Improving risk management and proactively sequencing the major infrastructure pipeline will be key to managing the impacts of an overheated construction market, escalating input costs, labour shortages and productivity challenges, Infrastructure Australia’s 2022 Infrastructure Market Capacity report has found.
Infrastructure Australia’s Infrastructure Market Capacity Program is unique in the world as it provides a national view of Australia’s infrastructure pipeline and the market’s ability to deliver on it.
The 2022 edition shows that risks to on-time and on-budget project delivery have increased in the last 12 months, with demand for major public infrastructure projects climbing by $15 billion in a year.
Amid an increase in public and private sector infrastructure investment, Infrastructure Australia’s Acting Chief Executive Adam Copp said the industry was also contending with a surge in supply-side risks in 2021-22 caused by continuing uncertainty in the global economy.
“Australia’s infrastructure sector is facing significant disruption to supply chains caused by the COVID-19 pandemic, volatile demand and more recently, the war in Ukraine. This is causing delays and cost escalations for imported items, while delivery risks are being compounded by severe labour shortages that industry report as having the greatest impact on capacity.
“Industry also reports that fast-rising costs and contracts that are increasingly allocating risk responsibilities to parties not best-placed to manage them, combined with sharp declines in tier 1 contractor’s profitability observed in our 2021 edition, has contributed to a sharp rise in construction sector insolvencies in 2022. This leaves fewer companies to deliver the pipeline of work, with many already operating at 90% capacity and above.
“Our latest research on market capacity points to an increasingly urgent need to better manage these risks and proactively sequence the major infrastructure pipeline. A focus on productivity improvements in planning and delivery, and more ambitious reform to sustainably expand the market’s capacity through supply of labour and materials is increasingly critical for successful, timely and cost-effective delivery,” Mr Copp said.
About the Infrastructure Market Capacity Program
The 2022 Infrastructure Market Capacity report is the second report in this series published by Infrastructure Australia in response to a request made by the Prime Minister and First Ministers at the Council of Australian Government in March 2020. In meeting this request, Infrastructure Australia has worked collaboratively with state and territory governments, and industry across Australia and internationally.
The Market Capacity Program is underpinned by a data-driven capability designed to comprehensively understand the capacity of the market to deliver the pipeline of major public infrastructure projects. A National Infrastructure Project Database aggregates and organises project data and a Market Capacity Intelligence System applies a comprehensive suite of analytical and system-based tools to interrogate and visualise capacity across sectors, by project type and resource inputs.
Acting Infrastructure Australia CEO Adam Copp is
