Construction Materials Industry Conference Delivering Australia’s Pipeline
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Transcript of Construction Materials Industry Conference Delivering Australia’s Pipeline
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Construction Materials Industry ConferenceDelivering Australia’s Pipeline
Jennifer Westacott
20 September 2012
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Overview of presentation
Key growth challenge – pipeline or pipe dream?
• Australia’s investment opportunity
• Australia’s project performance
• Challenges and solutions
• COAG and BCA reviews
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Australia’s Investment Opportunity
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The project pipeline
Source: Deloitte Access Economics.
Australia’s $921b Investment pipeline – projects by status
Under
Committed, $66
Under consideration
$192b
Possible $279b
Under construction
$384b
Committed $66b
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Pipeline facts
Projects unprecedented in size
Projects unprecedented in number
Remoteness
Narrow sector base
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This matters
Source: Deloitte Access Economics using real investment and GDP data.
Investment and exports as a percentage of GDP, Australia
10
15
20
25
30
35
10
15
20
25
30
35
1991-92 1996-97 2001-02 2006-07 2011-12 2016-17 2021-22
Investment (total)Exports
Per cent of GDPPer cent of GDP
Projections
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Risks to delivery
Pipeline delivery risks
• Revenue risk
• Cost and time blowouts
• Missed opportunities due to project deferral or abandonment
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Australia’s Project Performance
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Critical question
How well do we deliver projects?
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Data on project performance
Note: cost premium is calculated in US dollarsSource: Resources projects data by Independent Project Analysis; other data from Turner & Townsend, International Construction Costs Survey 2012. Note: Turner & Townsend sourced costs are US dollar relativities per m2.
40% 26% 43%62%
90%
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
Resources projects
Schools Large shoppingcentres
Hospitals Airports
Cost premium Cost premium
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How do we perform?
Project performance
• Lack of robust data for infrastructure projects
• Need to understand cost drivers
• Better measurement can help lift performance
• Warnings in global project data
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Challenges and Solutions
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Barriers to project delivery
Community concerns
Capacity constraints
Efficiency problems
Timely funding and delivery of public infrastructure
Investor confidence
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Solutions
1. Build higher levels of community understanding and acceptance for projects
2. Expand Australia’s capacity to deliver multiple capital projects
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Solutions
3. Improve the efficiency of project delivery in Australia
4. Adequate provision of economic and social infrastructure
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Solutions
5. Build the confidence of investors
6. Supportive government institutions, policies and programs
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BCA and COAG reviews
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BCA/COAG reviews
What’s next
• COAG review of construction costs
• BCA review of project costs
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The four steps to recovery
• Commonwealth to amend EPBC Act – give states authority to assess/approve projects
• State governments to fast-track major development approvals
• Amend Fair Work Act – include employer-only agreements on greenfield projects so work can start sooner
• Cease tinkering with the tax system