from um the the sporting federations and the the IOC and and all that kind of stuff, you know as yeah it's not often known early on and that tends to add it as it goes along and you want to sort of understand that scope very early on to be able to get yeah firm, well not firm pricing, but plus certainty about what you're looking at we on a risk adjusted basis.
00:26:25
Speaker
the um I think I saw in the report that the workforce ah is projected to grow. I can't remember the exact numbers. You might remember what they are, Andrew, but it was it was substantial. as that I'd imagine there's a lot of conversation about where that comes from.
00:26:41
Speaker
Yeah. So this gets a little bit numbery and I'm sorry for the heavy nature of it. It's all right. A lot engineers. A lot of engineers. Yeah, that's great. There's 285,000 people currently employed across the building and construction industry in Queensland.
00:27:05
Speaker
That is across three areas. Building construction, which includes residential and boroughs. construction services and engineering construction. Of that 295,000, 30 to 35,000 are employed in the engineering construction area.
00:27:22
Speaker
The major projects within the engineering construction area account for about 50% of that. So, but it delivers inordinately more than all of the other areas in terms of CapEx.
00:27:37
Speaker
So it looks far more efficient than the other areas. But we're not as efficient as we can be and productive.
Labor Force and Productivity Needs
00:27:46
Speaker
So we'll put 15,500, 16,000 people employed on the major projects within the engineering construction sector and in the state to deliver the, if if every single project were to happen that's on the pipeline, and at current productivity levels, we'll we need up to 41,000 people.
00:28:08
Speaker
So that is a 25,000 increase from where we are today. If we are delivering the funded works, we would still need a 10,000 person increase.
00:28:20
Speaker
Now, those numbers are qualified. They're at existing productivity levels. If we were able to increase productivity through a whole range of mechanisms, better culture, reducing our indirects on site, um reducing the the time and cost of procurement, um being out, yeah manage the some of the IR practices better to get more effective working time of work, being able to um plan and schedule how we're doing that work,
00:28:54
Speaker
more technology, innovation, et cetera. um If we can gain a 10% improvement in the productivity on site, and that is a measure of output per person per year, and we we're able to increase the number of people in the industry by 10 to 15%, then we're able to deliver that the run rate to deliver that pipeline, which is 15.5 billion a year.
00:29:22
Speaker
and we increasing our people And the increasing of people in the industry, you know, again, going back to that same period, I remember how many people were coming into the industry in Queensland from different countries. Half the people I worked with had emigrated from Ireland ah in in and know around that period.
00:29:43
Speaker
is that is that Is that something that the like your members, are that's where some of that comes from? Or is it you know Melbourne's a bit skinny on work? I think migration does play a role. Skilled migration does definitely play a role.
00:29:58
Speaker
Equally, it's also looking at... um other industries that have a some relevance to construction um or even being able to retrain people out of other industries that may be sort of falling off a little bit.
00:30:14
Speaker
um So or even using technology or and other approaches that could reduce on-site manuals that we can then redeploy those people onto other tasks.
00:30:27
Speaker
So it's that thinking about the work design and how you're you're going to plan and deliver a job that can also help in that area too. So it's not just about just going and finding that number of more people, um it's there's a combination of factors in there. And also I think skilled migration plays a role, I think, retroning people out of other industries or in rescaling people from other parts of the industry that may be being displaced through other technology or whatever um into other parts of the industry, into the engineering construction area.
00:31:04
Speaker
How much flow do you see between the three major cities? Like Jason mentioned there, if Melbourne's like quieter for the next five years, do you see a lot of people move or do people like, to yeah appreciate it not like the UK, there's some serious hours between these cities. So you can't drive from one side of the country to the other and then start an hour's like quiet on top gear.
00:31:26
Speaker
yeah That was a great episode. But yeah,
00:31:35
Speaker
<unk> I'll go back pre-2000 colours on that one because when the Sydney Games were being built, all the infrastructure was being built for the Sydney Games, New South Wales, particularly Sydney was a construction zone, we found a lot of labour and skills moved from Queensland and Victoria into New South Wales.
00:31:58
Speaker
um we're we're we doing our very in When Queensland and WA were doing the energy and resources construction boom in that 2010 to 2016 period, North South Wales and Victoria were very, um were were quiet. So a lot of labour came those ways.
00:32:17
Speaker
um Then that 2016 period onwards to sort of 2021, 22, we have been relatively quiet and so and sort of building up.
00:32:30
Speaker
NSW and Victoria have been doing a very big building program and we have seen a lot of resources, both technical and delivery resources, construction resources moving, gravitating towards Sydney and Melbourne.
00:32:45
Speaker
um The challenge we have going forward is that Sydney and Melbourne are still doing big build programs. um At the same time as Queensland is needing to go hammer and tongs.
