2012 Major Projects: Queensland Engineering Construction Outlook

2012 MAJOR PROJECTS REPORT Queensland Engineering CONSTRUCTION OUTLOOK
2012 MAJOR PROJECTS REPORT
Queensland Engineering Construction Outlook
Contents
4. EXECUTIVE SUMMARY 7. INTRODUCTION 7. ECONOMIC OUTLOOK 10. 12. 13. 16. 19. QUEENSLAND CONSTRUCTION OUTLOOK QUEENSLAND ENGINEERING CONSTRUCTION OUTLOOK QUEENSLAND MAJOR PROJECTS KEY POINTS, IMPLICATIONS AND CHALLENGES APPENDIX: QMCA 2012 MAJOR PROJECTS LIST
February 2012 QMCA The copyright in this document belongs to the Queensland Major Contractors Association (QMCA). All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, including photocopying, without the prior written permission of the QMCA. All requests to be directed to the QMCA. Exclusion of Liability This document is strictly provided on the basis that, to the extent permissible by law, neither the QMCA nor BIS Shrapnel nor any person involved in the production of this document: (1) warrants in any way the reliability or accuracy of any representation herein; (2) assumes any duty of care or other legal duty to any person who may use or rely on this document and persons using or relying on this document do so entirely at their own risk; (3) shall have any liability to any person with respect to any loss or damage howsoever arising, including in contract, tort or under statute, or otherwise from the use of or reliance upon this document. Acknowledgement This report has been prepared by Adrian Hart, Aleck Schoevers and Kurt Lemke at BIS Shrapnel and James Schirmer of the QMCA. Note: Although great care has been taken to ensure accuracy and completeness of this report, BIS Shrapnel Pty Ltd does not accept responsibility for the completeness and accuracy of the factual information on which its opinions and assumptions are based. BIS Shrapnel contact: Adrian Hart Senior Manager Infrastructure & Mining BIS Shrapnel Pty Limited Level 8, 99 Walker Street North Sydney NSW 2060 Australia T: +61 (0)2 8458 4200 F: +61 (0)2 9959 5795 E: ahart@bis.com.au QMCA contact: James Schirmer Treasurer Queensland Major Contractors Association GPO Box 3254 Brisbane QLD 4001 Australia T: +61 (0)7 3900 9005 F: +61 (0)7 3211 4900
Versatility driving success

I welcome the opportunity to contribute to the fourth Major Projects Report and thank all involved in the important analysis of the outlook for Queenslands engineering construction sector. The last decade has seen the sector face significant challenges, but it has also been a time when Queenslands infrastructure sector has shown it has and will continue to deliver and drive the growth of Queensland. I have been fortunate to personally witness these evolutionary changes through the delivery of several major infrastructure projects in my role as Coordinator-General, and currently in the rebuilding and reconstruction of the state in the wake of the worst natural disasters on record. This growth has been driven by the engineering construction sectors versatility and its ability to meet Queenslands ever evolving infrastructure needs. This report identifies that Queenslands engineering construction market turned the corner in 2011, with a 25% lift in activity in the June quarter and an overall 18.5% increase for the financial year. Emerging resource industries like CSG and LNG will continue to drive business investment growth over the medium term. Three major CSG-to-LNG projects worth around $45 billion are currently under construction in Queensland. In concert with more traditional mining, the resources sector will provide a solid platform for continued successes. This is reflected by the escalation in the level of private new engineering construction investment. In 2010/11, this increased 42.5% to $15.1 billion, almost double the 2007/08 figure in real terms. Queensland is a State of climatic extremes. The early 2000s saw the worst drought in more than a century and necessitated the delivery of the States largest ever water infrastructure program. Now, in a matter of years, the greatest set of natural disasters ever to hit Queensland brought about a $7 billion reconstruction program, again the States largest. Twelve months on, there is $3.6 billion in the reconstruction pipeline. This reconstruction activity will support more than 15,000 jobs through to 2014. As the second largest contributor to GSP and the third largest generator of jobs, engineering construction will continue to be a leading driver for Queensland. However, competition from other resource rich States and the continuing international demand for product presents skills and labour challenges for the entire construction industry. This will require a consistent push for increased employment and skills training and growth in the labour market. There are challenges to face as we move forward, but at the heart of this resilient state is a versatile, strong and committed engineering construction sector. When Queensland experienced its greatest test through the summer of natural disasters, you stood at the ready offering time, energy, resources, equipment, materials, financial assistance, people power and compassion to help out fellow Queenslanders in need. This sector provides the backbone for a strong economy and resilient communities and a rudder for the future prosperity of our State, and I look forward to working with you through the next exciting period.
Graeme Newton Chief Executive Officer Queensland Reconstruction Authority
February 2012
2012 MAJOR PROJECTS REPORT Queensland CONSTRUCTION OUTLOOK 2012 MAJOR PROJECTS REPORT Queensland EngineeringEngineering CONSTRUCTION OUTLOOK 3
FOREWORD
This is the 4th Queensland Major Contractors Association (QMCA) Major Projects Report, following earlier reports published in 2006, 2008 and 2010. This 4th report is co-sponsored by Construction Skills Queensland (CSQ), which is significant given the importance of training and up-skilling initiatives to meet Queenslands construction demands. The aim of these reports is to provide a reasoned and thoughtful perspective of the outlook for major engineering construction projects in Queensland, and the workforce resourcing requirements this entails for contractors and government agencies. The analysis also presents implications and challenges for the industry as a result of these findings.
By its nature, this report is concerned with engineering construction activity. This necessarily excludes residential and non-residential building, although movements in building activity can also impact on the engineering construction market in terms of access to, and cost of, materials and labour. Consequently, some discussion is included in this report on the outlook for residential and non-residential building activity in Queensland, although the primary focus remains the engineering construction segment. Furthermore, the report is concerned with the outlook for major projects, which are defined as projects exceeding $100 million in value. This makes up a substantial proportion of the total engineering construction market in Queensland. The complete list of major projects considered for this analysis, and the explicit assumptions for each project regarding work done and construction workforces employed each year, are provided in the Appendix at the rear of this report. In 2011/12, major project work is forecast to amount to $10.7 billion in work done, or around 37% of the total engineering construction market (according to BIS Shrapnel forecasts). By 2014/15, annual major project work is expected to nearly double to just under $20 billion per annum in 2013/14 and 2014/15. In turn, this is expected to drive a substantial lift in the major project workforce requirement, from 15,300 persons in 2011/12 to a peak of 30,200 persons by 2014/15. This is shown in Figure 1 below, where the columns refer to levels of construction work done (in A$ Billions) reading off the left hand side (LHS) axis and the lines refer to estimated major project workforces required (in thousands of persons) reading off the Figure1 right hand side (RHS) axis.
$Billions 25
YearEndedJune
of avoiding skills and equipment shortages, bottlenecks and rising costs which have characterised previous booms. This will require transformational thinking about the way projects and skills are developed and innovation in how they are delivered. Much of these increases are being driven by mining and energy projects, not just on the mines and processing facilities directly (e.g. LNG trains) but also the transport and utilities systems required by these projects including roads, railways, harbours, water and energy infrastructure. While major projects activity is projected to weaken in 2015/16 as some projects move to completion (and the next round of projects are yet to be defined), it is still expected to be well above that of 2011/12. It is also likely to be sustained at high levels through the subsequent five years given further investment in energy and minerals Figure15 projects and higher urban infrastructure requirements.
$ Billions 2.5 2.0 1.5 1.0 0.5 0.0 2011/12 2012/13
Roads&BridgesFunded (LHS) Total Labour Demand (RHS)
Year EndedJune
Source:BIS Shrapnel,ABSData
Thousands 6 5 4 3 2 1 0
2013/14
2014/15
2015/16
Roads&BridgesUnfunded (LHS) FundedLabour Demand (RHS)
FIGURE 2: Major Roads and Bridges Projects Work Done & Workforce Demand Forecast.
Thousands 35 30 25
20 15 10 5 0 2011/12 2012/13 2013/14 2014/15

