AUSTRALIAN
INFRASTRUCTURE
METRIC
December Quarter 2016
The IPA/BIS Oxford Economics Australian Infrastructure Metric (the Metric)
is the leading indicator of real investment in Australia’s civil infrastructure.
Key highlights for the quarter include:
Total construction work won has risen
after weak results in the September
2016 quarter, to a level just 1.5 per cent
below the long-run trend
The December 2016 quarter
saw civil construction activity
strengthen significantly
following the subdued
performance in the
September 2016 quarter,
driven by solid transport and
utilities work won, as both
sectors surged above their
respective long-run trends.
While the December 2016 quarter saw
the Australian Infrastructure Metric
headline result boosted by investment
in roads, telecommunications and
water infrastructure, mining work
won continued along its low and flat
trajectory. This is further evidence of
the emergent trend of non-mining
investment buoying civil infrastructure
investment in Australia, as construction
activity continues to shift from the mines
into the major cities.
Figure 1 – December Quarter Work Won Trends
September
2016 Quarter
Index Value
December
2016 Quarter
Index Value
Per cent change
(four quarter rolling
average)
December
quarter vs
long-run average
Total Civil
28.7
87.6
2.1%
1.5%
Mining
13.1
5.1
15.1%
93.9%
Non-Mining
35.3
123.0
1.5%
34.0%
Transport
51.9
139.6
0.9%
35.3%
Utilities
8.6
94.2
37.2%
53.0%
1
Australian Infrastructure Metric December Quarter 2016
Mining related investment remains
very low – at 94 per cent below the
long-run average
Non-mining investment rose
significantly in the December 2016
quarter, due to considerably higher levels
of both transport and utilities work won
Non-mining work done is forecast
to increase by $315 million over
FY2016/17 and $4.7 billion over
FY2017/18. It is forecast to retreat
slightly over FY2018/19 by $339 million.
AGGREGATE TRENDS
Figure 2 – Total Civil Work Won Index
September
2016 Quarter
Index Value
Total Civil
28.7
•
he December quarter
T
saw the headline work won
index rise sharply to 87.6
compared to the weak result
in the September quarter;
•
otal civil work won is now
T
just 1.5 per cent below the
long run trend (see Figure
2); and
•
December
2016 Quarter
Index Value
he four quarter rolling
T
average saw a small
increase of 2.1 per cent,
with the Metric alternating
between high and low levels
of work won over the past
five quarters (see Figure 3).
87.6
205.9%
ABS data shows both civil construction
commencements and civil work done
rising dramatically from a weak base
through the 2000s (see Figure 3), as
both the public and private sectors
funded major transport and utilities
initiatives. The mining boom also
saw the development of new rail and
port infrastructure to handle the rapid
increase in mining capacity.
Since 2011, total civil commencements
have been on a declining trend.
Resources-related commencements
continued to rise, but were partly offset
by tightening public sector funding for
new infrastructure (following a large
GFC-related stimulus), a lack of new
Public Private Partnership (PPP) style
projects and, from 2012, a sharp fall in
non-LNG mining-related infrastructure
as the capital phase of the mining boom
ended. Civil work done has remained
at high but declining levels, as existing
projects are progressed and move to
completion. However, the large gap that
opened up between work done and
(much lower) commencements over
2011 has begun to narrow (see Figure
3), which suggests the declining trend
will begin to moderate as non-mining
investment begins to recover.
Data for the Australian Infrastructure
Metric, which surveys actual work won
by civil contractors, has been collected
since the March 2010 quarter (index
value 100). This data exhibits a similar
spike in growth over FY2010/11, and
trend decline since FY2011/12 – in later
years driven by the collapse in mining
2
Per cent change
(four quarter
rolling average)
Per cent change
(quarter on quarter)
Australian Infrastructure Metric December Quarter 2016
2.1%
December quarter vs
long-run average
1.5%
investment. FY2014/15 represented the
worst financial year for total work won
as recorded by the Metric, with a four
quarter reading of 66.8 (around 22.8 per
cent below the long-run average reading
of 86.4) (see Figure 4).
But the FY2014/15 result masked
an emerging recovery in non-mining
sectors, with the non-mining index
moving above the long-run trend.
This ‘twin speed’ investment outlook
continued over FY2015/16 with
strengthening non-mining investment
offsetting low mining investment. This
included the high level of major civil
infrastructure projects won for roads &
bridges and railways, such as Capital
Metro which was signed in the June
2016 quarter.
The December quarter headline figure
of 87.6 is a significant increase on the
September quarter figure of 28.7. Civil
construction activity has been volatile
over the last five quarters, however, the
four quarter index has risen slightly to
58.3 from 57.1 last quarter. Work won for
the non-mining sector over FY2016/17
(year to date) is 11 percentage points
below the long-run trend, however
mining sector activity remains well
below its long-run average, as seen in
Figure 5.
The total work won reading indicates
that the December 2016 quarter civil
commencements will be between $14.5
billion and $18.5 billion (see Figure 3).
