Recruitment market intelligence for the Construction, Infrastructure, Engineering and Architecture, and Property Development industries
You'd probably agree that the world has changed a lot, further impacting of what’s already been a difficult year for Australian businesses. Many companies have had to change their business models and figure out how to recruit and retain staff with little to no contact.
In the post-COVID economic recovery, the construction, engineering, and infrastructure industries will play a key role in job creation. Whilst this is welcome news for our clients, it also puts even greater pressure on already challenging resourcing, recruitment, and retention issues.
To support clients and help the industry as a whole deal with some of these issues, the recruitment specialists at CGC have developed – CGC In Focus. A market intelligence report providing recruitment insights and highlighting the challenges and opportunities for clients to achieve positive personal, professional and commercial outcomes.
In our inaugural CGC In Focus, we’ll look at the state of Australia’s construction and infrastructure industries, and the recruitment implications on hiring and retaining top talent, as we look back over the past financial year and ahead to the 2020/21 financial year.
We are delighted to share this important information with you. We hope you find it useful…
Welcome to CGC Recruitment’s inaugural CGC in Focus Report on the state of Australia’s construction and infrastructure industries, and the recruitment implications on hiring and retaining top talent, as we look back over the past financial year and ahead to the 2020/21 financial year.
Our sole focus on the construction and infrastructure sector gives our recruitment specialist teams a strong understanding of the project lifecycles, government policy and economic considerations which impact our industry and the demand for skilled professionals. This deep market knowledge also gives us an insider perspective of our sector’s performance against the backdrop of the wider impact of COVID-19 on Australia’s economy.
This depth of experience enables us to view decisions from the client’s perspective and provide strategic insights during the hiring process on factors including short-term profit and risk management, and to identify current recruitment processes and opportunities as well as challenges for strategic expansion.
Financial Year 2019/20 Overview
- Nick Curtis, Managing Director of CGC Recruitment
As we look back at the 2019/20 year, the standout performers in our industry have been within the infrastructure space, particularly rail and transport on the back of massive government investment.
In Engineering, Data Centres/Mission Critical were both in short supply of talent, while Defence projects continue to perform strongly on the back of unprecedented government investment. In Queensland, road and rail/transport engineering design have been busy due to the State Government’s push to build a better transport network.
Australian construction, particularly residential activity, has been driven by net overseas migration in Sydney and Melbourne, creating a demand for housing that has made property investment attractive. Commercial offices continued to be in demand, with an exciting level of investment and international businesses viewing Australian cities as great places to work and live, with fantastic accessibility/connection to the Asia-Pacific region.
Better management of financial investments was a hot topic for companies, with many fine-tuning strategies in the first phase of projects. This has resulted in clients looking for financially-savvy candidates with skillsets in early-stage financial planning. With the huge pipeline of infrastructure activity in progress, and after last year’s Federal and NSW elections, market confidence was expected to be high. This has not materialised due to external factors beyond our control, with Australia’s devastating summer of out-of-control bushfires immediately followed by the worldwide outbreak of COVID-19.
- Urban design and landscape architecture have been active in Sydney, fuelled by the infrastructure boom and forward planning for satellite cities to meet the needs of the city’s growing population.
- In Building Services, government money has been focused on schools and health infrastructure, with consultancies capitalising on these areas. Another key area is upgrading NSW’s aged care facilities.
- The aviation space had a lot of work around Sydney Airport’s continuing development and the next building phase for the Western Sydney airport.
What should companies and candidates be focusing on in FY21?
During this turbulent end to the financial year, companies are naturally focused on short-term survival plans and cashflow management. With those fundamentals addressed, to deliver growth and profits in the coming year, focus on putting in place the right people and systems that can get you there quicker.
Develop and implement a clear business plan which minimises current risk and that positions you to emerge as strongly as possible on the other side of the pandemic’s impact in Australia.
For candidates, this period has been an opportunity for reflection for everybody. A chance to step back and think about professional and financial goals, the value you can bring to your current or next employer, and the type of projects and business you want to work with.
Many candidates are risk-averse about moving positions at this time, highly valuing their job security. Others are seeing opportunities to make good money on short-term contracts, while candidates who have had a poor experience from their current employer during COVID are more likely to move on.
Think through whether your individual goals may require you to forego immediate financial rewards in favour of making a five-year career plan that will provide the invaluable professional experience, training and mentoring that will help in your career development.
It’s a real balance and rare to get both big money and professional development, as with the high salary comes expectations for delivery. Try to align your goals with a business that shares your values and can offer you the opportunities you are seeking.
David Hope, Queensland Director for Building, Billy Versey, Director, Building and Infrastructure, and Carmel Jones, Associate Director Building, contribute to our overview of strong growth areas, key take-outs for clients and candidates, and the trends and initiatives impacting Australia’s construction industry over this past year.
The State of the Construction Market
Our expert team agreed that continued government spending has been a key driver of the health of the construction industry across several strong-performing sectors, with education, health, and aged care at the forefront.
“The ‘hero’ in terms of economic demand is government consumption, which bolstered the growth rate over the past year, registering an increase of some 5.1% over the past 12 months. Government-led projects mean that transport infrastructure will be one of the strongest performers, but prospects for new home building are more mixed and some areas of commercial building will be doing it fairly tough.”
- Master Builders Australia Building & Construction Forecasts to 2023/24
From the perspective of construction companies, we see commercial construction, industrial, and data centres as strong, and logistics as a growing space as more and more businesses move online. And after a strong year, our experts believe that data centres and defence are both going to be significant opportunities going forward. While COVID has led to recruitment, placement and onboarding challenges, largely speaking, the market has been less impacted than others.
“Must have experience” is the message for candidates at senior levels, with companies competing for Senior Project Managers/Project Directors and contract management expertise at the top of the market. In the junior ranks, the talent pool is strong, with not all candidates able to be placed in the current market.
In the Queensland market, CGC expects government spending to continue, positively influencing the start of the new financial year. On top of this government funding, data centers have been big and will continue to see investment from the private sector, while the logistics space is expected to continue growing.
