2023 was a busy year for the Australian engineering and construction industry and current forecasts point to an equally busy 2024.
“There is a cautious optimism surrounding 2024,” explains James Lawrence, Group Manager for Customer & Markets at Coates. “While residential construction is declining, nationally the market remains in an upward cycle driven by concurrent booms in road, railway and renewables construction.”
“Although buoyant, 2024 may still be challenging for some construction businesses, with demand surging in some markets and flattening in others. Construction costs also continue to rise, although at a slower pace than the past two years, and planning approvals and labour market constraints persist,” James continues. “If businesses can successfully navigate these challenges and retain the talent to deliver on demand, the next decade will be a rewarding time to be working in this industry.”
Here's what engineering and construction businesses can expect from the year ahead.
Despite challenges, the overall position of Australia’s construction markets remains strong.
The value of construction work is a key indicator of the health of economies and, based on current forecasts, Queensland and WA are expected to outperform NSW and Victoria in coming years on a percentage growth factor. “These states have relatively strong foundations for demand this decade, with growing populations, mineral and renewable resources, relatively low debt and major events like the 2032 Olympics in Brisbane stimulating further opportunities,” says James.
Nationally, the construction of transportation, utilities, renewables, transmission, industrial, road and rail infrastructure projects will continue to drive significant activity in 2024, and provide longevity for engineering and construction businesses. Coates also continues to experience strong demand across all equipment and service categories to support Australia’s expanding infrastructure project pipeline.
“We’re seeing considerable expansion into social institution infrastructure in areas like health and education, particularly in regional locations,” says James. “We’re also starting to see the return of private investment, in large scale multi-dwelling projects, which will be essential for meeting the needs of Australia’s growing population.”
Renewable energy infrastructure will surge significantly in 2024, notably in the Eastern states. Industry research and forecasting company Macromonitor1 recently forecast spend on renewable energy infrastructure to rise 49% to reach $5.2 billion in FY24, and grow to $12 billion in FY26. The proposed Integrated System Plan (ISP) from AEMO2, Australia’s independent system and market operator, indicates there will be continued escalation in infrastructure for large-scale renewable generation, distribution and storage, and a contraction in traditional sources of power generation. The impact of this investment will be truly national. as indicated on the ISP project roadmap.
Renewable energy construction is forecast to surge in 2024.
“Coates is well-placed to support customers in delivering on demand for renewable energy infrastructure, with more than 145 branches in key locations across the country; Australia’s largest hire fleet; and experience supporting the delivery of major infrastructure projects Australia-wide,” says James. “The growth in renewable energy sector projects aligns with Coates’ sustainability framework.”
Market capacity, capability, cost and carbon reduction remain key focus areas for construction in 2024.
As the pipeline of construction work continues to exceed the availability of skilled and unskilled labour, workforce challenges will remain. “To address labour and capability issues, construction businesses can partner with providers like Coates with inhouse design and engineering capability and turnkey solutions to boost the capacity to deliver on project requirements,” says James.
The rising costs and tightening margins that have hampered construction businesses in 2023 look set to continue into 2024 as low margin projects come to fruition. Although a slight resettling of costs – albeit at a higher level – and the completion of the Federal government’s infrastructure review will bring more surety to the industry. “To meet demand there needs to be a general acceptance that costs will be higher, and that tendering will happen at those higher rates,” says James.
Navigating changing environmental regulations and the need to deliver on carbon reduction targets and strategies is another factor that will shape construction activity and the cost of delivering construction projects in 2024 and beyond. "Initiatives and legislation, such as the Sustainable Buildings SEPP3 in NSW, are shifting from reducing operating emissions to reducing embodied carbon – that is the carbon associated with construction materials, their transport to and from site, and the construction process itself,” says James. “Construction businesses will increasingly need to consider embodied carbon in the early stages of the project life cycle.”
Across all sectors and geographies, there is potential for construction businesses to improve productivity and ease cost and capacity constraints. “It’s really about doing more with less,” says James.
“Technology has a role to play in easing labour pressures and offsetting rising construction costs. By offering telemetry-enabled equipment and technologies like SiteIQ for asset management during industrial shutdowns and maintenance and Coates Connect, our customer portal, Coates’ customers have visibility to what’s on hire; where it is located; utilisation rates; and the ability to proactively manage all hire assets,” says James. “This intelligence provides a powerful means for improving tool time, cost efficiency, productivity and project outcomes.”
SiteIQ enhances efficiencies on major industrial sites by tracking, managing and optimising tool use.
While the path to net-zero presents significant challenges for the industry, it also offers opportunities. Embedding circular economy principles – such as reusing materials, designing structures for disassembly and reducing waste – can yield significant benefits including increased efficiencies that can lead to cost savings and reductions in embodied carbon.
Hiring rather than buying construction equipment allows construction businesses to participate in the circular economy, to be responsive and asset light. “Coates Engineering Solutions can support customers with temporary works equipment and expertise, such as reusable propping and hydraulic shoring systems, which help reduce embodied materials and carbon emissions,” says James. “Our Greener Choices range of lower-emission and more sustainable equipment also enables customers to reduce their project Scope 1 greenhouse gas emissions.”
To discuss your hire needs in 2024, or to design a complete site solution for your next project, reach out to Coates today.
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