Figure 3 – All Civil Work Won, Commencements and Work Done
$ BILLION
INDEX
Jun 19
Jun 18
Dec 18
Dec 17
Jun 17
Dec 16
Jun 16
Jun 15
Dec 15
Dec 14
Jun 14
Dec 13
Jun 13
Jun 12
Dec 12
Dec 09
Dec 08
Dec 11
0
Jun 11
5
Jun 10
50
Dec 10
15
Jun 09
100
Jun 08
25
Jun 07
150
Dec 07
35
Dec 06
200
Jun 06
45
Dec 05
250
Jun 05
55
Jun 04
300
Dec 04
65
IPA/BIS Oxford Economics Work Won Metric – All Civil (RHS)
IPA/BIS Oxford Economics Work Done Forecast 2016/17 (quarterly average) – All Civil (LHS)
Total Work Done by Quarter (ABS Data) (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2017/18 (quarterly average) – All Civil (LHS)
Total Commencements by Quarter (ABS Data) (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2018/19 (quarterly average) – All Civil (LHS)
Figure 4 – Average Work Won Index, FY2010/11 to FY2016/17 YTD
Total Civil
Mining
Non-Mining
180
160
140
120
100
Non-Mining Average (91.5)
Total Civil Average (86.4)
80
Mining Average (74.6)
60
79.2
9.1
58.2
99.9
5.1
71.5
93.4
4.7
66.8
74.5
133.8
92.3
71.4
65.9
69.7
107.3
173.6
127.2
114.8
130.0
20
119.4
40
0
FY2010/11
3
FY2011/12
FY2012/13
Australian Infrastructure Metric December Quarter 2016
FY2013/14
FY2014/15
FY2015/16
FY 2016/17 YTD
MINING
1
Figure 5 – Mining Work Won Index
September
2016 Quarter
Index Value
Mining
13.1
•
imilar to previous
S
quarters, the mining
sector recorded tiny
levels of investment in the
December quarter;
•
hile the four quarter
W
rolling average increased
as small contracts were
signed, the sector remains
significantly below long-run
trends; and
•
December
2016 Quarter
Index Value
ining work won is still
M
expected to keep mining
and heavy industry
commencements at low
levels. As such, mining
work done is forecast
to decline to pre-mining
investment boom levels by
FY2017/18 (see Figure 6).
5.1
Per cent change
(four quarter
rolling average)
Per cent change
(quarter on quarter)
61.5%
Mining was once the largest single
category of civil construction,
representing circa 46 per cent of total
work done ($58.7 billion in FY2012/13).
Both ABS civil commencements and
ABS civil work done in this construction
segment boomed during the 2000s,
and again after the GFC with several
large LNG projects and a burst of new
investment in coal and iron ore mining.
However, since FY2011/12, the value
of mining commencements – while
highly volatile – has been on a declining
trend. Lower levels of commencements
relative to existing levels of work done
suggest that a sharp fall is a prospect
for mining-related work done over
FY2015/16, FY2016/17 and FY2017/18.
15.1%
December quarter vs
long-run average
93.9%
The Metric shows work won in mining
peaked in FY2011/12, after which it
has been volatile around a general
downward trend. This volatility was
evident in FY2013/14, with mining work
won reaching high levels in the first half
of the year. FY2014/15 saw new mining
work won collapse to zero for much of
the period since December 2014, with
a tiny spike in activity in the September
2016 and December 2016 quarters. This
recent activity in the past two quarters
brings the four quarter index up by 15.1
per cent.
The work won reading for mining
indicates commencements will be in
the $3 billion to $5 billion range for the
December 2016 quarter (see Figure 6).
1. T
his includes the construction of mines, refineries, smelters, chemical processing plants, materials handling and storage facilities, oil refineries and platforms, blast furnaces,
steel mills and other heavy industrial facilities.
4
Australian Infrastructure Metric December Quarter 2016
Figure 6 – Mining Work Won, Commencements and Work Done
$ BILLION
INDEX
50
300
45
250
40
35
200
30
25
150
20
100
15
10
50
5
0
IPA/BIS Oxford Economics Work Won Metric –
Mining (RHS)
Mining & Heavy Industry Work Done
by Quarter (ABS Data) (LHS)
Mining & Heavy Industry Commencements
by Quarter (ABS Data) (LHS)
5
Australian Infrastructure Metric December Quarter 2016
Jun 19
Dec 18
Jun 18
Jun 17
Dec 17
Dec 16
Jun 16
Dec 15
Jun 15
Jun 14
Dec 14
Dec 13
Jun 13
Dec 12
Jun 12
Dec 11
Jun 11
Dec 10
Jun 10
Jun 09
Dec 09
Dec 08
Jun 08
Dec 07
Jun 07
Jun 06
Dec 06
Dec 05
Jun 05
Dec 04
Jun 04
0
IPA/BIS Oxford Economics Work Done Forecast 2016/17 (quarterly average) – Mining & Heavy Industry (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2017/18 (quarterly average) – Mining & Heavy Industry (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2018/19 (quarterly average) – Mining & Heavy Industry (LHS)
NON-MINING
2
Figure 7 – Non-Mining Work Won Index
September
2016 Quarter
Index Value
December
2016 Quarter
Index Value
Per cent change
(four quarter
rolling average)
Per cent change
(quarter on quarter)
December quarter vs
long-run average
Non-Mining
35.3
123.0
248.5%
1.5%
34.0%
Transport
51.9
139.6
168.9%
0.9%
35.3%
Utilities
8.6
94.2
992.9%
37.2%
53.0%
•
•
he December 2016
T
quarter saw non-mining
work won return to high
levels of 123, following
the low of 35.3 in the
September quarter, some
34 per cent above the
long-run trend (Figure 7);
and
he non-mining four
T
quarter rolling average
increased 1.5 per cent.