Last year residential was a strong performer, but in FY20 this market has been extremely competitive, and builders have struggled with margins. New home building is currently undergoing a cyclical downturn and we forecast a trough will be reached during 2020/21, when work on about 168,000 new homes is expected to begin. However, it should be noted that this would still represent a strong volume of new home building activity by historic standards.
“Prospects for residential building in Australia will be determined by the combined interplay between macro and micro-economic conditions, as well as local issues in each of the different geographic markets around the country.”
- Master Builders Australia Building & Construction Forecasts to 2023/24.
CGC’s Queensland Director for Building, David Hope, sees clients looking for top professionals all encountering the same issue in the state’s construction market.
“When you’ve got high demand, candidate supply shrinks, because everyone is jumping on the recruiting bandwagon, whether that is government or private sector spend, or other investment.”
“What we’re seeing across the board is building companies trying to diversify into new sectors and projects. And those senior strategic appointments are key to opening doors in new areas.”
New South Wales Activity
Strong on the back of government spending in NSW and increasing demand, the aged care sector is continuing to exceed growth expectations. This area’s growth is fuelled by an ageing and healthier population, baby boomers downsizing, improvements in the style and facilities of aged care developments, and the availability of cheap funding.
The biggest demand from NSW companies is to fill senior construction roles. Other high demand-recruitment areas include builders across the industrial, data centre, health, and education sectors.
CGC’s Associate Director, Building, Carmel Jones, comments that in early 2020 there was already a shortage of candidates with solid experience across these strong sectors.
“As more projects are released it will be a booming market and this shortage will only increase. But as CGC has good networks in these sectors, we will be well placed to recruit experienced candidates.”
Late last year, businesses also experienced an impact on project flow due to clients pushing projects back, not pushing the ‘go’ button because of new development application issues, or clients not giving them the sign-off. The early months of 2020 didn’t really get going as quickly as anticipated, so from a relatively low base there is some pent-up demand for talent.
There were positive signs as we closed off on this financial year. If we see some of these projects come along reasonably quickly on the back of government spending and strategic investment to stimulate the economy, there are positive signs for the first half of FY20/21 and beyond. Combined with all the associated activity around infrastructure projects, there’s a lot of reason for optimism.
However, there are senior and experienced candidate shortages.
“You’ve either got that leadership experience as a senior project manager or commercial manager, or you haven’t. It’s that classic thing, how to actually get the experience that’s needed,” commented Carmel Jones.
Senior requirements are primarily around the compliance space for defence, health, and education. Project directors and project managers really need to know the contracts and understand the client’s expectations from both the commercial and contract point of view, plus be aware of potential risk factors.
Once you do pick up that work and have an experienced leader in place, you can recruit and train at more junior levels. Right now, there is almost too much junior talent, with CGC probably having more candidates that we can place.
Looking Ahead To FY2020/21
Key Take-Outs for Clients
- Reputation – companies are encouraged to improve staff retention through paying attention to the employee experience and to the training and career development they can offer.
- Proven Track Record – candidates want to know an employer has a good record of delivery and experience.
- Diversification - this is an important selling point for many candidates, who are looking for employers that have a well-diversified pipeline. So, companies should be looking at diversification and one way to do that is by hiring senior level people with that capability who can assist with business development/strategic development.
- Gender Diversification – this is a hot topic and a real drive for employers who have set targets for equality.
“Reputation together with a proven track record is still number one. From both the client and candidate perspective, reputation keeps coming up in our conversations. It’s a really big thing in terms of recruitment and staff retention. How people feel about a company and its culture while they’re working there or as viewed from the outside, and what emphasis companies put on the employee experience.”
- Carmel Jones
Key Take-Outs for Candidates
What should candidates be focusing on?
- Reputation – for candidates, it’s important how they feel about a company and its culture, and what emphasis that company puts on the employee experience.
- Challenge yourself – is it time to take the next step up in your career development? Does your current employer know about your aspirations?
- Be realistic about salary expectations – money always talks, even if a candidate says it isn’t a factor. But the market has changed, and your expectations may have to as well.
- Work-life balance/integration is an increasingly big factor for many construction professionals. “I think, if it gets adopted, the five-day working week will be a game-changer for work-life balance. It will decrease employees’ stress and the flowon impact will improve mental health and wellbeing”, said Versey.
As we move into the next financial year, David is excited about the future for the over-all Queensland market, citing the flow-on effects of large projects coming through such as Queens Wharf and the Cross River Rail project.
Areas of concern for 2020/21 include increased competition, as companies seek to attract top industry talent from other Australian and international locations to fill senior and other positions.
“Western Australia and Queensland are expected to be the strongest performers in growth terms over the next three years. This reflects both the high levels of activity already occurring in NSW and Victoria (which is not expected to ease), but also a recovery in private (i.e. mining-related) and public investment in the ‘resource’ states.”
- Infrastructure Magazine
New South Wales Activity
In NSW, the long-awaited second Sydney Airport at Badgerys Creek, major transport projects, an increasing spend from the Defence sector and a booming commercial sector will see a strong market over the next 12-24 months, and even up to 36 months.
Construction and infrastructure will continue to thrive due to a number of factors, with major infrastructure projects coming online such as the Metro and all the overland stations still in design, Metro West, South Connex and Badgerys Creek.
Sydney also has major towers including Circular Quay Tower and Parramatta Square both starting this year, going through to build and fit out in FY21. The Central Station Tech Hub is an exciting addition to the project pipeline which will create jobs and high rise development in an underutilised part of the Sydney CBD.
Carmel Jones also points to specific projects in the pipeline.
“We have some iconic projects being delivered this year such as the Opera House, Sydney Modern and Sydney Football Stadium, which attracts keen interest from top talent. But with ACT, Melbourne and Brisbane being busy, we’ll see the NSW talent pool reduce.”
Continuing public sector investment across infrastructure, including road and rail, will continue to underpin growth for the construction sector.
With government investment in health and education budgets at an all-time high, those areas will be busy for at least 2-3 years, which will also put more pressure on the talent pool. Continuing public sector investment across infrastructure, including road and rail, will continue to underpin growth for the construction sector.
“Master Builders’ Chief Economist Shane Garrett said its latest forecasts predict a substantial upswing in the volume of engineering construction work, particularly on transport infrastructure in the next 12 months, with this forecast “contingent on state and territory governments working with the Federal Government to push shovel-ready projects out the door.”