Total Not Funded (LHS) Total Funded Labour Demand (RHS)
20 15 10 5 0 2015/16
Total Funded (LHS) Total Labour Demand (RHS)
By contrast, there will be fewer major project opportunities from the public sector over the next few years (compared Annual% Change 25 to the pre-GFC era) as State and Federal Governments seek 20 to15consolidate spending. This particularly affects the roads and 10 bridges segment, given the prominence of public sector 5 funding of major projects, with both major project work done 0 and workforce requirements expected to move lower over the 5 next 10 few years, as shown in Figure 2.
Year EndedJune Forecast
Figure4
FIGURE 1: MAJOR PROJECTS WORK DONE & WORKFORCE DEMAND FORECAST.
Queensland faces profound changes, driven by a once-in-ageneration commodities boom which could potentially run for $Billions Thousands 7 4.0 decades. For Queenslands construction industry, this will drive 3.5 6 a 3.0 fundamental and sustained lift in activity and demand for 5 skills. The outlook presents challenges to the industry in terms 2.5
Year EndedJune Source:BIS Shrapnel,ABSData
Figure16
2.0 1.5 1.0
4 3 2 1
This00 is 01 despite a substantial lift in reconstruction 02 03 04 05 06 07 08 flood 09 10 11 12 funding for roads. In particular, the Queensland Government PublicInvestment PrivateInvestment Total Investment has announced over $6 billion in funding measures for local and state roads through the Queensland Reconstruction Authority between 2011 and 2013 inclusive. However, following an immediate ramping up of activity following the floods, it appears that flood reconstruction works have peaked and will trend downward from here. Further flood reconstruction works are likely to be delivered across the state in relatively small packages (less than $100 million individually) and as such are not considered in this report.
15
EXECUTIVE SUMMARY
By its nature, much of this investment will be regional, funded by the private sector, and driven by sustained growth in demand for metals, minerals and energy in Asia. While there are concerns over the sustainability of growth in the global economy given the weak outlook for Eurozone economies (affected predominantly by sovereign debt crises in Greece and Italy) the outlook for China and the Asian region remains relatively robust. Chinese economic growth is expected to slow as a result of weakness in Europe and the United States, but remain supported by ongoing domestic investment into expanding its industrial base and improving living standards. This will see growth sustained above 8% per annum through the next five years. This is reasonably expected to underwrite demand and investment across a range of commodities including coal, iron ore, copper and other base metals. Meanwhile, strong growth in energy demand in Asia is also underpinning large investments in LNG and thermal coal projects in Australia. Given the long run nature of this demand (and the high upfront capital costs of development), it is highly unlikely that these energy projects will be cancelled, even if Figure14 global economic growth were to slow by more than expected.
$Billions 25 20 15 10 5 0 2011/12 2012/13 2013/14 2014/15
YearEndedJune Source:BIS Shrapnel,ABSData
Furthermore, the strong outlook for large mining and energy projects in Queensland is likely to be mirrored in other traditional resources states, including Western Australia, South Australia and the Northern Territory. This is likely to see a battle take place for skilled construction labour and equipment right through the next five years. Queensland will need to bring home skilled Queenslanders who may work under FIFO arrangements in these other states, as well as attracting other workers from other states and overseas, if the major project plans detailed in this report are to be completed on time. This is likely to require a competitive positioning not only regarding wages but also social, familyfriendly lifestyle benefits which investment in regional social infrastructure can address. In this respect, the West Australian government recently announced plans to invest $1.5 billion in social infrastructure in the coastal mining town of Karratha, including the provision of 1,500 new dwellings, a hotel, new town centre and recreational facilities. Similar investment plans should be developed for key Queensland towns through the forecast period. At a broader level, competition for skilled labour and equipment is likely to push up construction wages and prices for inputs and equipment through the next five years. Nationally, engineering construction activity is at record levels, with work done exceeding $87 billion in 2010/11, while construction sector employment (including residential and nonresidential building) sits at 1.03 million persons. Engineering construction activity is expected to exceed $100 billion per annum from 2012/13, with construction employment rising to 1.18 million persons by 2013/14. Given existing constraints on labour and equipment, it is very likely that overall construction costs will re-accelerate through the next five years, while risks of cost blowouts and delays at specific projects will be heightened. Another potential risk to project timelines is meeting environmental standards of development through the environmental approvals process. While many major projects have already received environmental approvals, the time taken to pass this stage (and the quantum of environmental conditions attached to development) has been, in some cases, substantial. Furthermore, some environmental approvals are currently being challenged through the legal system which will further delay project implementation. Given the size and complexity of many of the major projects proposed for Queensland over the next five years, it is not unreasonable to expect that some projects may face delays as a result of the approvals process. Overall, however, if projects are delayed through capacity constraints or approvals processes, this is more likely to extend the upward cycle and peaking in major project work in Queensland beyond that suggested in this report (2014/15).
Thousands 35 30 25 20 15 10 5 0
2015/16
FIGURE 3: Mining and Heavy Industry Projects Work Done & Workforce Demand.
The regional focus of many mining and energy projects (e.g. the Bowen and Surat Basins, the North West Province and, $ Billions Thousands 16 25 potentially, Weipa) in turn will create substantial challenges 14 for the construction industry. For instance, how will 20 skills 12 be attracted outside of the major population centres in the 10 15 South East corner of the state (and other metropolitan areas 8 10 in the rest of Australia) into these regions? What infrastructure 6 4 plans are in place and being progressed in these regions to 5 2 accommodate and provide services for the large numbers 0 0 2011/12 2012/13 2013/14 2015/16 of skilled persons required in both 2014/15 the construction and Mining &HeavyIndustry NotFunded (LHS) Mining &HeavyIndustry Funded (LHS) production phase of these developments? In summary, the Total Labour Demand (RHS) FundedLabour Demand (RHS) coming mining and energy investment cycle will drive a fundamental shift in the way construction works are delivered. This will necessitate substantial investment in social infrastructure in these regions, from housing to schools, hospitals, parks and recreational facilities to attract working families on top of the more fundamental economic
Figure19
By contrast, much of the growth in major project work will be driven by a strong upswing in mining and energy investment in Queensland. This not only affects mining and heavy industry construction and corresponding workforce demand, as shown in Figure 3, but also entails substantial construction of new transport and utilities infrastructure, including railways, harbours, gas pipelines, electricity generation and supply, water and sewerage.
infrastructure requirements across transport segments and the utilities. While Fly in / Fly out or FIFO working arrangements will become more prevalent, it will not be a panacea for investing in sustainable communities in these regions.
. . . driving strong demand for construction workforces . . .