Non-mining construction is traditionally
the largest component of engineering
construction; representing circa 51 per
cent (circa $64 billion) of work done in
FY2013/14.
During the 2000s, investment in nonmining infrastructure boomed, driven
by both public and private investment.
However, since the December 2010
quarter, the Metric has shown work won
outside of mining and heavy industry to
be on a declining trend. This was driven
by tightening public investment initially,
but has been joined by falling miningrelated investment, such as associated
rail and port infrastructure.
While volatile quarter to quarter, the nonmining work won index fell progressively
from FY2010/11 to FY2012/13. From
an average index reading of 114.8 in
FY2010/11, non-mining work won fell to
a series low of 71.4 in FY2012/13 (see
Figure 4). This low level of investment
was sustained over the course of
FY2013/14, which saw an average
reading of 74.5.
However, from FY2013/14 nonmining work won saw a slight
improvement, with this investment
recovery accelerating in FY2014/15,
culminating in an extremely strong June
2015 quarter result. While robust, the
September 2015 and December 2015
quarters declined off the back of the
very strong June 2015 quarter (see
Figure 8).
Investment in the non-mining sector has
become the main driver of the headline
Metric result with the collapse in mining
investment since 2015, as the volatility
in the headline result over the past
five quarters mirrors the activity in the
non-mining sector. For instance the high
headline reading in December 2016 is
a consequence of large increases in
investment in both transport and utilities
sectors, at 35.3 and 53 per cent above
their long-run averages respectively.
Total non-mining work won indicates
that commencements are expected to
reach between $11.5 billion and $14
billion for December 2016.
This downward trend in work
won corresponds with a fall in
commencements (as measured by the
ABS) from mid-2011, and indicates
further declines in future construction
activity.
2. N
on-mining and heavy industry construction includes the development of transport (roads, bridges, railways and ports), utilities (electricity, water and sewerage, gas and
telecommunications) and other work (including recreation and site clearing). While not including the direct construction of mines and heavy industry facilities, this category of
work still includes the development of mining-related infrastructure, such as railways, ports and gas pipelines.
6
Australian Infrastructure Metric December Quarter 2016
Figure 8 – Non-Mining Work Won, Commencements and Work Done
$ BILLION
INDEX
20
200
180
18
160
16
140
14
120
100
12
80
60
10
40
8
20
0
IPA/BIS Oxford Economics Work Won Metric –
Non-Mining (RHS)
Non-Mining Work Done by Quarter
(ABS Data) (LHS)
Non-Mining Commencements by Quarter
(ABS Data) (LHS)
7
Australian Infrastructure Metric December Quarter 2016
Jun 19
Jun 18
Dec 18
Dec 17
Jun 17
Dec 16
Jun 16
Jun 15
Dec 15
Dec 14
Jun 14
Jun 13
Dec 13
Dec 12
Jun 12
Dec 11
Jun 11
Jun 10
Dec 10
Dec 09
Jun 09
Dec 08
Jun 08
Jun 07
Dec 07
Dec 06
Jun 06
Dec 05
Jun 05
Jun 04
Dec 04
0
IPA/BIS Oxford Economics Work Done Forecast 2016/17 (quarterly average) – Non-Mining (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2017/18 (quarterly average) – Non-Mining (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2018/19 (quarterly average) – Non-Mining (LHS)
TRANSPORT
•
hile volatile over the last
W
four quarters, the transport
work won index surged
in December 2016 – from
51.9 to 139.6, a level which
is 35.3 per cent higher than
the long-run average (see
Figure 9); and
•
here were large increases
T
in investment in roads
& bridges and railways
infrastructure, while
the work won index for
harbours remained at zero
for the second consecutive
quarter.
Civil commencements and work done
in the transport sector rose through the
2000s, driven initially by large private
sector funded projects in roads, but
later by new public investments as well
as mining-related projects. A large spike
in commencements in the December
2010 quarter was driven in part by
new road infrastructure (e.g. Hunter
Expressway and Pacific Highway),
but mainly by new port and rail
requirements for the iron ore and coal
mining industries.
Work won in the transport sector has
been volatile for the past four quarters
alternating between high and low levels
of activity. The September 2016 quarter
saw the level of transport work won fall
significantly to 51.9, from 169.1 in the
June quarter. However in the December
2016 quarter, work won for railways and
roads & bridges have again lifted the
index to high levels, as the transport
reading reached 139.6.
The recent movements in the work
won index for transport suggests that
commencements will be in the $6.5
billion to $7.5 billion range for the
December 2016 quarter.
Data from the Metric tracks movements
in transport work won since March
2010 (Index = 100). The Metric spiked
in FY2010/11, before progressively
retreating over the course of FY2011/12
and FY2012/13. Transport work won
has picked-up slightly over FY2013/14
and FY2014/15, a trend that continued
in the September and December 2015
quarters.
