Delays building homes around Australia are becoming more and more common as we experience global shortages of material supplies and workers. Various factors contribute to the setbacks, ranging from an unprecedented surge in demand within the construction sector to substantial spikes in the prices of essential homebuilding materials—when those materials can be procured at all.
A shortage of skilled labor and materials exacerbates the situation. The global health crisis, a consequence of the pandemic, has reshaped the workforce and its working conditions. Within the construction industry, workforce challenges extend to health and safety concerns. The widespread illness among contractors leads to a labor shortage, causing delays in construction projects and driving up costs.
The impact extends to local suppliers, many of whom have been forced to close due to labor shortages, increased expenditures, or difficulties in receiving imported goods. Business closures have disrupted the supply chain for fundamental construction materials like cement, sand, and brick.
Another contributing factor is the escalating cost of materials. Forecasted building costs prove inadequate as material prices, particularly for imports from China to Australia (such as aluminum, steel, and copper), experience significant hikes. For instance, steel prices have nearly doubled since the pandemic’s onset. Global transit bottlenecks, coupled with rising sea freight costs, add 2% to 4% to total project expenses. Additionally, geopolitical conflicts, like the one between Russia and Ukraine, impact steel, oil, and gas prices, crucial components in the construction supply chain.
The cumulative effect of these challenges is a pervasive increase in construction-related costs, impacting the pricing of products and projects throughout Australia. The cash flow within the building industry faces an imbalance, especially for small and medium-scale contracting businesses. Contractors, who may have initially set fixed construction prices and collected payments in advance, grapple with unpredictable increases in costs related to materials, labor, and the entire supply chain. This unpredictability can erode profit margins, and in severe cases, lead to insolvency.
In summary, global delays in building are evident compared to two years ago, with disruptions occurring across the construction industry’s supply chain. Despite these challenges, SDA Australia Group remains resilient, viewing the disruptions as opportunities to enhance services for the NDIS/SDA participant community and ensure the successful completion of home projects.
by Peach Morato