Like many industries, the construction industry – commercial and residential sectors alike – is going through a period of enormous change. We speak to three professionals to delve deeper into the issues in the here and now, and those on the horizon.

Concern 1: Resourcing is at a premium

Clinton Lloyd, co-founder of family-owned commercial construction firm, Lloyd Group, says resourcing can be tough, and innovation is more important than ever.

“Everyone’s looking for blue collar and white collar staff,” he says. “Now it’s more about being smarter with how we approach recruitment, given our resourcing needs can fluctuate rapidly.

“We’re looking at a few different social media platforms as a way to promote our opportunities and avoid agency fees by connecting directly to talent pools online. That means we require clear brand positioning and strong marketing capabilities, so the areas of recruitment, marketing and brand positioning feed into each other more than ever.”

Philip Moreton of Philip Moreton Bricklaying has been working in the industry for over 20 years, and shares a similar view when it comes to skilled staff being hard to secure. “It’s hard to find good staff and while I’m keen to take on apprentices, they often don’t want to lift a shovel in 40-degree heat. Not many apprentices seem to want to have a good crack at bricklaying these days – in my experience at least.”

Dean Ipaviz, co-founder of Sydney-based residential construction firm VerdeCon, also encourages building firms to promote engagement from within to retain good talent, whether contract or permanent staff.

“Staff engagement is really important to us. We place a big emphasis on making sure we look after our team,” Dean says. “We’ve put a project-based profit share opportunity on the table with our supervisors, and we run quarterly out-of-hours meetings with the team to ask what is and isn’t working, and how we can fix any problems we’ve discovered. Then we make sure we set and revisit company goals to promote inclusiveness, and make the guys feel part of what we‘re trying to achieve.

“We want them to grow with the company, feel valued, and be very much a part of what we’re doing and where we’re going.”

Dean also reasons that staff engagement needs to be values driven. “When we meet carpenters onsite who share our values, we make a point of trying to show them what we’re about and where we want to go. It’s so important to have a point of difference in the current climate for your business. By working with team members who carry the same ethos, it means we move the handover goal posts of every project that little bit closer.

“I think this shift towards prioritising higher engagement is the start of a new chapter for the whole industry – especially as a way to tackle the trade shortage head on.“

Concern 2: Technology is shifting fast

While Clinton embraces technology platforms, he believes this shift will take time to integrate industry-wide.

“Unfortunately our industry has been comparatively slow to adopt technology,” Clinton says. “And yet now so many software companies are entering the industry to offer different services – everything from document management to safety measures.

“Take document management, for instance. It’s so much more efficient to have everything stored and distributed electronically. But there’s an adjustment – some guys are fresh out of uni and love it, while others are less enthusiastic to these changes.”

Technology can also impact your choice of materials, says Philip, who cites cost-cutting as a motivator for the switch. “We often have to use a new product for cost reasons, yet we may not enjoy working with it as much compared to traditional bricks. But now a client has to pay more to opt for traditional bricks, and most of the time they’re not even given the option – so the new product prevails to save money.”

construction industry business concerns

Concern 3: The rise of modular constructions

Both Clinton and Dean agree a shift towards modular constructions is being experienced at different rates across residential and commercial building sectors.

Clinton says the commercial sector is slower to embrace this shift because bespoke building design is inherent to any strong brand, but he sees its impact on the horizon.

“The amount of automation in the next five to ten years is increasing significantly, as seen through the increase in modular buildings and bathrooms for example. I can’t see that changing in the near future in the commercial sector, but I can see it happening in the residential sector.

“It will start to be introduced more and more in the next five years, and it will reduce labour costs which are so high at the moment, particularly in Australia.”

Dean raises an interesting question about modular residential constructions being erected in city versus regional locations.

“Automation is very real, and like it or not, it’s going to impact our industry. Dropping a modular prefabricated house on a block of land in a regional area where you have the space certainly doesn’t pose the same complexities as attempting to do the same thing in the eastern suburbs of Sydney. The savings made in prefabrication are then lost to labour, equipment and permits during the install.”

Dean also draws a connection between workforce opportunities and the relative affordability of a more cost-effective installation process in regional areas.

“With modular building being more cost effective in regional locations than city locations, it may be the impetus that regional kids need to be encouraged to stay local. Whereas now, kids in rural areas are flocking to cities like never before – locking them in to learn a trade is becoming harder and harder.