Figure 9 – Transport Work Won, Commencements and Work Done
$ BILLION
INDEX
12
250
11
10
200
9
8
150
7
6
100
5
4
50
3
2
IPA/BIS Oxford Economics Work Won Metric –
Transport (RHS)
Transport Work Done by Quarter (ABS Data) (LHS)
Transport Commencements by Quarter
(ABS Data) (LHS)
8
Australian Infrastructure Metric December Quarter 2016
Jun 19
Jun 18
Dec 18
Dec 17
Jun 17
Dec 16
Jun 16
Jun 15
Dec 15
Dec 14
Jun 14
Dec 13
Jun 13
Dec 12
Jun 12
Dec 11
Jun 11
Jun 10
Dec 10
Dec 09
Jun 09
Dec 08
Jun 08
Jun 07
Dec 07
Dec 06
Jun 06
Dec 05
Jun 05
Jun 04
Dec 04
0
IPA/BIS Oxford Economics Work Done Forecast 2016/17 (quarterly average) – Transport (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2017/18 (quarterly average) – Transport (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2018/19 (quarterly average) – Transport (LHS)
Sub-Categories
An analysis of transport subcategories
shows that movements in the roads &
bridges sector tends to dominate the
overall transport reading, followed by
railways and harbours. Much lower
measures of work won for roads
over FY2011/12 and FY2012/13 saw
the headline transport reading trend
downwards through this period, despite
a large cycle of harbours and railways
investment being largely maintained at
2010 highs as shown in Figure 10.
The December 2016 quarter reading for
the transport sector saw several large
roads & bridges and railways projects
signed including level crossing works in
Victoria, the Mernda Rail Extension and
works for the Northern Road Upgrade in
Western Sydney.
Since the start of FY2013/14, investment
in roads & bridges has bounced back,
continuing to rise to FY2015/16 which
has brought the transport work won
index up. The year-to-date reading
(2010 = 100) for roads & bridges in
FY2016/17 shows a fall to 46.4 as a
result of the very low level of work won
in the September 2016 quarter.
Figure 10 – Transport Sub-Groups, FY2010/11 to FY2016/17 (Four Quarter Average Index)
Roads
Rail
Harbours
200
180
160
140
120
100
80
60
FY2010/11
9
FY2011/12
FY2012/13
Australian Infrastructure Metric December Quarter 2016
FY2013/14
FY2014/15
FY2015/16
0.0
130.5
46.4
28.9
70.2
79.4
19.2
129.1
67.2
78.3
65.8
48.5
55.2
95.2
25.9
163.1
93.1
39.7
132.2
0
79.6
20
101.7
40
FY2016/17 YTD
UTILITIES
3
•
•
•
he utilities work won index
T
surged in the December
2016 quarter to a reading
of 94.2, following three
consecutive quarters of
very low activity (see
Figure 11);
T
here were significant
increases in investment
in telecommunications
and water infrastructure to
bring the December 2016
quarter result 53 per cent
higher than the long-run
average; and
T
he four quarter rolling
average index for utilities
increased more than 37
per cent to 32.8, from 23.9
in the September 2016
quarter with this quarter
seeing a larger spike in
work won compared to the
December 2015 quarter
(see Figure 7).
ABS commencements and work done in
utilities sectors exhibited a rising trend
through the 2000s, driven by upgrades
and capacity expansions across the
electricity network as well as a number
of drought-busting water infrastructure
initiatives, including the construction of
desalination plants in most Australian
capitals. Between 2009 and 2013 the
development of large LNG projects in
Queensland (involving the construction
of gas pipelines) also drove a significant
burst of work.
More recently, the completion of these
projects along with the breaking of
drought conditions and the end of a
long-run phase of electricity investment
has seen commencements start to trend
downwards, with commencements now
well below current levels of work done.
While the Metric shows high readings
for work won through FY2010/11,
FY2011/12 and FY2012/13, utilities
work won fell over FY2013/14, before
picking up over the final quarter of
FY2014/15 (see Figure 11). While
strong in the first quarter of FY2015/16,
utilities work won softened over the first
three quarters of 2016, largely due to
the drop NBN related investment. The
large spike in December 2016 reflected
the deployment of Fibre-to-the-Curb
technology in the NBN project, and
various renewable energy generation
and wastewater projects across
Australia. This still left the four quarter
reading for work won over the calendar
year at 34.6 compared to 81.2 for 2015.
Sub-Categories
An analysis of work won trends in the
utilities sub-categories shows that
telecommunications and sewerage
infrastructure is growing compared to
the energy sector. As shown in Figure
12, there has broadly been a downward
trend in work won in pipelines, water
and electricity infrastructure between
FY2010/11 to FY2015/16. This pattern of
activity in the utilities largely continued
in the first quarter of FY2016/17, with
no work won in the electricity and
pipelines categories and the low level of
telecommunications and sewerage work
won resulting in the overall utilities index
falling to one of the lowest readings
since the index began. The December
2016 quarter has seen a recovery in
work won for telecommunications
and sewerage categories while the
water sector also recorded significant
infrastructure investment.
The level of utilities work won indicates
that commencements for this sector
for the December 2016 quarter will be
between $5 billion and $6 billion.
3. U
tilities includes electricity, water, sewerage, telecommunications and gas pipelines, servicing both the mining and non-mining sectors of the economy.