The engineering construction workforce required to deliver Queenslands major projects will need to at least double over the next four years. From around 15,300 persons in 2011/12, the major project construction workforce is expected to rise to just over 30,000 persons by 2014/15.
. . . impacting on wages and broader construction costs . . .

The sharp increase in major engineering project works will drive a substantial increase in total building and construction activity. This is likely to see further strong growth in construction wages in Queensland above that of Australia as well as a re-acceleration in construction costs generally. Consequently, there remains a substantial risk that major engineering construction projects in Queensland will be placed under cost pressures or could be delayed beyond the timelines currently proposed by the proponent or suggested here. If so, the engineering construction cycle could be extended in duration, albeit with a weaker ramp up period, if cost pressures or skills shortages begin to bite. Even so, the major project list, compiled in conjunction with Queensland contractors, represents a balanced and reasonable expectation of major project development in the state.
Implications and Challenges

These are similar outcomes to that reported in the 2010 Major Projects Report, although the scale and duration of the engineering construction major project pipeline is now much greater than reported then, and some project timings and other developments have changed. As such, most of the implications and challenges expressed in the 2010 report still hold true today; indeed, even more so. Overall, the key implications and challenges are as follows:
Construction activity is set to re-accelerate in Queensland . . .

Growth in Queensland construction activity slowed substantially between 2008/09 and 2009/10 as large private projects were put on hold in the wake of the GFC. In turn this led to a sharp slowdown (and recession) in the Queensland economy. The latest engineering construction data from the ABS suggests that the Queensland engineering construction market turned the corner in 2011, with a 25% lift in activity coming through in the June quarter and an 18.5% increase in the 2010/11 financial year. This is likely to be just the start of a strong sustained upswing in engineering construction work. From here, annual work done on Queenslands major engineering projects (i.e. those with a value greater than $100 million) is expected to rise sharply, from $10.7 billion in 2011/12 to just under $20 billion in both 2013/14 and 2014/15. The importance of mining and energy projects to the outlook, relative to the public sector, means that Queenslands major projects outlook is now, more than ever, tied to the fortunes of the global economy, particularly China and the Asian region. Growth here, however, is expected to remain relatively robust despite
. . . creating issues for skills resourcing and infrastructure . . .

In the absence of a transfer of skills from industries within Queensland, or the availability of skilled engineering graduates and construction labour, skills will need to be imported into the state. This is likely to drive an overall re-acceleration in population growth, with annual net immigration into Queensland likely to rise from just under 40,000 persons in 2010/11 to over 70,000 persons by 2012/13. This will have implications for the adequacy of housing and infrastructure needed to sustain and support these population increases, particularly in the regions outside of Brisbane where much of the project work (i.e. mining and heavy industry related) will be taking place. It also has implications for contractor hiring strategies and the ability to source people who are willing to work in these regions and outside of the South East corner. Much of the increased demand for labour is being driven by LNG and coal-related works in the Surat and Bowen Basins, Gladstone and Mackay regions. Apart from creating hot spots in these regions in terms of cost and infrastructure requirements, these projects will be in direct competition for resources with other similar sized projects in Western Australia, South Australia (i.e. Olympic Dam), the Northern Territory and New
The analysis for this report indicates that the upswing in major project engineering construction activity in Queensland will be sustained right through the next five years (although not all projects have yet received funding commitments or environmental approvals). Furthermore, while activity may weaken in 2015/16 as several substantial projects move into simultaneous completion, the outlook for the subsequent 5 years also remains strong. In this environment, attention to skilling through education and training initiatives will be crucial. In the short term, it will be difficult to meet the workforce requirements on major projects through education and training initiatives alone, with much of the increased workforce requirement likely to be met by higher interstate and overseas migration. However, through the medium to longer term, targeted education and training programs will be vital in boosting the available supply of workers to meet demand. In high skill areas, such as the engineering professions, education and training initiatives will be necessary simply to replace older workers who are retiring over the coming decade, let alone building up larger workforce capabilities to meet projected demand.
emerging problems in Europe and weaker trend growth in the United States.
. . . and driving other implications and challenges for contractor strategies . . .

