14/04/2014 - 11:35

Engineering construction set to fall

14/04/2014 - 11:35

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Civil construction activity in Western Australia is set to fall by about 25 per cent over the next five years as a number of major resources projects are completed, according to a new report by forecaster BIS Shrapnel.

Hancock Prospecting's Roy Hill project has provided opportunities for WA engineering contractors.

Civil construction activity in Western Australia is set to fall by about 25 per cent over the next five years as a number of major resources projects are completed, according to a new report by forecaster BIS Shrapnel.

The report predicts resources-related engineering construction will fall by 42 per cent over the next five years, with the downturn to be felt hardest in Western Australia and Queensland.

The value of annual civil construction activity in WA is set to fall by about $10 billion between 2013/14 and 2016/17.

However the total sum of construction work done in Western Australia over that period is forecast to come in at more than $170 billion, well ahead of Queensland ($130 billion) and New South Wales ($100 billion).

Several major resources projects are set to be completed in that period, including Chevron's Gorgon and Wheatstone liquefied natural gas projects and Hancock Prospecting's Roy Hill iron ore mine.

The next round of LNG projects beyond that period are set to include floating offshore production platforms with far less local construction.

BIS Shrapnel senior infrastructure manager Adrian Hart said the decline in resources-related construction meant contractors would be looking to government infrastructure projects to fill the void.

"While public investment is falling sharply now, the prospects for telecommunications, roads and railways look better after the middle of the decade, but a lot depends on how state and federal governments can work together to deliver needed productivity-enhancing infrastructure, particularly in our capital cities," he said.

"In this respect, the current round of state and federal budgets will be vital in establishing project priorities but a lot more needs to be done to ensure we have sustainable revenue streams to fund infrastructure development and maintenance over the long term."

BIS Shrapnel expects Sydney will become Australia's next construction hotspot, with a raft of major government infrastructure projects set to be built in the coming years.

Activity is also set to increase sharply in the Northern Territory on the back of the $34 billion Ichthys LNG project, which has provided a number of opportunities for Western Australian contractors.

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