We’re going to be busy next year and the future is looking bright.
We take a broad look at the Infrastructure marketplace over the 2019/20 financial year and the year ahead. Backed by government spending on shovel-ready projects to kick-start Australia’s post-COVID economic recovery, the Infrastructure sector will play a key role in job creation in the country’s COVID-impacted economy.
Several of our top Infrastructure experts have contributed to this special report. CGC’s Managing Director Nick Curtis and Dan Kundi, Principal Consultant, Civil Construction discuss the state of the NSW market, while CGC’s Queensland Associate Director Rory Todd comments on current activity and the state’s upwards trend and industry optimism.
The State of the Infrastructure Market
Government investment continues to drive the Infrastructure sector in both of our operating regions. As NSW emerges from a year that sees some mega-project phases finishing up, there remains a massive pipeline of government-backed infrastructure work ahead.
Queensland infrastructure has languished for six years, but with state government funding committed will now ramp up strongly over the next two years, attracting professionals to the state from other regions to be involved in some of these major initiatives.
What is going to continue to drive industry growth is population growth and Australia continuing to be seen as a desirable place to live for new immigrants. The more people who come to live in our major city centres and neighbouring regions, the more pressure there is on our infrastructure, housing, hospitals, and schools. Both the government and the private sector need to step up and plan ahead.
New South Wales Activity
In the last 12 months, NSW has enjoyed unprecedented investment and progress for the mega-projects that you hear about in the mainstream news. Thousands of employees have been working on initiatives such as the Parramatta Light Rail, WestConnex 3a and 3b, Western Sydney airport at Badgerys Creek, the rail station upgrades and the Snowy Hydro Scheme’s renewable energy project.
During this boom period for infrastructure investment, there’s been some big winners and some big losers, with all parties now reassessing their positions. We anticipated this pipeline of projects would continue seamlessly, but as some project phases reached completion, over the last six months there was in fact something of a lull.
Challenges faced across the board have been inflated salaries, cost blow-outs on mega-projects, and the lack of talent in the market, leading to the need for international candidate recruitment. Two elections within the space of six weeks and the amalgamation of Roads & Maritime Service with Transport for NSW have also had an impact.
Ultimately, there’s lots of work, however these projects are only worth executing if there are positive commercial outcomes. For government clients, an evaluation of procurement methods and commercial contracts has impacted on how they are carrying staff, whether directly, through outside labour, or service consultancies.
This of course also impacts on the scenario for contractors, who will be assessing their risk profile when deciding to move ahead with bids and tenders. We expect further collaboration between tier one and mid-tier contractors as projects are broken down into smaller packages. The opportunities are there in the market, it’s a case of identifying delivery models that ensure all stakeholders can achieve positive commercial outcomes.
We’re now moving into the second or third stages of these mega-projects, with those ramping up including the multiple rail stations, WestConnex 3A and 3B, Western Sydney Airport and ‘Snowy 2.0’. These and other projects create a $200 billion pipeline, which is a massive scope of work coming up for at least six years.
After the slump of the last five-six years, the Queensland market is now performing more strongly, with this upwards trend set to continue for at least the next four years. Major initiatives driving this growth include the Cross-River Rail, Brisbane Metro, TMR upgrades, Inland Rail, and the approval of Adani’s controversial central Queensland mine.
While this boost in activity is welcome after the extended quiet times, from a recruitment viewpoint CGC observes Queensland’s current challenges as similar to the issues that NSW has encountered in terms of industry resources.
For companies now needing to attract and hire well-qualified workers, one enticement will be the appeal for former Queensland workers of returning to Brisbane and SE QLD. Many professionals have needed to move south to NSW and Victoria in recent years to chase work and major projects, so there is a strong appetite to return to QLD to be involved in some of these new works, particularly the metro-based projects.
“I think for many people the attraction is about just being close to home, quality of life and a lower cost of living. That’s going to make Queensland an attractive destination for quality candidates.” CGC Queensland associate director Rory Todd.
But the overarching risk for all these new projects is that they are driven by state and federal government funding, which influences decisions and procurement. That impacts on confidence and planning for private sector companies in terms of the resources they have invested in having the capabilities to win the work.
Looking Ahead To FY2020/21
Already a strong sector benefitting from a period of unprecedented and ongoing government investment, infrastructure will play an even more important role in Australia’s economic recovery in the coming year.
Key Take-Outs for Clients
What should companies be focusing on in the current market?
- Diversification – to stay competitive and succeed in a tough market, strategically diversify across different sectors, such as the civil aspects of renewable energy, mining, and rail.
- Risk management and cost blow-outs - draw a line in the sand between winning a job and ensuring that the project won makes money:
- A big issue is contractors having very tight margins and taking on too much risk. Getting even one thing wrong can have catastrophic consequences, with some companies going into administration or selling up. It would be good to see the government sharing more risk with contractors.
- For example, Sydney’s Metro is now several billion over budget. At the outset, it would have been difficult to forecast the cost increases across salaries and procuring materials it’s now having to address.
- Recruiting project leaders - it’s been a struggle to find quality senior professionals to spearhead and deliver some of these mega-projects. To meet Australia’s appetite for infrastructure, we are seeing international candidates moving here for Project Director and Commercial Director roles.
- Project timing - the sector will have learned from releasing so many projects within a 2-4-year period, resulting in everyone now competing against each other.
- New working environments – COVID-19 has meant that companies have had to rethink their recruitment, onboarding and working models, as social distancing and remote working become the norm.
Key Take-Outs for Candidates
What should candidates be focusing on? In the current conditions, the answer really depends on the project and your individual circumstances:
- Money – particularly if they have been made redundant because of COVID-19, candidates, particularly younger workers without big overheads or family commitments, are taking almost anything to get money coming in. Bear in mind:
- There has been quite a freefall, so candidates have chased short-term opportunities.
- It’s a tighter ship for the next phase of many big projects. For at least the next six months, employers are holding firm on unrealistic salary expectations.
- The pipeline ahead is huge, so as things do hot up, market forces will dictate remuneration.
- Security – remains a key factor for senior roles and professionals with a family to consider.