00:32:58
Speaker
And I made the comment ah in previous versions of the major projects report what that that nomadic nature of our construction workforce, be it supply chain, workers, project managers, technical school people,
00:33:16
Speaker
um is starting to die off a bit, certainly because of the amount of work still going on in those areas. And we'll need to see some other areas from a national interest perspective, slow down, that they can then go again in the 30s to enable us to to be able to shift that labour around like it used to have used to move a bit.
00:33:39
Speaker
move or And one yes, we had a lot of um international labour come in when we did the LNG plants and the like. um That was skilled labour specific to those elements.
Federal Coordination and Labor Flow
00:33:51
Speaker
um We also had a lot of labour coming up from the southern states. um And then it kind of went back after we finished. So we we kind of need to look at that those arrangements again. and And there needs to be, in our view, a bit better sequencing at the federal level. into yeah are they They're the ones with the birth strengths that give money to the states. Maybe it's, main it's we've got hop we're going to hold you off here.
00:34:14
Speaker
That money, we need the focus be up here. the um Andrew, you had ah you mentioned much earlier on in the conversation the you know the the interaction and the engagement with the the government or or quasi-government bodies around the the benefit of kind of sequencing. you you talked about some of the stadiums and instead of doing them all at once, doing them one after another.
00:34:36
Speaker
I'm interested in how that conversation goes when, you know, i you can see the the other side of the argument, which is like you've got a fixed deadline, starting something in three years rather than now is just chewing up three years of floats. And, um yeah, how do people think about that that trade-off? There was also the, and I'm not saying we're going to the stadium and then we'll do the aquarium.
00:34:58
Speaker
That was a critical time period. They will run concurrently and where a lot of products are run concurrently. but there were some that are a little bit more sequenced.
00:35:12
Speaker
It's a challenge how you you sort of manage that aspect um because if you delay a project too long, um you're also going to um encounter the cost growth. So but out in a report, our projection is that this financial year, we're going to see 7.1% cost increase across the industry.
00:35:35
Speaker
And for the next four years, we're anticipating somewhere 26% to 7% each year. So a $100 million project to today, if it was delayed or pushed out to start in five years' time, that project is $135 million.
00:35:49
Speaker
hundred and thirty five million So you've got that colliery as well, but equally, if you start in for things right now, you're suddenly going to find the $100 million dollar project might be $110 million because of supply and demand issues.
00:36:04
Speaker
So you've got to, there's a foreign line to trade there. isn't ah Isn't there and ah another funny thing under the hood there, Andrew, which is like it's probably still going to cost that amount anyway. It's just where does the cost sit? um Because let's say the government awards the contract, say now rather than three years, does that sit with one of your members that then has to eat the cost of that increase or their supply chain? Because if inflation is going to happen regardless.
00:36:31
Speaker
We've seen that on some projects like Inland Rail, which is a very, very big project or program. yes There was some procurement undertaken that had for the Queensland sections that had contractors on board, even the northern New South Wales sections.
00:36:52
Speaker
And they are working through the environmental approvals processes and big teams and they were churning. It was a lot of engineering work being done. They're churning, churning, churning, it's costing. And then they went, oh, we're going to put a hold on the project. And it's like, oh, um so there's a direct cost involved in that because client has to pay.
00:37:13
Speaker
But there's also an indirect cost in that there's an element of work that could have been delivered in that period of time. um on other projects, but those those teams were tied up too.
00:37:25
Speaker
So we've got the we've got to make sure that when we are bringing the parties on board, it's at the right time to deliver the right input to de-risk a project, to be able to give price and time certainty.
00:37:42
Speaker
And we're not then wasting that in that it could have been delivering other projects. So that there's ah that fine line you've got to tread, as I guess, as a client, as an industry too.
00:37:57
Speaker
I got one final question, which is a bit of ah a gear shift. If i reflect back on um you know, back to that 2011, 2016 boom period when I entered the industry, um I think about how many of those projects, even the LNG plants in Gladstone that you you referenced, Andrew, how much of the...
00:38:20
Speaker
um The projects were managed by people that entered the industry right at the start of that boom and the amount of people that were graduates that entered and kind
Educational Investment for Future Needs
00:38:30
Speaker
of cut their teeth. And one, two, three years later, they're big part of the people that they're a big part of of of the the people that and needed to to run those jobs. how ah Do you or your your members have thoughts about yeah how to engage and and drive the right pipeline of of people entering from great Queensland universities, for example, yeah entering the industry?
00:38:55
Speaker
I mean, it's it's a massive challenge because and whilst we have seen engineering companies starts increase across Queensland, we're still only graduating 55% of those who start.
00:39:12
Speaker
um And when you look at the increases in those starting in or entering an engineering degree, and There is a lot of international students involved in that and they often might stay. They might go back to their normal or their parent help country. um So we will look at this kind of boom coming forward.