The next few years will see fewer major project opportunities provided by the public sector, as State and Federal Governments seek to restore their financial positions after moving into deficit during the GFC and its aftermath. Furthermore, where public works are offered, it will be less likely to be aggregated into very large packages as governments seek to spread work amongst medium sized and smaller contractors and in-house workforces and seek competitive efficiency gains. This will have implications for the procurement strategies of Queensland contractors. Both activity and major project workforce requirements are expected to ease in 2015/16 as the next round of major projects begins to wind down. Even so, activity is projected to remain well above that of 2011/12. Furthermore, this outlook is based on a reasonable assessment of currently known projects only (see the Appendix for a complete project list). It is highly likely that more major projects will be developed and identified over the next few years including further mining and energy projects in the regions and new infrastructure investment in the urban centres which could boost activity in 2015/16 and beyond. Consequently, any downturn in 2015/16 may be shallower than presented here and transitory in nature. This has implications for the long term development of skills to match construction industry demand after 2015/16. Contractors will need to keep abreast of developments in order to plan for works in 2015/16 and beyond.
2. ECONOMIC OUTLOOK
2.1 World and National Outlook
Unlike many of the developed Western economies, Australia did not experience a financial crisis or recession following the GFC. This is largely credited to its solid economic position prior to the crisis, a supportive macro policy response, healthy banking system and strong demand from Asia. While the world economic recovery is still struggling to find traction, Australias economy is relatively sound, although growth weakened in the first half of 2011 due to the impact of natural disasters and a high Australian dollar. Thanks to historically high commodities prices and robust and sustainable domestic demand for coal and iron ore from China and other rapidly industrializing south-east Asian nations, Australia is experiencing a rolling commodities and natural resources boom that is sheltering the economy from further shocks. In this regard, much depends on the outlook for economic growth in the Asian region, and particularly China. Chinese economic growth is expected to slow from the rapid double digit growth rates achieved during the past five years, mainly due to weaker growth in exports. Exports have been a key component of the Chinese growth story, but maintaining rapid growth in exports will be difficult compared to the preGFC era. With a greater reliance on domestic demand as the primary engine of growth in China (mainly through further industrial development), economic growth is expected to moderate. Nevertheless, the continued urbanisation of rural areas and rising household incomes and spending should still support relatively strong growth despite the weak outlook for Europe and the United States. In turn, sustained domestic demand in China will be the primary driver of the minerals and resource boom that will fuel Australias growth in the coming years.
1. INTRODUCTION
The construction industry is a major employer and a lead indicator of the overall health of the economy, with engineering construction directly aligned with economic and productivity outcomes. Importantly, a robust and efficient engineering construction sector is dependent on competitive and sustainable contractors. QMCA members represent contractors who are uniquely placed and capable of delivering Queenslands major projects. The business sustainability of the QMCA member contractors relies on their ability to develop, deploy and retain resources having regard for the anticipated demand for their services. To assist both QMCA members and key industry stakeholders, the QMCA, in conjunction with co-sponsor CSQ, has worked 3 with BIS Shrapnel to develop the 2012 Major Projects Report Table 1: Selected GDP Forecasts
Annual GDP Comparison
Year Ended December Australia Advanced Economies China 2010 2.5% 3.1% 10.4% 2011e 2.0% 1.6% 9.1% 2012f 3.8% 1.9% 8.5% 2013f 3.8% 2.4% 8.4%
Australian growth outlook

The Australian economy slowed through calendar 2011. Economic growth of 2.0% is now expected for the full year, compared to growth of 2.5% in calendar 2010. While softer, Australian growth in 2011 is still expected to exceed the average GDP growth amongst the other advanced economies. Slower Australian growth through calendar 2011 was largely a result of a temporary lack of consumer confidence (boosting household savings rates to 15 year highs), a strong Australian dollar impacting the trade exposed sectors, the withdrawal of Federal Government stimulus programs (affecting public investment) and a series of natural disasters which has affected production. In particular, Queensland was hit by extraordinary cyclones and floods impacting coal exports that accounted for a third of total national exports. Traditionally, investment is the major driver of the economy. Investment adds to the economys capacity to support increased production and its large, cyclical swings and volatility delivers strong multiplier effects. Through much of the 2000s
Source: BIS Shrapnel, IMF World Economic Outlook 2011
TABLE 1: selected GDP Forecasts.

