Not enough contractors

A SEVERE shortage of qualified contractors is the single greatest barrier to new construction projects, according to a survey by KPMG.

The survey says that demand for construction is expected to increase significantly over the next five years.

"The problem looks set to intensify as the pool of qualified contractors able to bid for projects is reduced and the wider shortage of skilled labour affects the ability of teams to deliver projects on time and to budget," the Global Construction Survey 2007 says.

KPMG partner Steve Gatt said in the 2005 survey of contractors they believed clients were transferring inequitable amounts of risk to the contractors.

"That is now changing. Highly regarded contractors will be in a powerful position when negotiating contracts and will be able to transfer more risk back to the procurer.

"Australian contractors work globally and enjoy an increasing high profile in India, China and the Middle East, countries which appear to be gripped by development and infrastructure renewal fever," he said.

Mr Gatt said the survey showed that the demand for Australian contractors at home and offshore was growing and they were increasingly able to be more selective as to which projects they take and the terms, conditions and margins they negotiate.

But while the increased demand and shortage of labour is good news, the cloud of another rate rises hangs over the sector, according to the latest Master Builders Australia National Survey of Building and Construction.

"Building activity appears set to improve although the outlook remains clouded whilst there is continued speculation about another rate hike," the Master Builders' survey says.

MBA chief economist Peter Jones said the March quarter survey revealed builders becoming positive about the outlook for residential activity and conditions in non-residential were expected to remain strong.

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