00:39:36
Speaker
um My view is that we need to be very, very um clear about where we want the investment to be building up skills and capability that is their full legacy for the future that can be used. So um yeah let's be investing in the trades that are relevant to deliver what we need to deliver, but also for the future.
00:40:00
Speaker
In the same way in our engineering education, um Yes, civil mechanical, electrical are vitally important, but if we look at some of the the engineering elements of the future, it's a lot around mechatronics, automation and stuff like that. So we'll need to be looking at those elements and starting to invest in that um for the future of the industry as well. so um My view is we've got to be careful about what we invest in.
00:40:30
Speaker
We've got to be clear on where we're making that investment um so that we deliver. And yes, the skills cap are really we need today, but it's got to be to an eye to the future.
00:40:40
Speaker
guess as a shout out for potential graduates, think a lot of people end up in an engineering degree out of, you know, kind of get you get told it leaves a lot of options open for you when you enter and and then you kind of make your decisions as you kind of go along. Yeah.
00:40:55
Speaker
And as ah a plug for the construction industry, for those that are considering, i honestly think that there's very few better industries to learn a bunch of core skills that translate ah to ah a bunch of others.
Opportunities in Construction
00:41:08
Speaker
You learn a lot very, very, very quickly. um So i would recommend, i would have told myself to do the same thing, that or computer science something, but I would have told myself to do the same thing. Yeah.
00:41:20
Speaker
ah I would have told myself to invest in Facebook, but apart from that, I would have gone into it. Or Bitcoin. i I'm a passionate engineer.
00:41:33
Speaker
ah It's the only thing I ever wanted to do. um I love the engineering profession. I love the construction profession. Why? Because as you said, amazing. vibrant, you get challenged, you you get to work on some really interesting, challenging things, and you get to actually sell the fruits of your land. And um and Yeah, I remember early on in my career, I was doing some, I was actually with a consultant at the time, working on a big transport scheme.
00:42:05
Speaker
Only now, 29 years, 25 years later, as it started to come to fruition, I said this to my kids, who are now all, well, and truly, well, once 21's 18, but this couple years ago, I said, I'd worked on that.
00:42:21
Speaker
Oh, it's only just coming out of the ground now. When you work on something with construction, can see it, you can feel it. If you're in three or four years, we'll see something go from what is a design or a plan, be a concept, through design development, or how you're going to plan and deliver it, all the way through to construction and finishing it. And the sense accomplishment with that is...
00:42:50
Speaker
There's nothing there. Let's be honest. Totally. i'm I'm the guy that got my family to drive to central Queensland to like drive over a bridge I built or to go stand, stand stand on the shore and try and look at a look at a gas plant plant in the distance. I've done that project.
00:43:07
Speaker
Oh, great. Snooze fest for them. But yeah, totally. Carlos, any, any final questions, mate? No, that was a, it was really interesting. I think, um, Yeah, i underappreciated how much work and thought must instead go into sort of finding the sweet spot because you're ultimately protecting organizations from booms.
00:43:29
Speaker
But it's the boom at the same time that's going to attract the labor and the investment and everything that needs to come in. So finding that midpoint must be really difficult. And I guess without the organization. You're right, Carson. It was exceptionally difficult to find that midpoint.
00:43:43
Speaker
um and Let's watch, will that the whim of the funders, be their private sector or or public sector? um When the age of, Arden has always been, when the public sector is spending, the the private sector doesn't spend a lot.
00:43:58
Speaker
When the public sector has come off, the private sector steps up. um And in gru financial times, that's when the private sector really should be stepping in because it it is commercial. It's worthwhile, it's viable.
00:44:11
Speaker
um But when you've got some big investment per imperatives, like the games that generate a whole lot more, which is a lot of public sector funds, um you need to try to manage that a little bit. and and that's why groups of the coordinator general in Queensland coming in, whether they where they could help to sequence some of that stuff and a lot better.
00:44:34
Speaker
um Do I think we we'll ever get it right? Probably not. um But can we do better? Yes, we can. And I think that's a conversation that is ongoing, that we as an industry body, the QMCA, tries to work very closely with government to ensure that yeah we could have those conversations and try to get the sequencing a bit better so we're not having as much of that overloading and then peaks and troughs.
00:45:01
Speaker
Andrew, thank you very much for the time and the the conversation. you know We focus a lot on on Queensland and that pipeline, but it's ah it's ah it's a proxy for things that happen in in cities and regions in different parts of the world. So if anyone is interested, highly recommend downloading and accessing a copy of the the pipeline report, which we'll put in the ah notes of the the episode.
00:45:24
Speaker
Andrew, thank you very much again. And Carlos, do you want to read us out? Yeah, thanks, Andrew. It was really good chatting to you. But ah no, thank you very much, everyone, for listening to today's show. Please do think about liking this video or following us on your chosen podcast platform. We appreciate your support and we'll catch you all very soon.
00:45:42
Speaker
Bye-bye.