- Contracts open doors – some 70% of our contract appointments lead to permanent positions.
- Reputation – a company’s reputation and the value it places on the employee experience are increasingly important.
- Diversity – particularly to be eligible for senior positions, upskill and diversify.
- New working environments – new working and recruitment models, due to COVID-19, may mean longer processes. Keep in touch with your recruiter and be transparent about your situation.
New South Wales Activity
In NSW, the strong performers for the next financial year, and over the next four to six years, are going to be Roads, Rail, Power, Energy (including Renewable Energy) and Water.
With the market currently dominated by these major projects and large companies that have soaked up a lot of resources, it’s been a difficult market for smaller players. It will be in the government’s interest to make it competitive for tenders, so it’s driven by value and getting the best price, with enough competition in the market.
It will be interesting in terms of how that all leads to recruitment and hiring. What we’re seeing is that big organisations want to bolster their senior commercial and delivery ranks, looking to attract international candidates, as that senior talent doesn’t exist outside those companies or on the ground in Australia.
At the next level of company size, we’re seeing a real balancing act because while their success is dependent on the quality of their people, if they invest in hiring too early, they are increasing staff costs and also impacting on employee engagement and reputational damage.
One thing we can say with confidence is that there is a huge pipeline and things are going to have to start happening. There’s a clear commitment from government and people want to start seeing progress that continues the buzz around the boom that Sydney is on.
Infrastructure roles are going to be in demand on the back of this pipeline and overall market sentiment. With the volume of major works in progress and being tendered for, we should be extremely busy.
Infrastructure roles are going to be in demand on the back of this pipeline and overall market sentiment.
From Brisbane, our Queensland infrastructure team is confident that the market will pick up after a very quiet 2019/20 and the subdued market of the last four to five years. Despite a lack of project funding, there is a good pipeline of projects that are just entering their first phase of investment and roll-out.
Strong performers will be Roads, Rail and Water projects, with the immediate focus on the projected circa $17bn of funded infrastructure projects coming back to south-east Queensland (Brisbane, Gold Coast and Sunshine Coast), most of which are at the pre-contracts/tender review stage. There will be better margins for companies on these projects, enabling them to work with recruiters to find quality Senior Engineers and Project Managers who are interested in FIFO work.
Queensland will also benefit from the Federal Government’s announcement that the latest stage of the 1,700km Inland Railway from Melbourne to Brisbane, which will be Australia’s largest infrastructure project when completed in 2024/2025, will be one of 15 major projects fast-tracked to help stimulate the Australian economy.
The second strong area will be the rail and civil side of the mining sector. With the price of coal on the rise and with Adani’s mine approved and other mining projects in Central QLD getting busier, one sector of interest for civil contractors is delivering infrastructure upgrades in the mining space.
Roles we will be recruiting for in this coming year will also include Project Directors, Operations Managers, Senior Commercial Managers, General Managers, Construction Managers and Bid/ Pre-Contract Managers.
Both huge opportunities and industry challenges ahead
There’s a lot of confidence in the future of infrastructure investment in Australia, but a fundamental lack of resources with mega-project delivery. The concern for these massive billion-dollar-plus projects boils down to resources, the risk profile around cost blow-outs and how to make them profitable.
“It’s easier for large organisations that can take an outlook of probably 5-10 years and a big picture focus on really dominating the market and getting their share of these ongoing privatisation opportunities. They can also take an even longer outlook to road and rail maintenance assets, such as building at a loss, but then securing the maintenance or toll road contracts over a 25-year period.”
- Dan Kundi, Principal Consultant, Civil Construction
There’s always challenges for companies of all sizes, but there is demand and money. Our experts believe the main challenge ahead is acquiring the right resources to sustainably achieve growth. This will partly need a strong push and investment in industry training and development, as continuing to invest in future generations is vitally important for Australia’s future.
Engineering and Architecture
Our specialists Sydney-based Principal Consultant Martin Smallshaw, Christina Ryan, Senior Consultant, Architecture and Interior Design, and Matthew Rayburn, Consultant, Building Services Design in Brisbane, discuss growth areas, the key areas for both clients and candidates to focus on, and the market forces and developments impacting Australia’s engineering and architecture sectors.
The State of the Market
Data Centres/Mission Critical is in short supply of talent and this niche sector will be the next big boom for Australia and APAC engineering and infrastructure.
Defence projects are performing strongly on the back of huge government investment which is increasing year on year. The 2019/20 budget provided $38.7 billion for defence, equivalent to 1.9% of GDP. In Queensland, roads and rail/transport engineering design have been busy due to the State Government’s push to build a better transport network. Companies are seeking to build teams of engineers and designers, who remain difficult to find to meet demand.
Urban design and landscape architecture have been consistently busy in Sydney this year, with major infrastructure projects and the planning for future expansion of satellite cities fuelling this growth.
The skill shortage in Australia is very apparent in building services this year, with project wins dictating demand for Fire, Electrical and Mechanical specialists.
The impacts of COVID-19 are still being felt with privately funded projects in retail and hospitality on hold indefinitely. A good project mix will be key to companies’ success in the year ahead.
New South Wales Activity
Mission Critical continues to grow strongly, on the back of increasing worldwide demand from the private sector and government for safe and secure centralised data stored in the cloud.
Opportunities are vast with both consultancy and client-side growth, with a knock-off effect for recruitment as there is a serious shortage of mission critical experience. This makes it harder to directly attract qualified applications, so there is an increasing need to work with a recruitment agency.
In the Defence sector, the security and safety of Australia’s population is paramount, so government investment continues to be strong. Principal Consultant Martin Smallshaw sees the otherwise-quiet South Australian market continuing to be impacted positively by the boost in defence budgets.
“Opportunities are concentrated within certain consultancies who have staff who possess a security clearance. With the challenges and vetting involved, these take time and are not easy to obtain, but they are mandatory for any work carried out on a defence site.”
In the busy urban design and landscape architecture sector, after a volatile market at the beginning of the financial year, 2020 brought good news as many projects were released, notably an increase in multi-residential, aged care and community projects.