10
Australian Infrastructure Metric December Quarter 2016
Figure 11 – Utilities Work Won, Commencements and Work Done
INDEX
$ BILLION
12
180
11
160
10
140
9
120
8
100
7
80
6
60
5
IPA/BIS Oxford Economics Work Won Metric –
Utilities (RHS)
Jun 19
Dec 18
Jun 18
Dec 17
Jun 17
Jun 16
Dec 16
Dec 15
Jun 15
Dec 14
Jun 14
Dec 13
Jun 13
Dec 12
Jun 12
Jun 11
Dec 11
Dec 10
Jun 10
Dec 09
Jun 09
Jun 08
Dec 08
Dec 07
Jun 07
Dec 06
0
Jun 06
2
Jun 05
20
Dec 05
3
Dec 04
40
Jun 04
4
IPA/BIS Oxford Economics Work Done Forecast 2016/17 (quarterly average) – Utilities (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2017/18 (quarterly average) – Utilities (LHS)
Utilities Work Done by Quarter (ABS Data) (LHS)
IPA/BIS Oxford Economics Work Done Forecast 2018/19 (quarterly average) – Utilities (LHS)
Utilities Commencements by Quarter (ABS Data) (LHS)
Figure 12 – Utilities Sub-Groups Work Won, FY2010/11 to FY2016/17 (Four Quarter Average Index)
Electricity
Water
Sewerage
600
Telecomms
Gas Pipelines
500
400
300
200
11
FY2011/12
FY2012/13
Australian Infrastructure Metric December Quarter 2016
FY2013/14
FY2014/15
FY2015/16
264.8
3.1
51.6
81.6
33.1
73.5
162.1
382.4
9.0
9.9
30.6
405.2
32.6
24.9
13.3
25.2
229.4
205.5
52.9
15.4
552.6
7.5
343.8
53.7
30.7
108.5
356.3
101.4
103.1
28.6
176.2
FY2010/11
100.4
104.4
0
76.3
41.8
100
FY2016/17 YTD
WORK DONE FORECASTS
Measuring the work won by
civil contractors provides
an important indicator of
future trends in civil work
done (activity) as measured
by the Australian Bureau of
Statistics (ABS).4
While non-mining – and particularly
transport – work won has improved to
above long-run trends, this increased
investment is unlikely to be sufficient
to fully offset the retreat in mining (see
Figure 1).
In this context, BIS Oxford Economics
forecasts falling levels of total
construction work done continuing
into FY2016/17, as well as a sizeable
decline in civil work over FY2017/18
(see Figure 2). Despite the forecast
retreat, the decline in work done has
begun to moderate as the gap between
commencements and work done begins
to close (see Figure 14).
An analysis of the data also shows that
the mining sector’s share of total civil
work done is expected to decline from
about 50 per cent during FY2013/14
to less than 25 per cent by FY2018/19.
In contrast, the share of utilities and
transport work done is expected to
continue growing to 70 per cent by
FY2018/19 (see Figure 15).
In particular, BIS Oxford Economics forecasts:
Total civil work done is estimated to
fall $13.4 billion over FY2016/17, and
decrease by $3.9 billion over 2017/18,
while FY2018/19 work done is forecast
to fall by $4.8 billion (see Figure 13)
Non-mining work done is expected to
increase by $315 million over FY2016/17,
with transport work won expected
to surge by $2.9 billion, offsetting a
decrease of $1.9 billion from the utilities
sector
Mining is expected to see the biggest
retreat of any sector, with work done
estimated to fall $13.7 billion in
FY2016/17 compared to the previous
financial year
The annual change in total civil
construction work is expected to remain
negative over FY2016/17 to FY 2018/19,
but fall at a slower rate as the impacts
of the mining slowdown eases and nonmining sector activity grows. Total civil
construction work won is expected to
fall by $4.8 billion over FY2018/19
4. N
ote – Due to a range of factors, such as the time between a contract being signed and work commencing, direct comparisons of work won, as measured by the Metric,
and work done, as measured by the Australian Bureau of Statistics (ABS), should be avoided. Rather, trends in work won, as well as trends in work commenced (as
measured by the ABS) provide a guide as to future work done levels.
12
Australian Infrastructure Metric December Quarter 2016
Figure 13 – Forecast ABS Work Done, Change from FY2016/17 to FY2018/19 ($ Million)
2015/16 to 2016/17
Total Civil
2016/17 to 2017/18
Mining
(Source: BIS Oxford
Economics/ABS data)
2017/18 to 2018/19
Non-Mining
Utilities
Transport
-15,000
-10,000
-5,000
0
5,000
10,000
Figure 14 – ABS Work Done and ABS Civil Commencements ($ Million)
60,000
Work done and civil
commencements
begin to de-couple
50,000
Gap begins
to widen
40,000
Gap begins
to narrow
30,000
20,000
10,000
Jun 19
Dec18
Jun 18
Dec 17
Jun 17
Dec 16
Jun 16
Dec 15
Jun 15
Dec 14
Jun 14
Dec 13
Jun 13
Dec 12
Jun 12
Dec 11
Jun 11
Dec 10
Jun 10
Dec 09
Jun 09
Jun 08
Dec 08
0
Total Civil Work Done
Total Civil Construction Commencements
Total Civil Work Done Forecast
Figure 15 – ABS Civil Work Done by Sector ($ Million)
Transport
Utilities
40,000
Other
35,000
Heavy mining
and industry
30,000
25,000
20,000
15,000
10,000
5,000
13
18
19
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16
16
17
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14
13
15
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11
11
12
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De
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10
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09
09
08
08
07
Australian Infrastructure Metric December Quarter 2016
De
c
Ju
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De
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Ju
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De
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07
Ju
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06
05
05
06
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De
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0
PROCUREMENT TRENDS
TheIPA/BIS Oxford Economics Australian Infrastructure Metric also collects data on the type of
contracts being used for surveyed projects.