South Wales. This will make resourcing of Queensland projects more challenging.
and Major Projects List to provide a snapshot of major projects and the implications that these projects hold for the Queensland engineering construction sector and the broader economy.
Figure5
$ Billions 120 100 80 60 40 20 0
Year EndedJune
Source:BISShrapnel,ABSData
Forecast
Year EndedJune
00
01
02
03
04
05
06
07
08
09
10
11
12
Residential Building
NonResidential Building
EngineeringConstruction
FIGURE 5: Construction WORK DONE Australia.
Annual%Change 25 20 15 10 5 0 5 10 15 00 01
Year EndedJune
Forecast
02
03
04
05
06
07
08
09
10
11
12
PublicInvestment
PrivateInvestment
Total Investment
Investment includes construction, the purchase of plant, Figure6 equipment and intangibles (such as software), mineral exploration Annual%Change and growth in biological assets (i.e. livestock). 8% Of these, construction has the greatest multiplier impact on 7% economic activity given its high utilisation of domestic labour 6% and materials. The construction segment can itself be broken 5% down into residential building, non-residential building and 4% engineering construction (which includes mining and heavy 3% 2% industry) sub-segments. Overall, as demonstrated in Figure 5, 1% engineering construction (heavily driven by mining) was the only 0% construction sector to demonstrate real2008 growth over 2010/11 2000 2002 2004 2006 2010 2012 AUS QLD as residential and non-residential remained flat, WA contributing to the current soft patch of the Australian economy.
YearEndedJune Source:BISShrapnel,ABSData Forecast
FIGURE 4: Total Investment, Australia, Real Growth Per Annum.
Upon the onset of the GFC in late 2008, private investment weakened as new projects were delayed or cancelled. To shore up economic growth, the Federal Government embarked on a substantial stimulus program including the Building the Education Revolution (BER) scheme, which drove a boom in public investment. State Governments, too, continued many of their significant infrastructure programs. However, the Federal stimulus program is now coming to an end and, with both Federal and State Governments looking towards fiscal consolidation, public investment is set to decline over 2011/12 and subsequent years. Looking forward, Australian GDP growth is expected to accelerate to 3.8% in both calender 2012 and 2013 well ahead of other advanced economies. Growth in this period will be driven by recovering private investment largely driven by the next round of mining and energy projects that are set to ramp up through 2011-14. Market conditions are not yet conducive to a major phase of commercial and industrial property building. However, conditions are expected to improve through 2012 and 2013 as funding constraints ease and employment, demand and profits strengthen. Private non-dwelling building investment is likely to have bottomed out in 2010/11 with double digit growth, albeit from a low base, expected to follow in 2011/12. Overall, private investment will post solid growth, offsetting expected cuts in public expenditures as Federal and State governments move back towards surplus.
Residential building is a casualty of the combination of uncertainty and relatively high interest rates. All the talk of overvalued housing markets compared with overseas has spooked owner-occupiers and housing investors alike. Without the prospect of capital gain, let alone facing the spectre of capital loss, they are keeping their powder dry. In some states, particularly New South Wales, the shortage of housing has become critical. Meanwhile, privately funded non-residential building fell sharply in the wake of the GFC and remains weak, with total non-dwelling building activity supported temporarily by the BER stimulus program. The next stage of the building cycle is an upswing in residential building and commercial and industrial non-residential building work but, currently, markets still remain weak. Private investment came off pause in 2010/11 as delayed coal investment works resumed. However, apart from resources, private investment remains flat, below the level required to underwrite even moderate growth, setting the scene for future capacity constraints. Business remains in cost containment mode rather than gearing up for growth. This highlights the three-speed nature of the Australian economy: sectors exposed to the resource sector are growing, trade-sheltered sectors not exposed to the high growth resources sector remain neutral while trade-exposed sectors are threatened by foreign competition and a strong Australian dollar. However, a broadening in employment, profits and investment is expected from 2012 as mining investment and incomes stimulate wider economic activity, lifting confidence and spending and encouraging businesses to switch out of costcontainment mode as excess capacity is absorbed. The unemployment rate is expected to move lower through 2012, with an acceleration in wages growth.
prior to the global financial crisis (GFC), Australia experienced twin booms in private and public investment. This underwrote Thousands $ Billions 6 2.5 strong economic growth in Australia during the period. Private 5 investment boomed first, driven initially by a strong housing 2.0 4 upswing, coupled by large private investments in social and 1.5 economic infrastructure through public/private partnerships 3 1.0 (PPPs). Then, from 2003 to 2008, private investment boomed, 2 driven mainly by investment in mining and energy resources 0.5 1 projects. By contrast, growth in public investment was 0.0 0 relatively subdued 2012/13 early in the2013/14 decade (continuing a2015/16 period of 2011/12 2014/15 Roads& Bridges Funded (LHS) Roads&Bridges Unfunded (LHS) underinvestment in infrastructure which defined much of the Total Labour Demand (RHS) FundedLabour Demand (RHS) 1980s and 1990s) but picked up strongly later in the decade on the back of high government revenues and a need to reFigure4 in infrastructure. invest
Figure15
2.2 International and Domestic Risks