“But someone has to put these prefabricated houses together; there’s a business and a decent living to be made doing it. When someone comes up with a modular style production line that allows quicker builds and more cost-effective housing in rural areas, you can only hope it will open up more regional opportunities.”

On the flip side, while the rise of modular constructions doesn’t directly shape Philip’s experience, he says a similar shift is happening in bricklaying. “Precast concrete panels made offsite are taking a lot of work off bricklayers, which is a threat to our industry.

“People are adapting to this though – my brother in law, who was a bricklayer, has switched to doing the concrete panels.”

Concern 4: Bigger barriers to entry

Both Dean and Clinton say that the barriers to entry are increasing in construction, with potential knock-on effects for the building industry in Australia.

Dean wishes there was a better way forward when it comes to insurance premiums in NSW.

“The old ‘homeowners warranty’ scheme in NSW is broken,” he says. “It’s now known as iCare HBCF (Home Building Compensation Fund), and it’s been handed back to the private sector. This means all residential builders’ premiums have increased, with small proprietary limited companies being the ones to bear the brunt.

“This cost is passed onto the consumer, which inflates pricing as soon as we pick up a set of plans.”

The skills shortage compounds this issue, says Dean – who adds that incentives for an experienced tradesperson to want to set up their own business are low.

“If you couple the high premiums in NSW with the start of the skills shortage we’re seeing,  you start to pull at a string that has a very tightly woven ball behind it,” he explains. “In essence, despite having worked in the industry for over a decade and having been through the rigmarole of obtaining my license, we as a company are being penalised for the mistakes of previous builders. It’s just not right.”

Incentives are key to opening up opportunities within construction, he believes. “There should definitely be more incentives for young builders looking to get in the game. While I understand the real risks involved with our industry, they can be minimised by the vetting processes when obtaining your license and proving you’re qualified.

“It doesn’t need to be about penalising the people who have the runs on the board, and are looking to start a new business.”

Clinton raises the issue of bank fees as another barrier. “The banks are being more conservative and demanding in terms of the security we’re putting up, and with regard to their terms. Bank fees have definitely increased compared to say two years ago.  This is a bit of a concern but every builder learns to deal with it.

“That said, less established builders may find the barriers to entry tougher as a result.”

construction industry cash flow

Concern 5: Stepping up to sustainability

Clinton and Dean are proudly outspoken about the fact that the future of construction needs to be more sustainable, or at least environmentally responsible – for the sake of the environment as much as cost-cutting measures.

Waste is a big part of this issue they say, and it can be improved. ”A lot of waste is generated by people not ordering the right quantities of material,” says Clinton. “So we’re looking at how people can measure more accurately up front and reduce the cost of waste all around.”

They both emphasise the need for more conscious construction decisions. “We’re living in this consumption-based society,” says Dean. “Now, instead of taking 10 minutes to sharpen a chisel onsite like I would have done 10 years ago, we just buy a new chisel, hand saw or blade.

“Everyone is so time poor. These days everything in our industry needs to be done faster and needs to cost less, and this has a massive impact on the environment.”

They agree that the key to the future of construction is about being environmentally responsible – but also realistic.

“The building industry as a whole – from sourcing raw materials, through to production, procurement, delivery, installation and removal – is one of the biggest contributors to global warming. The embedded energy and carbon in all building materials is huge,” Dean says.

“As a business, we’re a long way away from being sustainable, but it’s definitely one of our goals. We make every effort to be more responsible in our choice of building materials, tools and waste disposal. In doing this, we actually save money for ourselves and our clients.

“It’s about people – in the industry as well as homeowners and clients – becoming aware and wanting to change.

Meet….
  • Dean Ipaviz – Dean is co-founder of VerdeCon alongside Matt Baker. Together they lead a team of six carpenters who work mostly on residential renovations across the eastern seaboard of Australia.
  • Clinton Lloyd – Clinton is co-founder of the Lloyd Group in partnership with his brother, Dustin Lloyd. This family-run business specialises in bespoke commercial constructions throughout Melbourne and the eastern seaboard of Australia.
  • Philip Moreton – Philip is a sub contractor bricklayer who works on commercial and residential developments. He’s been in the industry for over 20 years and is based in Perth