The challenge at present is mainly the quantity of candidates that have worked at senior levels on specific projects. One example is the need for experienced landscape architects for major highway/transport projects, with limited private-sector candidates being able to offer such large-scale infrastructure experience. An additional factor is that a lot of clients don’t see the value in upskilling international candidates who are already in Australia.
The year’s challenges included many redundancies, with some quality candidates out of work for months. This resulted in an increase in contract opportunities, with companies not ready to commit to permanent staff in case projects fall through. However, some 70% of these contract placements resulted in a permanent position within just three months, so often offer a good path forward.
Architecture firms have reported billions of dollars-worth of cancelled or delayed projects, leading to significant staffing cuts. An end-March survey by the Association of Consulting Architects (ACA) found that 89% of the 333 participating practices have had projects cancelled, put on hold, or expect cancellation, with an estimated combined value of more than $5 billion.
78% of practices have had to negotiate changes to employment arrangements and are expected to. Some 1,150 employees had hours cut, 150 employees had been stood down, 192 fulltime employees made redundant; and 224 casual staff been stood down or made redundant.
Residential is underperforming due to oversupply. Some prospective homebuyers may delay purchasing property during challenging economic times, when job security is uncertain and securing finance is more difficult. The pandemic has, however, caused one of Australia’s keenest property investor groups to drop off, with a pullback from big international investor China.
In May 2020, RealEstate.com.au observed that based on their data, after years of increasing search activity, “There has been recent talk about the return of Chinese buyers of residential apartments in Australia, and while that may be the case for select projects, broadly speaking, Chinese search activity is overwhelmingly down.”
Transport Engineering Design is busy and exceeding growth expectations, due to Queensland receiving its share of Federal Government spending. Roads and rail have been particularly busy, reflecting the State Government’s transport network investment.
Roads and rail projects in progress include the 1,700km Inland Railway from Melbourne to Brisbane, which started construction in 2018 and will be Australia’s largest infrastructure project ever undertaken when completed in 2024/2025. The government-backed/PPP project will contribute up to $16 billion to the economy and generate 16,000 jobs nationally, benefitting Queensland.
In June, Prime Minister Scott Morrison announced the latest phases of this project will be fast-tracked, as part of the government’s effort to stimulate the Australian economy. The project presents many engineering and architectural challenges, including boring a 6.3 km tunnel through the Toowoomba Range.
This and other projects have meant clients are seeking to build teams of hard-to-find engineers and designers to accomplish this work, said CGC Queensland’s Matthew Rayburn Consultant, Building Services Design.
“On top of that, you’ve got resistance from Queensland design or engineering consultancies to employ NSW candidates because the drainage codes and standards for roads and highways is completely different. So, we have to try and move people around within the QLD market. For Building Services Design, it’s not the full gamut of design and retail as we know it nationally.”
Construction began in 2019 on the massive casino, resort and residential Queens Wharf project being developed by the Destination Brisbane Consortium joint venture, which will cover 26 hectares of the inner city and will cost more than $3.6 billion.
Another transport project, the $5.4 billion Cross River Rail development, will create a 10.2 km train line linking Dutton Park to Bowen Hills, featuring a 5.9 km twin tunnel underneath Bribane’s CBD and river. Due for completion in 2024, the train line will carry 164,000 passengers daily, create four new underground stations and redevelop two above-ground stations.
On the building side, it has been a flat year with no significant investment or growth and very few big projects going up.
Looking Ahead To FY2020/21
In May, peak body Engineers Australia released ‘COVID-19 – A 9 Point Plan’ for economic recovery, setting out key criteria for success. Engineers have already been part of the healthcare response and are ready to contribute their expertise to support Australia’s efforts to achieve widespread economic recovery.
The Plan’s first priority was identifying and implementing shovel-ready projects to create new employment opportunities. Each project is preceded by a long design phase that employs thousands of engineers and allied professionals before the first shovel is used.
Key Take-Outs for Clients
What should clients be focusing on in the coming financial year?
- Staff retention
- Keeping up with technology (the best drafters and engineers want the best software to work with – links in with retention)
- Not being afraid to explore new markets/revenue streams
- Being open to recruiting international candidates with the necessary experience
- Progression and advancement of design.
- Consider upskilling candidates with sector experience to meet skill shortages, especially on specialist projects.
With COVID-19 and falling oil prices impacting its project pipeline, the ASX-listed global engineering group Worley said the COVID-19 outbreak has fast-tracked a cultural shift at the company.
Worley will slash some $70 million in costs by the end of 2021 by shrinking its offices around the world, with at least half its 46,000 staff expected to work remotely part or all of the time in future. The company has cut 3000 jobs and secured an extra $465 million in debt.
“The way we’re going to work going forward is never going to be the same as what it was pre-COVID,” global CEO Chris Ashton said in a recent Australian Financial Review article. “We’ve broken the mould,” he said. “I would argue that we’ve seen cultural change advance by probably a decade.”
Key Take-Outs for Candidates
What should candidates be focusing on?
- Upskilling where possible or working on developing new client relationships to broaden your skills.
- Tenure in role is important, your reputation is diluted by job-hopping for a small salary increase.
- Develop your skills to offer 360 degree experience, from concept design to completion.
- Business development is becoming a desired skill, so develop good client relationships, and having a pipeline of clients is a great value-add and a sell factor to a potential employer.
- Have a flexible attitude to contract roles - they often lead to a permanent opportunity.
Australia’s 2019 Civil Engineer of the Year Brian Uy, Head of Civil Engineering and a Professor of Structural Engineering at the University of Sydney says that Structural Engineering is a rewarding field offering exciting possibilities.
“We’re always looking for good engineers locally and people who have an affinity for those STEM disciplines to consider a career in engineering.”
New South Wales Activity
In NSW in the coming financial year, Martin Smallshaw sees the strongest performing areas as data centres, defence, and sustainability.
“Infrastructure has another 10 years of backing from industry with state, government and private investment at a high.
“Australia has a unique mix of virtually-uninhabitable land mass and a reasonably low crime rate, which creates a safe place to generate and store energy as well as data. Building solar farms, wind farms, data centres and such is highly attractive for both private investors and the government."
As we’ve seen in the past 12 months, residential property is increasingly difficult to predict, but overall, it remains optimistic for key sought-after locations and developments. We are also increasingly seeing the Federal Government act to support homebuyers and investors to make purchases.