Sector Wide
Across all civil segments over the past
four quarters, 60.8 per cent of surveyed
projects have been procured through
Construct Only contracts, while Design
and Construct contracts account
for 33.4 per cent. 4.2 per cent have
been Other-type contracts (primarily
managing contractor or schedule of
rates), with Alliance and Public Private
Partnership (PPP) contracts accounting
for 1.2 and 0.3 per cent respectively
(see Figure 16).
Figure 16 – All Projects Procurement
Type: Four Quarter Total by Volume
In terms of total value of contracts
signed over the past four quarters, 58.4
per cent can be attributed to Design
and Construct contracts, while 26.6 per
cent is accounted for by Construct Only
contracts. Other-type contracts capture
8.8 per cent of total value, while PPPs
account for 2.7 per cent, and Alliance
contracts represent 3.4 per cent of
contract values (see Figure 17).
14
Australian Infrastructure Metric December Quarter 2016
Figure 17 – All Projects Procurement
Type: Four Quarter Total by Value
Design and Construct (D&C)
Design and Construct (D&C)
Construct only (lump sum/fixed price)
Construct only (lump sum/fixed price)
Alliance
Alliance
PPP
PPP
Other
Other
Transport
Over the past four quarters, 70.3 per
cent of all transport projects surveyed
have been procured through Construct
Only types of contracts, while Design
and Construct contracts represent
27.4 per cent. 1.4 per cent have been
Other-type contracts (predominantly
managing contractor) and 0.5 per cent
can be attributed to PPP and Alliancetype contracts (see Figure 18)
Figure 18 – Transport Procurement Type:
Four Quarter Total by Volume
Meanwhile, Design and Construct
contracts represent the largest total
value of transport contracts signed over
the last four quarters with 65.4 per cent.
Construct Only contracts represent
24.9 per cent of total value. PPP and
Other-type contracts capture 3.7 and
3.4 per cent respectively, while Alliance
contracts capture 2.6 per cent of value
(see Figure 19).
Utilities
Over the past four quarters, Design and
Construct-type contracts accounted for
54.4 per cent out of all utilities projects
procured. Construct Only contracts
represented 33.8 per cent of contracts
signed, while Other-type contracts
(predominantly schedule of rates)
accounted for 7.4 per cent. No PPP-type
projects accounted were signed, while
Alliance contracts had 4.4 per cent of
the share (see Figure 20).
15
Design and Construct (D&C)
Design and Construct (D&C)
Construct only (lump sum/fixed price)
Construct only (lump sum/fixed price)
Alliance
Alliance
PPP
PPP
Other
Other
Figure 20 – Utilities Procurement Type:
Four Quarter Total by Volume
In terms of total value of contracts
signed, 14 per cent can be attributed to
Construct Only-type contracts. Design
and Construct contracts captured 66.2
per cent of the total value, while Othertype contracts accounted for 10.1 per
cent (see Figure 21). No PPP contracts
were signed, while Alliance contracts
accounted for 9.7 per cent of the total
contract value in the utilities sector over
the last four quarters.
Australian Infrastructure Metric December Quarter 2016
Figure 19 – Transport Procurement Type:
Four Quarter Total by Value
Figure 21 – Utilities Procurement Type:
Four Quarter Total by Value
Design and Construct (D&C)
Design and Construct (D&C)
Construct only (lump sum/fixed price)
Construct only (lump sum/fixed price)
Alliance
Alliance
PPP
PPP
Other
Other
Work Won Survey
(METRIC) - Quarter
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Roads and Bridges
100.0
139.6
191.7
310.9
60.6
27.6
43.7
102.3
54.1
94.2
46.2
47.7
31.1
67.2
Railways
100.0
196.5
229.9
349.1
23.1
288.0
100.4
408.6
102.5
203.6
133.8
158.6
168.8
372.6
Harbours
100.0
20.4
8.2
75.4
11.2
174.9
32.2
159.1
96.3
45.2
40.0
50.8
17.4
4.5
Total Transport
100.0
120.7
155.4
262.7
43.8
99.4
49.4
160.2
70.9
99.1
57.7
64.7
48.2
97.7
Electricity