Presently there are downside risks, both internationally and domestically, that could alter Australias growth path. Internationally, recovery and growth is hinging on European policy makers to stabilise the regions current sovereign debt crises and for the USA to gain sustained economic traction through increased private investment and rebalancing trade with emerging market partners. If this is not achieved, an anaemic global economy and weakened Asian growth could impact on the demand for commodities, causing Australias resources boom to weaken. A further potential risk is a sharp escalation in sovereign debt concerns in advanced economies, leading to a freeze in funding markets. However, this is expected to be a remote scenario as it is more likely that weak advanced world growth and European sovereign debt problems will not substantially impact Asian demand. But it wont all be plain sailing. Despite successive cuts in interest rates in November and December 2011, interest rates are likely to stabilise, then move higher again through the next three years to prevent the economy from overheating and to make room for the mining investment boom. This will constrain a pick-up in residential building by 2013-14 and take the heat out of employment and spending. Further, the Australian dollar is expected to remain high over the next two years, further eroding the competitiveness of the export and import-competing sectors, with imports taking a larger share of the domestic market at the expense of local manufacturers and tradable services (such as tourism and education) while non-commodity exporters continue to suffer lower revenues and profits. Ultimately, investment will be affected on tradeexposed sectors, while some operations will close down and/ or relocate overseas, in many cases meaning a permanent Figure5 loss of industry. This process has already begun.
$ Billions 2.3 Regional Trends and Outlook: Queensland 120
Year EndedJune
$Billions 20 18 16 14 12 10 8 6 4 2 0 00
YearEndedJune
PerCent 30 25 20 15 10 5 0
Private Investment Share ofState Final Demand (RHS)
Livestock OwnershipTransferCosts NonDwelling Construction
01
02
03
04
05
06
07
Dwellings Machinery and Equipment IntellectualProperty
08
09
10
11
FIGURE 7: Private Investment: Queensland.
Queensland economic growth (or Gross State Product) has 100 slowed substantially since the onset of the GFC, with GSP 80 growth sliding from the 4-6% per annum range prior to the GFC 60 to 0.6% in 2008/09 and 1.7% in 2009/10 (the latter figure 40 assisted by public stimulus measures). The withdrawal of public 20 stimulus and the impact of floods has seen economic growth for 02010/11 back just060.2%. These reflect 00 01 slump 02 03 04 to05 07 08 09 outcomes 10 11 12 Residential Building NonResidential Building EngineeringConstruction the nature of Queenslands economy, which apart from the coal mining and the emerging coal seam gas industries, is also highly services oriented, and heavily dependent on domestic Figure6 and international tourism.
Annual%Change 8%
YearEndedJune
Forecast
Figure 7 shows the growth path and contributions of the various components to private investment, as well as the share of private investment to state final demand (SFD). State final demand Thousands refers to state economic activity (GSP) but excludes 140 exports and imports: it comprises household and government 120 consumption, private investment and public investment. Given 100 the size and volatility of private investment, however, SFD is 80 particularly affected by this segment. Figure 7 clearly identifies 60 40 sharp fall in private investment, and consequently state the 20 final demand, driven by declines in machinery and equipment 0 purchases during 00 01 and 02 03non-dwelling 04 05 06 07 construction 08 09 10 11 12 13 14 2008/09 15 and 2009/10 followed by a strong rebound in 2010/11 as NaturalIncrease OverseasMigration InterstateMigration commodity prices and investment rebounded in the mining sector. With private investment assuming a larger role (+53% since 2000/01) in determining state final demand (and ultimately GSP), the state is becoming ever more reliant on the development of its natural resources as the principal driver of investment in the economy.
Year EndedJune Source:BISShrapnel,ABSData Forecast
Figure8
Recently, in its State of the States report, COMMSEC grouped Queensland in a bottom group of four states, with little to distinguish it from Tasmania, New South Wales, and the Northern Territory. However, the COMMSEC report is backward looking, not forward looking. Although last years economic indicators can paint a very pessimistic picture for Queensland, the outlook is extremely different. Queensland GSP growth is expected to jump back over 5% in both 2011/12 and 2012/13 before growth edges back through to the middle of the decade. Growth in 2011/12 will be fuelled by a strong rebound in exports (coal and natural resources) and a post-flood reconstruction effort coupled with surging private investment in the mining sector. This was captured by a substantial 25% lift in engineering construction activity in the state in the June quarter of 2011, with further very strong readings expected through the next few years.
Forecast
7% 6% 5% 4% 3% 2% 1% 0% 2000 2002
AUS
2004
2006
QLD
2008
WA
2010
2012
FIGURE 6: National and State ECONOMIC Growth Comparison 2000-12.

Figure 6 shows that while the Queensland economy has historically outperformed the national average, it has underperformed over the past three years. Indeed, for the last two years Queensland has been effectively in recession as a result of the GFC, high Australian dollar and floods. The GFC induced a pause in minerals investment and weakened residential construction, and, along with the high Australian dollar, caused a collapse in services activity. However, as indicated in the graph, the outlook for the Queensland economy, Figure7 driven by investment and construction, is highly positive.
$Billions 20 18 16
YearEndedJune
PerCent 30 25
Figure9
Index 170 160 150 140 130 120 110 100 90
Private Investment Share ofState Final Demand (RHS)
2.4 Population Growth
Livestock OwnershipTransferCosts NonDwelling Construction
Dwellings Machinery and Equipment IntellectualProperty
80 70 2008
Residential Building
A significant constraint facing Queensland in the next few years Figure8 will be an adequate population base and skilled labour supply to cater for the large increases expected in private investment (particularly for coal and LNG-related projects).
Thousands 140 120 100 80 60 40 20 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
NaturalIncrease OverseasMigration InterstateMigration
2009
2010
2011
Engineeringconstruction
2012
Total Construction
NonResidential Building
FIGURE 9: Queensland Construction WORK DONE June 2008=100.
3.2 Residential Building Figure 11

Residential building work done, including alterations and $Billions additions, has fallen for three consecutive years: 9.8% Index in 120 120 2008/09, 5.8% in 2009/10 and a further 13% in 2010/11. 115 100 Weak rental growth and modest price growth is providing 110 80 incentive to invest. Weakness in the overall Queensland little 105 60 economy and relatively high land prices are acting to limit 100 owner-occupier demand. Weak rental and price growth and 40 95 high land prices will persist in 2011/12 driving Queensland 20 90 residential building down further. However, this level of building 85 0 is well With rising 87 below 89 91underlying 93 95 97 demand. 99 01 03 05 a 07 09 deficiency 11 13 15 of residential stock, and robust growth and demand Engineering Construction Work Done, LHS population EngineeringConstruction 'Real'IPD, 2004/05=100, RHS for housing, both rental and capital growth is expected to pick up again driving another upswing in residential building over 2012/13 and 2013/14. The prospect of a return to rising interest rates through this period to counter inflationary pressures (despite the recent rate cuts) will likely constrain the upswing, however.
YearEndedJune Source:BISShrapnel,ABSData Forecast
Year EndedJune
Forecast
FIGURE 8: Queensland Population Growth Net INCREASE.
Queenslands rate of population growth accelerated sharply through the 2000s as the mining investment boom ramped up, drawing in much higher levels of immigration from other states as well as from overseas. The pause in investment driven by the GFC saw a sharp slowdown in the rate of population growth over 2009/10 and 2010/11, particularly through immigration. However, BIS Shrapnel forecasts Queenslands population growth rate to re-accelerate over the next five years to levels similar to that seen at the height of the 2000s investment boom. This will have implications for housing activity and the adequacy of infrastructure to cater for higher population levels, particularly in the rural regions where many resources projects will attract labour. With national population growth rates trending down during this period, plus an ageing composition, Queensland will need to compete fiercely for local labour and overseas and interstate migrants.
3.3 Non-Residential Building

