Master Builders warns new limits may cut $456 million in revenue from construction industry
As stage 4 restrictions hit construction sites in Melbourne, blowouts and delays are tipped for major projects. Now a peak body is warning the scaling down will have a “huge impact on the Victorian economy” and risk losing $456 million a day.
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Blowouts and delays are tipped for major projects as Stage 4 restrictions hit construction sites, with one peak body warning the industry may lose $456 million per day in revenue.
Builders are scrambling to work out how to operate under new workplace guidelines to limit the spread of coronavirus, with private companies to reduce site staff to 25 per cent of normal.
It comes amid ongoing delays and disputes on the $6.8 billion West Gate Tunnel and mediation over costs on the Metro Tunnel currently digging under Melbourne.
Master Builders Association of Victoria chief executive Rebecca Casson said the sector had maintained high safety standards during the pandemic but warned of challenges ahead as it worked through the new rules.
She said scaling down the construction sector would have a major effect on the state’s economy.
“Given the 300,000 strong workforce and the 13 per cent of the economy it accounts for, we could be looking at daily losses in revenue of up to $456m with what has been announced,” Ms Casson said.
“Many businesses will have to consider whether it’s feasible to work under the conditions as they are written.”
She also said the sector was seeking more clarity on how the 25 per cent capacity rule would be applied to big commercial projects.
Premier Daniel Andrews on Tuesday said guidelines would be clarified in coming days.
Head of infrastructure at law firm Allens, David Donnelly, said there were likely to be delays for most major projects, and private operations would be hit hardest.
But he said government construction projects would benefit from an exemption to on-site headcount constraints that would affect major commercial residential projects.
These projects would still need a high-risk COVID-19 safety plan, Mr Donnelly said.
“I suspect there will be delays and additional costs for all infrastructure,” he said. “It’s not likely big state projects will be hit to the same extent as the large commercial construction sector, but things will change onsite for all projects.
“When you factor in safe work practices, distancing, supply chains and resourcing, there will be delays and additional costs.
“Houses will get built but they’ll get built slower.”
Mr Donnelly said there were already reports of small businesses and subcontractors not sure they could survive the shutdown period.
“There’s no sense sending one of your subcontractors broke enforcing your rights only to create a gap in your supply chain for other projects,” he said.
“This is a short period affecting long-term relationships and assets. The industry needs to work together”
“If governments maintain their view that infrastructure is a good stimulus lever for the economy, there might be opportunities on the other side of the lockdown that can be directed towards those struggling to see the benefits now.”
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