Bounce-back in this sector is likely and in certain areas we’re seeing improved project pipelines. It is an industry abundant with experienced people. This sector faces few challenges, aside from people’s lack of desire to work on residential jobs, which are often deemed as boring and not challenging. More mixed-use development will help relieve that stigma.
For Architecture, Senior Consultant, Architecture and Interior Design Christina Ryan is excited about sustainability and the dialogue now happening around our environment and smart design.
“Design will have to take into account factors such as natural disasters, climate resilience, water and waste management. Architects and urban designers will be major drivers in this, becoming influencers and advocates pushing for positive change.”
“Environmental commitment will become a focus, things like the use of recyclable material, self-sufficient buildings, solar panels and renewable energy options. I also think multipurpose spaces will become a focus, eg.co-working/co-living spaces.”
In Queensland, road and rail transport remain the strongest performing sectors and this is expected to remain the case if the state government does not change.
While the wider national post-COVID economic recovery pathway is not clear, what is clear is that the Australian Government sees large infrastructure projects as a path to jump-starting the economy.
The Inland Rail from Melbourne to Brisbane and a second underwater power cable to Tasmania are among projects given priority status by the Government in its JobMaker plan to fast-track jobs on major infrastructure works. The 15 major projects will be given streamlined approvals, with Federal government approval times slashed in half and the government putting an extra $1.5 billion towards smaller infrastructure projects.
Joint assessment teams will work on accelerating infrastructure projects worth more than $72 billion in public and private investment and supporting more than 66,000 direct and indirect jobs. They include the inland rail project from Melbourne to Brisbane, the Marinus undersea electricity link between Tasmania and Victoria, the Olympic Dam extension in South Australia, emergency town water projects in NSW, and road, rail and iron ore projects in Western Australia.
These will benefit both the Engineering and Architecture sectors among many others. These might not fill the missing revenue for some businesses, but it is certainly a promising start.
Project Management, Consulting and Development
Looking at the trends and performance of the Project Management, Consulting and Development sectors over the past financial year and ahead to the new financial year, our expert contributors include Stewart Armstrong, CGC’s Principal Consultant, Development Management & Quantity Surveying, across the quantity surveyor, construction land, and property development areas.
Associate Director, Construction Consulting & Development, Jamie Ryde contributes to an overview of project management, property investment and fundraising, property development, cost management and quantity surveying sectors.
The State of the Market
Better management of financial investments was a hot topic last year for many companies. Due to COVID-19 that is likely to continue, with businesses looking for the best routes for leveraging their investments and saving money.
Most are in the first stage of a project, spending a lot of time fine-tuning and executing strategies for the new financial year. They are keen to invest their funds as wisely as possible, with a greater understanding around the returns expected at the end of a development project. We are now starting to move into those second stages and the third project stages as well.
Accordingly, companies are looking for financially savvy candidates who have experience working with early stage financial planning and different stakeholders, sector experience, good industry relationships, and will be a good fit with their culture. Sought-after candidates have included investment specialists, project feasibility specialists and fund managers who are growing capital.
Commercial and Residential Niches Performed Well
Commercial offices continue to be in demand, with international businesses viewing Sydney as a great place to work, with good working environments that also support employee wellbeing. Overseas companies are looking to upgrade their offices or move to new premises to be able to offer that kind of working environment to their local workforce.
In the heart of the Sydney CBD there is still investment in the commercial market, however with the onset of COVID-19 there are some questions being raised about the future of the office environment. Over the long-term, we believe that commercial offices will still play a central role in business growth, developing company culture and the face-to-face exchange of ideas. While there may be some choppy times ahead, the long-term fundamentals of the Sydney market remain strong.
Unsurprisingly, bricks and mortar retail is underperforming, with few clients recruiting in this development space, as Sydney’s neighbourhood shopping centres continue to be impacted by the shift to online shopping. Some developers are exiting this competitive sector, while others are adapting and evolving by offering in-person experiences that can’t be provided online, such as family services, child crèches, hairdressers and boutique stores. In certain sectors and regions, residential development is on the rise again. A segment doing particularly well is first time buyers looking for more affordable properties.
Additionally, many sports clubs are now looking at different ways of bringing in funds and are planning for their future. Some have made agreements with developers to build apartments and community facilities on their land, boosting membership and foot traffic, while enabling people to live in a community with like-minded people from club members to families and retirees.
This activity is happening right across Greater Sydney, among golf courses and bowling clubs in particular.
Around NSW, there are great project opportunities including clubs and communities in the Hunter Valley, Newcastle, and the Central Coast.
Building Services Benefits from Government Investment
In Building Services, government spending has been focused on schools and health infrastructure, with consultancies and project management consultants capitalising on these areas. Another key area of focus has been upgrading and expanding aged care facilities, with NSW’s aging population and shortfall in resources to support this demographic well-documented in the media.
The aviation space was busy in FY19/20, with extensive business cases and a lot of consultancy work around Sydney Airport’s continuing development and the next building phase for the Western Sydney Airport. While COVID-19 has impacted this industry, there is a lot of work to be done in this sector to meet longer term goals, creating many job opportunities for industry professionals.
Looking Ahead to FY2020/21
The huge amount of government investment in infrastructure, including the new airport and Western Sydney’s continued development, is going to provide a lot of businesses with opportunities, particularly around the industrial, logistics and supply chain sectors. Exciting new types of market verticals are being introduced to consultancies, while local businesses are investing in attracting talent to their share of Western Sydney’s multiple infrastructure projects.
In the first quarter of this new financial year we are still feeling the impact of the bushfires and coronavirus, however, CGC and industry leaders anticipate that the year will go on to be strong in our sector. This is good news for candidates wanting to be involved in these growing areas.
Key Take-Outs for Clients
- Put in place good investment teams and capable project delivery professionals.
- Ensure you are ready to hire when interviewing candidates, to both retain your good reputation and help attract the right person to the position.
- Strategic appointments present significant opportunities in the development space, particularly when fundamentals are being challenged and new business opportunities are emerging. Senior talent can unlock huge potential as the market responds to new trends.
- There are also major allocations to health ($10.1 billion) and education ($7.3 billion) capital projects.