Unlike most other states, non-residential building work in Queensland did not see a sharp slump in 2008/09, with work done rising 9%. Commercial and industrial building held relatively flat, while social and industrial building showed strong growth, thanks to the commencement of a few major projects and the BER scheme. However, non-residential building work done in Queensland has been flattening out, with growth in 2009/10 at 2.3% and 2010/11 at 1.8%. Social and institutional building grew strongly through these years on the back of the BER scheme, while commercial and industrial weakened substantially as new projects were delayed. Total non-residential building will decline sharply in 2011/12 as the impact of the BER scheme is withdrawn. However, some health projects, as well as a gradual recovery in commercial and industrial building will see non-residential building track higher over subsequent years.
3. QUEENSLAND CONSTRUCTION OUTLOOK

3.1 Construction Activity
Total construction activity increased mildly in Queensland during 2010/11 but is set to pick up strongly in 2011/12, with total activity 23% higher than 2007/08. The construction sector can be further broken down into the key sub-segments including residential building, non-residential building and engineering construction. These are addressed individually in sections 3.2-3.4 below. Any discussion of the construction sector would not be complete without considering the outlook for construction employment and wages as well as construction costs discussed in sections 3.5-3.6.
3.4 Engineering Construction

Following five years of back-to-back growth in excess of 20% per annum, Queensland engineering construction activity fell by 5.3% to $20 billion (constant 2008/09 prices) in 2009/10. Activity was primarily driven lower by weaker transport and utilities construction activity. Roads, railways, water and electricity sectors all eased in line with the completion (or near completion) of major projects, although mining and heavy industry construction still grew 10% in the year to $6.7 billion, mainly driven by surging oil and gas (i.e. coal seam methane) development.
Between 2012/13 and 2015/16, Queensland GSP growth 14 20 is 12 expected to remain strong and outperform the national 10 15 average, with some stagnation in public investment. This will be 8 10 6 more than offset by sustained increases in private investment, 4 5 2 particularly investment in new resources projects, which will be 0 0 the key of state 00 driver 01 02 the03 04economy. 05 06 07 08 09 10 11
Figure10
Annual%Change 13 11 9 7 5 3 1 1 3 5 2003
YearEndedJune Source:BIS Shrapnel,ABSData Forecast
2005
2007
QLDEmp
2009
QLDAWOTE
2011
AUSEmp
2013
AUSAWOTE
2015
FIGURE 10: Construction Employment vs. Construction Wages GROWTH.
A substantial rise in engineering construction work done is expected from here, with total activity expected to surge to $35 billion by 2013/14. Annual mining and heavy industry construction is forecast to double to $20 billion by 2013/14. In addition to record levels of mining investment, a significant round of investment in associated (mostly privately funded) infrastructure is also anticipated. Railways, harbours, pipelines, electricity, water and sewerage sectors will all be key beneficiaries from the next leg of the rolling boom encompassing minerals and energy. In fact, the only privately funded sector tipped not to experience considerable growth is roads construction as work winds down on the large Airport Link project. By contrast, publicly funded civil construction work is expected to peak in 2011/12 as flood reconstruction works come through, but then stabilise and decline in subsequent years as both State and Federal Governments focus on fiscal consolidation measures.
Given the strong outlook for construction activity, construction employment growth is expected to accelerate sharply from here. Employment is expected to average 243,000 persons through 2011/12, but then surge to 278,000 persons in 2012/13 and over 285,000 persons the subsequent year according to BIS Shrapnel. Employment growth will comprise both highly skilled and lower skilled labour as wages and employment simultaneously ramp up. Queensland construction employment growth will outperform the national average over much of the next five year period, although employment growth will slow and possibly contract through the final years of the five year forecast as the current round of major projects come to completion. However, during this period wages growth is expected to remain above the national average as construction firms seek to retain key personnel in preparation for the next wave of projects.
3.6 Construction Costs 3.6.1 Drivers of Construction Costs

Growth in construction costs tends to be linked to the amount of construction activity going on at any time. There is a positive correlation between construction activity and construction costs because high (and rising) levels of demand (i.e. construction activity) not only places pressure on the existing supply of inputs, boosting input prices, but also allows supplier margins to increase. Where capacity constraints exist, rising construction activity can lead to strong increases in input prices as investment in new capacity is itself costly and takes time to come on stream. Construction costs also vary due to changes in commodity prices determined in global markets (e.g. steel and oil). These price changes may occur independent of domestic construction activity.
3.5 Queensland Construction Employment and Wages

Given such a robust outlook for construction activity, one of the biggest challenges facing Queensland in the next few years will be sourcing an adequate labour supply to cater for large LNG and coal projects, plus the expected pick up in housing construction and household spending. Queensland construction employment growth has been stronger than the national average for more than a decade on the shoulders of mining related projects that increased migration; boosting demand for dwellings, commercial and industrial space as well as social and physical infrastructure. These factors combined saw Queenslands construction employment balloon to 247,600 persons in 2008/09 (from just 136,000 persons during the 2000/01 trough), before easing to 235,000 persons with the GFC in 2009/10. In 2010/11 Queensland construction employment picked up slightly by 0.5% to 237,000 persons while AWOTE wages (average weekly ordinary time earnings in nominal terms) realised strong growth of just over 10%. Taken together, employment and wages growth in the construction sector was largely driven by the addition of highly skilled labour in preparation for significant projects in the pipeline while still maintaining a leaner profile among lower skilled/lower wage earners.
3.6.2 Engineering Construction Implicit Price Deflator

