Mid-tier builders offer flexibility

While Perth’s major construction companies battle for the big jobs, competition is also intense among mid-tier builders. 

The state’s mid-tier builders are sharpening their focus on specialised areas to ensure they fend off growing interest in local construction projects from eastern states-based companies.

Shopping centre and government works, including schools and health facilities and multi-unit residential projects, are the bread and butter for these builders, with commercial construction jobs few and far between, according to Master Builders WA executive director Michael McLean.

“For most mid-tier builders it is actually a difficult market,” Mr McLean told Business News. “The volume is reasonable, it’s just that it is so competitive because a lot of the smaller jobs are not coming through the system.

“So builders are stretching themselves to areas that they wouldn’t normally tender on, to keep turnover going and to keep their staff.”

Mr McLean said the MBA was concerned the level of government expenditure was set to drop significantly following next month’s state budget, which he believed would force builders relying on those works to look elsewhere.

“That means more competition for the remaining work in the private sector, and in a market that’s already extremely competitive, where there is not much margin on the table, it is putting pressure on builders to deliver those projects on budget,” he said.

“A lot of things can go wrong in the building industry and you can’t always predict when you are tendering, so we hope builders are being responsible with their prices and not just being desperate to win work.”

However Perkins Builders managing director Dan Perkins said Western Australian companies were fortunate there was a lot of work in the market to pursue.

The builder is set to celebrate its 50th year in construction, having grown from a small operation in Bunbury to a company with a varied portfolio of projects across Australia.

Most recently, Perkins was successful in its tender for the $3.9 million expansion of year seven facilities at Bunbury Senior High School.

Perkins also has more than $100 million of retail construction jobs on its books, including an $18.4 million contract for the second stage of building at Pinjarra Shopping Centre, and a $17.5 million deal to construct the Wellard Square Shopping Centre.

Mr Perkins said the downturn of construction activity in the eastern states had resulted in a large transfer of resources from the east coast to WA, both in terms of new contractors entering the market and interstate builders moving personnel across state borders.

“We’ve got a lot of tender opportunities but we’ve got at least twice as much, if not more, in terms of the contractors pursuing them,” Mr Perkins said.

“Anybody that has any connectivity to the east coast is moving people west.

“So even though we’ve got a high level of activity, the sector’s ability to deliver in WA would be double what it was five or six years ago.

“It’s an unprecedented set of circumstances.”

Mr Perkins said one of the company’s significant advantages was that it had developed a specialised focus on recreation and aquatic centres through its subcontracting subsidiary, Commercial Aquatics Australia.

Perkins’ first aquatic centre project was a facility for St Brigid’s College in Kalamunda, in 2002.

The company has since built pools for St Hilda’s, an indoor aquatic centre for the City of Stirling, the South West Sports Centre, which includes an international-standard indoor swimming pool, as well as conducting a major redevelopment of the Beatty Park Aquatic Centre.

Last month, Perkins was selected by the City of Mandurah for the $20 million first stage of redevelopment at the Mandurah Aquatic and Recreation Centre.

Commercial Aquatics Australia’s client list includes Esslemont Cockram, Diploma Group, Brookfield Multiplex, PS Structures, and Pindan.

“It’s a complexity of construction that a lot of other people would stray away from, because it adds an elevated risk profile compared to generic, normal commercial construction,” Mr Perkins said.

“There’s a lot of expertise required in the delivery all the way through.”

FIRM Construction general manager Murray Simcock agreed that the mid-tier building market was more competitive than ever in WA.

He said he expected the level of competition to continue for the foreseeable future.

“I think we will become even busier over the next few months,” Mr Simcock said.

“Seriously, it comes down to effort; the more work you get in the door the more there is to manage.

“Margins are slim and our competitors are aggressive. I think it’s going to be very busy in across all sectors and at a lot of different levels for all of us."

“We know big jobs are going to be pounced on by builders like us and other companies out there.”

FIRM builds projects ranging up to about $60 million in value across government works including schools, as well as commercial, industrial, retail and resources sectors.

Mr Simcock said one of the company’s strategies to differentiate itself from its competitors was to increase the professionalism and qualifications within the business, in order to pursue work at the state and federal government levels, as well as a range of private sector projects.

“When tendering, the more professional a company is, such as higher qualifications of personnel, membership to professional associations such as the AIB and good safety record, the more favourable the company will appear,” Mr Simcock told Business News.  

“To some, it may seem costly to manage, but it actually gives you the edge.

“In fact it improves the professional standing of the entire industry.

“Companies that are looking to take on an organisation to build something are not going to take on two blokes, a dog and a ute, they’re looking to take on an organisation which has people who look the part and behave the part, who can guarantee end dates, a high level of safety and a high level of environmental performance.”

Mr Simcock said flexibility was another area where a mid-tier builder could establish a significant advantage over its competitors, and even the large-scale builders.

“The one thing big companies find difficult to do, is changing direction,” he said.

“It’s highly unlikely you’ll see a company who specialise in extremely large works building a one-classroom school, but you will find the mid-size companies having a crack at a multi-story building.

“Smaller companies are more flexible and can change direction very quickly.”