- Several health projects are expected to commence over the next four years, including a new Bankstown-Lidcombe Hospital with an estimated total cost (ETC) of $1.3 billion, the redevelopment of the Royal Prince Alfred Hospital (ETC $750 million), major upgrades to Ryde Hospital (ETC $479 million), Shoalhaven Hospital (ETC $434 million) and the St George Hospital (ETC $385 million).
- In education, $917.4 million has been provided for eight new schools and upgrades to a further 32 schools.
Key Take-Outs for Candidates
- Make it easy for a potential employer to see you can succeed in the role. Be prepared to discuss how you can add value to the company.
- Ensure your CV reads clearly and explains what you have achieved, projects you have worked on and the duties you undertook in each role.
- There is demand from companies for professionals with financial and strategic skillsets who can help structure and drive projects forward. How can you professionally upskill yourself in these areas, if you don’t already have these skills?
CGC expects Industrial projects to be busy as the online services market expands at a rapid rate. New sites for supply chain and logistics are likely to dominate developments, particularly around Western Sydney.
Driven by the growth in data centres and distribution warehouses, the industrial area will perform well not only this year, but over the coming 5-10 years. Jamie Ryde, Associate Director, Construction Consulting & Development, projects a huge shift driven by this technology area.
“Australia has the right environment and land space to offer. There will be a continual move to these technology sectors, which in turn will increase population, investment in infrastructure and developments. The skills shortages in this area create many opportunities for candidates with relevant skillsets”.
Residential Could Surprise
Residential could be a surprise performer in certain regions and in the first home buyer and over-55 lifestyle area aimed at early retirees wanting to remain active. Sports and community clubs are continuing to collaborate with developers who are seeing profit potential and good returns in this growing neighbourhood lifestyle/liveability area. We don’t see a slowdown in this niche, due to the needs of our ageing population, so are optimistic for the year ahead.
CGC is optimistic for the Property Investment, Development Management and Cost Management disciplines and will continue to work closely with commercial, residential, lifestyle and retail investment and development firms across NSW and Brisbane.
Government investment in health, schools, aged care and other community infrastructure and services will be ongoing in order to address our growing population’s needs. New South Wales has led the way in government investment in infrastructure, creating the booms which we see in Sydney and starting in Melbourne. This has also increased confidence in private residential development investment, particularly in New South Wales and Victoria.
As we enter the second phase of this infrastructure-driven activity, Queensland will start to benefit from the kind of investment we have seen in New South Wales. Due to its affordability and lifestyle, as jobs come on-stream, Queensland remains extremely attractive for industry professionals and people wanting a quieter life or making retirement choices.
Brisbane’s smaller population, compared to Sydney and Melbourne, does mean these larger cities receive a lot more international attention and funding. But with Queensland’s continuing population growth, there is demand for infrastructure investment in hospitals, schools and other community and service-related sectors.
“There are some mega-projects up there which are worth about $15 billion, relative to Queensland’s population that is a huge investment. I think we will see a trend with professional people relocating or returning to Queensland from New South Wales and Victoria to be part of this government-driven infrastructure activity.”
- Jamie Ryde, Associate Director, Construction Consulting & Development
Melbourne has got the same buzz around infrastructure investment as Sydney, although to a lesser extent, probably about 30 percent of its northern rival. The southern city will also benefit from the government’s June announcement of the first shovel-ready projects being fast-tracked as part of Australia’s post-pandemic economic recovery effort.
Building services will continue to be quite profitable. Of course, like any sector, we can’t get complacent, so need to monitor risk factors from COVID-19, population growth and immigration, to projects not being delivered on time and budget. Areas we are concerned about include Retail and the ability of small Tier 3 businesses to steer their way through this challenging operating environment.
We are particularly optimistic about the exciting changes happening in service offerings and the project management space. What is most exciting is the transformation into being able to offer and deliver infrastructure projects or expand into new business areas. There will be many job opportunities for candidates with new generation skills.
Overall, the sentiment is positive for the next year and up to five years ahead.
Looking Ahead to FY2020/21 – CGC Overview
- Nick Curtis, Managing Director of CGC Recruitment
It’s still early days, but we believe that with a return in confidence, the construction and engineering sectors are well placed to continue playing a key role in the Australian economy as a job creator. This presents excellent opportunities for organisations who can strike the right balance of clear strategy and risk management.
The construction and infrastructure sectors have been a cornerstone of the New South Wales and Victorian economies, and more widely the Australian economy, for the last five years. There is an established pipeline of work and we project that additional investment will include further government funding for education, healthcare, schools, and aged care facilities.
We are excited about infrastructure, data centres, health care and industrial space. These are the likely winners in the post-COVID world, as government bolsters its investment, creating jobs. Consumer demand and a shift to more employees working from home will increase pressure on mission critical infrastructure.
There will be winners, particularly organisations with a good reputation and relationships who can position themselves in those busy sectors, or have a track record in ‘safer’ sectors like commercial, hospital, or retail fit-out markets that can attract senior talent.
For local candidates, skills shortages as the economy recovers will create some excellent career opportunities. Australia’s borders may not open for some months so companies need to deliver works with local professionals. A reversal in fortunes is that now we will get to retain our local talent, while there will also be experienced professionals among the many thousands of ex-pat Australians who are choosing to relocate home at this time.
Small and Shovel-Ready
Smaller, ‘shovel-ready’ projects will be a clear winner as a driver of job creation, with the current environment creating opportunities for Australian-owned SME players to deliver works up to $20M.
As procurement and planning is less complex, smaller projects can be mobilised quickly. Local contractors have mostly been shut out of the major infrastructure boom by the large international top tier contractors, but these local operators have good in-house capacity to utilise.
They’re nimble and can deliver less-complex projects in an efficient way. Smaller local companies haven’t been able to compete with those international giants for the major projects, but conversely those big players, carrying their large fixed overheads, simply can’t deliver smaller projects as cost-effectively.
Strategise to Come Out of This a Winner
First and foremost, short-term survival plans that incorporate end-to-end recruitment business process and cash flow management are the focus for just about everyone at this moment. Once these immediate priorities have been addressed, take this time to strategise and come out of this as a winner.