100.0
23.8
72.8
78.9
13.7
44.7
6.9
8.9
50.0
12.8
33.3
27.4
10.6
76.8
Water
100.0
104.4
37.0
26.6
24.2
24.2
91.3
53.8
58.9
72.2
25.2
24.8
17.5
14.7
Sewerage
100.0
567.2
0.0
509.3
0.0
719.5
0.0
0.0
432.3
760.9
20.9
2,353.1
1,037.0
633.7
Telecommunications
100.0
0.0
0.0
235.9
9.0
346.9
161.9
502.2
419.6
113.0
189.7
75.7
518.9
1,071.5
Gas Pipelines
100.0
11.3
6,745.1
721.2
77.4
64.9
5,155.1
0.0
211.4
2,853.3
0.0
0.0
565.6
0.0
Total Utilities
100.0
60.9
138.7
79.5
18.5
62.6
120.0
61.2
84.3
88.1
40.0
49.3
64.1
121.7
Electricity and Gas Pipelines
100.0
23.5
246.1
95.6
15.3
45.3
140.6
8.7
54.2
86.6
32.5
26.6
25.0
74.8
Total Mining
100.0
56.4
127.6
142.8
224.7
24.9
160.3
150.6
222.3
161.2
59.7
145.0
41.9
16.9
Total Civil Construction
100.0
85.1
142.5
176.7
91.2
67.0
121.2
144.2
122.3
121.0
54.1
85.3
58.1
81.5
Total Non-Mining
100.0
97.4
148.9
191.3
34.0
85.1
104.5
141.3
79.4
103.7
51.6
59.6
65.0
109.2
Work Won Survey (METRIC) 4 Quarter Average - 2010=100
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Roads and Bridges
n/a
n/a
n/a
100.0
94.7
79.6
59.7
31.6
30.7
39.7
40.0
32.6
29.5
25.9
Railways
n/a
n/a
n/a
100.0
91.2
101.7
86.9
93.7
102.7
93.1
96.9
68.3
75.9
95.2
Harbours
n/a
n/a
n/a
100.0
56.5
132.2
144.0
185.0
226.7
163.1
166.9
113.9
75.1
55.2
Total Transport
n/a
n/a
n/a
100.0
91.2
87.9
71.3
55.2
59.5
59.4
60.7
45.7
42.2
42.0
Electricity
n/a
n/a
n/a
100.0
68.7
76.3
52.3
26.9
40.1
28.6
38.1
44.8
30.5
53.7
Water
n/a
n/a
n/a
100.0
71.7
41.8
62.1
72.2
85.2
103.1
78.4
67.6
52.1
30.7
Sewerage
n/a
n/a
n/a
100.0
91.5
104.4
104.4
61.2
97.9
101.4
103.2
303.2
354.6
343.8
Telecommunications
n/a
n/a
n/a
100.0
72.9
176.2
224.4
303.7
426.0
356.3
364.6
237.6
267.2
552.6
Gas Pipelines
n/a
n/a
n/a
100.0
99.7
100.4
79.4
69.9
71.7
108.5
40.4
40.4
45.1
7.5
Total Utilities
n/a
n/a
n/a
100.0
78.5
79.0
74.0
69.2
86.5
93.3
72.2
69.0
63.7
72.6
Electricity and Gas Pipelines
n/a
n/a
n/a
100.0
81.8
86.5
63.8
45.1
53.5
62.4
39.1
43.0
36.7
34.1
Total Mining
n/a
n/a
n/a
100.0
129.2
121.8
129.5
131.3
130.8
162.7
139.1
137.8
95.6
61.7
Total Civil Construction
n/a
n/a
n/a
100.0
98.3
94.7
90.5
84.0
90.2
100.9
87.6
75.9
63.1
55.3
Total Non-Mining
n/a
n/a
n/a
100.0
87.7
85.4
77.2
67.9
76.4
79.8
70.0
54.8
52.1
53.1
16
Australian Infrastructure Metric December Quarter 2016
Work Won Survey
(METRIC) - Quarter
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Roads and Bridges
136.2
33.2
141.0
49.9
66.9
23.7
115.1
292.6
181.4
225.1
51.5
131.4
47.7
124.6
Railways
375.3
175.7
18.6
6.3
692.5
343.8
36.8
57.4
26.2
12.3
37.3
539.0
150.6
420.7
Harbours
0.0
15.5
105.0
39.3
14.8
0.0
2.9
21.5
10.8
3.1
10.7
34.4
0.0
0.0
140.2
50.1
114.8
41.1
146.8
65.3
78.0
196.2
119.6
143.1
40.1
169.1
51.9
139.6
60.1
21.5
12.4
51.9
9.2
0.0
0.0
27.4
2.0
11.7
13.8
1.6
0.0
45.6
2.4
4.4
17.9
16.5
22.8
5.5
3.4
55.8
13.4
7.0
3.1
11.6
8.1
101.3
1,920.1
55.8
74.4
648.7
139.1
27.8
0.0
126.2
2,402.0
362.9
700.9
186.4
51.4
252.0
Telecommunications
690.2
0.0
0.0
0.0
22.5
13.0
11.9
1,313.3
1,248.5
0.0
0.0
35.0
70.2
374.5
Gas Pipelines
181.1
595.4
775.4
358.3
222.6
1,668.3
149.0
279.6
0.0
3,598.8
366.5
0.0
0.0
116.7
Total Utilities
96.1
20.5
24.3
42.5
19.8
25.1
4.2
130.7
112.1
58.6
18.9
9.7
8.6
94.2
Electricity and Gas Pipelines
63.2
36.4
32.2
59.8
14.8
43.3
3.9
34.0
1.9
104.9
23.0
1.6
0.0
47.4
Total Mining
198.1
196.3
108.9
31.8
19.0
0.0
0.0
0.0
0.3
0.0
19.8
0.4
13.1
5.1
Total Civil Construction
148.1
88.6
88.3
44.2
74.2
38.4
34.5
120.1
86.0
82.9
28.5
88.5
28.7
87.6
Total Non-Mining
126.7
42.4
79.2
50.6
99.5
55.8
49.2
171.5
122.7
118.4
32.1
126.3
35.3
123.0
Total Transport
Electricity
Water
Sewerage
Work Won Survey (METRIC) 4 Quarter Average - 2010=100
Sep-13
Dec-13
Mar-14
Roads and Bridges
38.0
36.1
50.9
48.5
39.2
37.9
34.4
67.2
82.6
109.7
101.2
79.4
61.4
47.9
Railways
122.8
124.8
107.6
65.8
102.0
121.2
123.3
129.1
53.0
15.2
15.2
70.2
84.4
131.1
Harbours
35.6
18.4
61.3
78.3
85.6
78.0
28.0
19.2
17.3
18.8
22.6
