Productivity the challenge for construction in 2024, Hutchinson Builders heir Jack Hutchinson says

Slower builds and cost blowouts will be the biggest challenges of 2024 for the construction sector, says Hutchinson Builders director Jack Hutchinson, as data shows a pick-up in the amount of work ahead.

Hutchinson Builders heir apparent Jack Hutchinson says productivity will likely prove one of the biggest hurdles for construction in 2024, as government infrastructure pipelines challenge the private sector.

Mr Hutchinson, who serves as a director of the family-owned company, said subcontractors were “being bitten by a lack of productivity”, with build times taking longer post-pandemic due to cost and supply-chain pressures, labour shortages and wet weather in recent years.

“There’s still projects on everyone’s books that they’re completing at a loss, basically,” Mr Hutchinson said. “So, there’s all these historical losses and then productivity is still not where it needs to be either.

“The only other thing that could overheat the whole thing again is we have a lot to get through as far as social infrastructure, like schools, and hospitals. That will suck up a lot of the labour, and it may be hard to get productivity on some of those smaller jobs.”

Jack Hutchinson at the Hutchinson Builders head office, in Toowong, Brisbane. Picture: Lyndon Mechielsen

New data from BCI Central has revealed an upswing in the national construction pipeline after a sluggish year for building under the pressure of rising rates.

Several large scale infrastructure projects currently in the early phases of construction include the $3bn Central One development in Sydney, the $1.7bn Melbourne Arts Precinct, and the Queensland Government’s $530m stage two expansion of Logan Hospital.

BCI chief operating officer for Australia and New Zealand, Ashleigh Porter, said the pipeline in the coming year was “robust” as several large scale projects and some that were deferred come back into play.

“Nationally, we’re expecting a significant jump in commencements,” Ms Porter said.

“Total construction value, we do see this to peak in quarter one next year. And, if we look at projects by volume, the number of projects coming on stream, we do see that really up ticking this quarter that we’re in now and peaking in the fourth quarter 2024.

“If you compare this year both on value and number of projects nationally across all sectors, it is really positive to see significant higher rates coming into 2024 which is making it look like a much more fruitful year.”

NSW will account for 36 per cent of the new construction pipeline next year, while the number of projects being deferred and abandoned nationally slows.

Hutchinson Builders, the nation’s second-largest private building firm, has remained in profit in recent years by maintaining slim margins. Mr Hutchinson said the business is writing fewer contracts, but the projects were getting bigger, with revenue expected to be higher next year.

Current work locked into cheap building contracts signed in 2021 ahead of significant cost escalations is also slated to complete in the first half of 2024, taking some of the pressure off the workbook.

“There was a big boom on the Gold Coast of luxury apartment buildings post-Covid, so we’re finishing those off now,” Mr Hutchinson said.

“They will be fantastic projects, but financially for us, they’re a bit of a drag just because they’ve been on the books so long.

“We’ll be happy to see the back of them as a builder.”

Ms Porter noted busy builders were working on shorter time frames due to the inconsistent nature of costs, which was making it difficult to forecast construction.

“They’re looking six, 12, 24 months ahead, which can sometimes cause a lot of spikes and troughs in their pipelines and the work that they’re bringing on stream.”