Companies are in business to add value or make money and achieve financial outcomes for their investors or shareholders. Accordingly, we believe there will be a shift to strategic thinking as businesses take this one-off opportunity to reflect, revisit the business plan and look hard at where they want to be.
Specifically, where are the opportunities going to be for the construction industry? Where is the government investment going to be? Where is the market telling you that you need to be positioned, if you’re not already positioned there?
Take a holistic view of the business across all of your systems, process, people, and strategy. Feeding that into your staffing, recruiting or recruitment strategies and people strategy, ask yourself if your company is managing your staff correctly:
- What systems and processes are working for you?
- How are people accountable for their own delivery?
- How are you attracting future employees who can come in and add value and open up new sectors?
- What is your employer value proposition?
- How are you training your existing staff?
- Will a candidate fit with your culture?
- How much training and development will you need to do?
Having clear plans around all of these factors will strongly position you for the future. Manage risk through having the right hiring systems and processes and partnering with effective recruiting or recruitment professionals to identify the right person for the job.
“For those looking to come out strongly on the other side, it’s about striking the right balance of having a clear strategy and managing your risk profile appropriately. You’re not going to be able to be a winner if you’re not prepared to take risks and that includes when it comes to hiring the best people to help grow your business.”
- Nick Curtis
We believe hospitality and commercial projects will be impacted short-term as organisations review their investment and growth plans. Fitout sectors focused on these markets will likely look to move into new markets that offer opportunities.
The residential construction market will experience short-term pain due to a downturn in overseas migration, with border closures and quarantine/isolation measures perhaps with us for some time. As we adapt into the new normal on each workplace, there is going to be a pause on immigration and any population increases until there is clear timing for a COVID-19 vaccine, if a vaccine is going to be found.
New South Wales Overview
In NSW, infrastructure remains the driving force, with the significant pipeline and committed investment including the Metro rail network, Parramatta Light Rail, and major highways projects which are continuing through their cycle. We are now entering the next construction phase for some of these major projects, which means 2-3 years of ‘boots on the ground’ high activity ahead.
Another 3-4 big projects are on the horizon and coming online for their construction phase. That will further increase the demand for talent, on top of existing skills shortages. Sydney has been on the starter’s line in anticipation and companies have retained staff and built up capability to meet this demand
Our Queensland focus is still very much on government-driven infrastructure work, so we welcome the federal government’s announcement of fast-tracked backing for the next phase of the huge Inland Rail project.
For both our sector and the state, their upcoming October election is going to be significant in terms of how Queensland moves forward with some of their investments, whether there will be government backing or reluctantly, local asset sales etc. It will be a real turning point for the state economy.
Within infrastructure and some technical spaces, that means the skills shortage will impact Queensland quite quickly once things do turn. Medium-term, there are going to be winners across the board in Brisbane, spearheaded by infrastructure.
The timing of when our local recovery will start is the million dollar question. Many Australian construction and infrastructure projects in development will proceed without major impact, driven by government spending and the market appetite.
The federal government is committed to stimulating the economy to get things moving again and infrastructure is already identified as a priority within this effort. We take confidence in the shift from the government balancing the books to using this window to be much bolder on its decision making.
That stimulus is going to feed into our sectors, and we should be busy off the back of it. With interest rates and the cost of borrowing low, it’s the right time to make some of those bold decisions.
Smaller works are going to contribute strongly to this, going back to my earlier comments about the nimble contractors who can jump in and do a project for 10 million in six months and then promptly turn over another one. That is where I predict the additional stimulus and additional investment will be achieved, as opposed to just another big, major project.
“So, despite timing and COVID-19 factors beyond our industry’s control, I’m optimistic. The next financial year for CGC Recruitment and for companies and industry professionals is looking strong.”
- Nick Curtis, Managing Director, CGC Recruitment
- Nick Curtis, Managing Director
- James Grantham, Chief Operating Officer
- David Hope, Director for Queensland / Building (Permanent Appointments)
- Stewart Armstrong, Principal Consultant / Development Management & Quantity Surveying
- Martin Smallshaw, Principal Consultant
- Billy Versey, Director / Building and Infrastructure
- Christina Ryan, Senior Consultant / Architecture and Interior Design
- Jamie Ryde, Associate Director / Construction Consulting and Development
- Ryan Todd, Associate Director / Infrastructure
- Dan Kundi, Principal Consultant / Civil Construction
- Carmel Jones, Associate Director / Building
- Matthew Rayburn, Consultant
- Master Builders Australia Building & Construction Forecasts to 2023/24
- Infrastructure outlook: 2020 and beyond
- Construction activity plummeted during 2019 to 2007 levels
- Engineering Consulting in Australia - Market Research Report
- Construction industry outlook to brighten in 2020
- The 2019 Civil Engineer of the Year says the future of structures is bright
- CGC Project In Focus - Inland Railway
- CGC Project In Focus - Brisbane as a development hotspot
- 9-Point plan for economic recovery from the COVID-19 pandemic
- PM to unveil $1.5 billion infrastructure funding boost
- Scott Morrison outlines details of Government's JobMaker plan, including fast-tracking infrastructure projects
- The new normal – the post COVID Workplace
- How to induct a remote workforce
- Post COVID Recruitment Intelligence
- The next 12 months in construction and engineering recruitment
- Recruitment strategies for hiring top talent
- Partnering with a recruitment agency in hiring talent
- Top talent will be in high demand throughout FY2020/21
CGC In Focus Market Wrap Series
- Construction Market Wrap
- Infrastructure Market Wrap
- Engineering and Architecture Market Wrap
- Project Management, Consulting and Development Market Wrap
CGC In Focus BLOG Series
- A gas-fired recovery
- How the infrastructure and construction sectors will aid Australia recovery
- Which projects are the government fast-tracking?
Projects In Focus Series
- Queen's Wharf, Brisbane
- The Brisbane Metro
- Cross River Rail
- Sydney Metro Central Business District (CBD)
Address: Level 4, 52 Phillip Street, Sydney, NSW 2000
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CGC In Focus: Recruitment market intelligence for the Construction, Infrastructure, Engineering and Architecture, and Property Development industries. All rights reserved 2020.
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