28.9
23.6
22.1
Total Transport
54.9
52.6
63.1
54.2
55.2
57.6
51.8
76.1
71.9
84.1
78.2
73.9
63.3
62.7
Electricity
63.4
61.3
62.0
52.9
34.5
26.7
22.2
13.3
10.7
14.2
19.2
9.9
9.9
22.1
Water
22.2
14.6
14.7
15.4
22.9
23.4
18.0
32.6
29.2
25.6
25.4
9.0
11.1
46.3
Sewerage
505.2
309.9
228.1
229.4
78.0
75.7
69.3
24.9
217.3
106.7
157.0
162.1
110.6
101.2
Telecommunications
701.6
679.0
524.5
205.5
6.7
10.6
14.1
405.2
770.2
767.2
763.3
382.4
31.3
142.8
Gas Pipelines
9.9
17.7
20.5
25.2
25.8
39.9
31.6
30.6
27.7
75.3
77.2
73.5
52.3
6.4
Total Utilities
87.4
79.8
69.3
48.4
28.3
29.5
24.2
47.4
71.8
81.2
84.5
52.6
25.3
34.6
Electricity and Gas Pipelines
40.8
42.9
44.4
41.2
30.8
32.3
26.2
20.6
17.9
40.1
43.7
36.8
27.8
15.5
Total Mining
94.2
106.2
121.9
125.4
83.4
37.4
11.9
4.5
0.1
0.1
4.7
4.8
7.8
9.0
Total Civil Construction
73.9
74.6
80.6
73.2
58.6
48.6
37.9
53.0
55.3
64.3
63.0
56.7
45.3
46.3
Total Non-Mining
67.1
63.9
66.6
55.5
50.1
52.4
46.8
69.5
74.1
86.1
82.8
74.3
58.1
58.9
17
Australian Infrastructure Metric December Quarter 2016
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
ABOUT
The IPA/BIS Oxford
Economics Australian
Infrastructure Metric (the
Metric) is a major research
initiative produced by
Infrastructure Partnerships
Australia (IPA), in
collaboration with business
research and forecasting
firm, BIS Oxford Economics
and Australia’s major civil
contractors.
The Metric captures circa 30 per cent
of private construction activity each
quarter, using this data to model the
work won (contracts signed) each
quarter – and forecasting construction
activity levels across the coming years.
The Metric provides a robust leading
indicator of the strength and direction of
the civil construction sector in Australia,
increasing community, investor and
sponsor certainty about the progress
in addressing Australia’s infrastructure
deficit.
The Metric also captures the contracting
arrangements that are being employed
to deliver Australia’s infrastructure,
allowing for an objective measurement
of procurement trends over time.
This Metric edition covers the December
2016 quarter; with the March 2017
quarter due to be published in April
2017.
Close to 20 of Australia’s largest
civil construction companies are
participating in this quarterly study.
By capturing a substantial sample of
the work won by these companies
each quarter, the Metric provides a
timely indicator of civil construction
activity across: Total civil infrastructure
investment; Civil infrastructure excluding
direct mining and heavy industry
construction; Transport infrastructure;
and Utilities infrastructure.
MARKET SHARE
The Metric is presently capturing around
25 per cent of total civil engineering
construction work commenced each
quarter, and an average of 30 per cent
of total private contract engineering
construction (see Figure 21). The
sample size varies considerably
between sectors and sub-sectors, with
the sample size for the transport and
mining sectors far outweighing the
utilities sector.
Figure 21 – Data Set Market Share
Sector
Total Civil Commencements
Total Private Contract Civil
Commencements
Transport
31
43
Utilities
17
26
Mining
30
27
All sectors
25
29
CONTACTS
Media: For all media enquiries please contact Sarah Dagg from Infrastructure Partnerships Australia on (02) 9152 6016
or [email protected]
Research: For further information on the research methodology please contact Gavin Chan from Infrastructure Partnerships
Australia on (02) 9152 6029 or [email protected]
Other: BIS Oxford Economics forecasts for civil construction work done appearing in this report are sourced from: Engineering
Construction in Australia 2016-2030; Mining and Heavy Industry Construction in Australia 2014 to 2028, Road Construction
in Australia 2013 to 2028
For more information on BIS Oxford Economics’ civil construction forecasts please contact Adrian Hart on (02) 8458 4200
or [email protected]