Given use of similar construction materials and skilled labour, costs for engineering construction are linked to broader cost trends in the building and construction industry. One gauge of aggregate engineering construction costs is the implicit price deflator (IPD) for engineering construction work done. This is derived by dividing current price (nominal) engineering construction data from the ABS by its corresponding constant price (real) data series. This effectively isolates changes in the price of construction, as opposed to changes in activity. There tends to be strong correlation between the real engineering construction IPD (i.e. net of CPI inflation) and real increases in construction work done at the national level. Through the 2000s, construction costs rose well ahead of CPI inflation, and strongly in line with generally stronger construction activity and steel / oil product prices.
While engineering construction activity stabilised at a higher level through the first three quarters of 2010/11 (despite the floods and cyclone impacts), there was a tremendous surge in activity recorded in the June quarter. Consequently, engineering construction work done in 2010/11 as a whole rose 19% to $23.6 billion; a new record. The largest increase in the year was for mining and heavy industry construction (+$3.4 billion in work done), mostly driven by new oil and gas (+$2.7 billion) and coal (+$500 million) projects. This fed through to a tripling in both gas pipeline and harbours construction respectively (each to over $500 million in work done for the year), whilst water, sewerage, railways and telecommunications work also rose significantly. By contrast, road construction activity fell away in 2010/11 as major private and publicly financed projects were completed the previous year.
Figure9
Year EndedJune
Forecast
90 Given the outlook for Australian non-dwelling construction 80 activity, a return to stronger, and accelerating, growth in 70 2008 2009 over the 2010 construction costs next 5 years 2011 is expected. 2012 From an average of just 1.5% growth through 2010/11, growth is Residential Building NonResidential Building Engineeringconstruction Total Construction expected to move back into the 4-5% per annum range during the 2013-15 period. This is similar to that experienced in the Figure11 period from 2005 to 2008.
100
$Billions 120 100 80 60
Index
Source:BISShrapnel,ABSData Forecast
YearEndedJune
120 115 110 105 100
40 20 0 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
95 90 85
Looking ahead, mining and heavy industry will see the strongest growth of any segment, with activity rising to $20 billion in 2013/14. This will open up a considerable gap between this segment and the other engineering construction segments, with mining and heavy industry construction representing nearly 60% (up from 25% in 2007/08) of all engineering construction activity in Queensland. While mining and heavy industry construction activity may ease in 2015/16 as projects are completed, it will still remain at levels nearly three times that recorded in 2008/09. It may also end up higher than this and sustained through the remainder of the decade if another round of projects (as yet unidentified) are developed to feed growing demand for energy and commodities in the Asian region. It is important to note the significance of the coal industry to overall engineering construction activity in Queensland. While the development of coal mines and handling facilities currently makes up roughly half of all mining and heavy industry construction (approximately $5 billion in 2010/11), the coal industry also currently drives around two thirds of all rail construction (a further $460 million in 2010/11) and 80% of all harbours work (around $400 million in 2010/11), between $150-200 million in access road construction as well as a Figure12 range of associated utilities and dam works.
$ Billion 20
EngineeringConstruction WorkDone, LHS
EngineeringConstruction 'Real'IPD,2004/05=100,RHS
FIGURE 11: Engineering Construction Implicit Price Deflator (2008/09=100).

3.6.3 Overall Outlook for Construction Costs

Despite recent events, the medium to longer term outlook for the global economy remains positive. While global economic growth may ease during 2011/12, it is expected to accelerate again over 2012/13 and 2013/14 (although growth in GFCaffected advanced economies such as the US, UK and parts of Europe will remain constrained for several years). The positive medium term outlook for the global economy, combined with a recovery in Australian construction activity is expected to drive a re-acceleration in growth in construction costs through to the middle of the decade. In Queensland, which has one of the strongest growth profiles for construction of any state, construction costs growth is likely to be particularly robust.
15
10
0 4. QUEENSLAND ENGINEERING CONSTRUCTION 2000 OUTLOOK
2002
2004
2006
2008
2010
2012
2014
2016
Roads Bridges,Railways &Harbours HeavyIndustry &Mining
Electricity&Pipelines Recreation&Other
Water&Sewerage Telecommunications
4.1 Structure and Overview of Engineering Construction

The engineering construction sector consists of primarily five subsectors of interest that constitute the bulk of the category: 1) roads; 2) bridges, harbours and rail; 3) electricity and pipelines; 4) water and sewerage; and 5) mining and heavy industry. Following five years of back to back growth in excess of 20% per annum, Queensland engineering construction activity fell by 5.3% to $20 billion (constant 2008/09 prices) in 2009/10. Roads, railways, water and electricity sectors all eased in line with the completion (or near completion) of major projects. In contrast, the mining and heavy industry sector continued its long term trend of expansion. Total engineering construction grew 18.5% in 2010/11. Growth was driven largely by a massive increase in mining and heavy industry work done with help from water, sewerage, bridges,
FIGURE 12: Engineering Construction Work Done By Segment: Queensland $ Billion 2008/09 Prices.
Figure13
4.2 Roads
Queensland roads construction work done fell for the second $Billion straight year in 2010/11, with activity down 12.7% to 8 $57 billion. The softening in activity came after work done 6 surged by over 50% in 2008/09 and reflects the completion 5 or near completion of a number of major private and public 4 projects. Roads construction is expected to rise in 2011/12 as 3 the 2 boost from flood rebuilding and immunity works peaks and 1 offsets falling activity elsewhere. The net effect is Queensland 0 road construction will move 2013/14 higher in 2011/12, before 2011/12 2012/13 2014/15 2015/16 falling Oil&Gas Coal Rail Roads& Bridges by nearly over the subsequent three years. Harbours/Ports one-third Water Sewerage Electricity A recovery Pipelines Telecom Bauxite,Alumina &Aluminium OtherHeavyIndustry is expected closer to the middle of the decade driven by the next five year round of Nation Building Program (NBP) projects from 2013/14.
Year EndedJune Source:BISShrapnel,QMCA
Upon the escalation of the global financial crisis in late 2008, Index 170 construction costs actually declined, in line with weaker 160 commodity prices and engineering commencements (with 150 the 140 exception of the massive Gorgon LNG project). However, 130 recent readings for construction costs show that it is 120 accelerating again. 110
railways and harbours work to buffer falls in roads, electricity and pipelines. Total engineering construction is forecast to surge a further 21% in 2011/12, with roads, electricity and gas pipelines the major contributors while water and sewerage begin to make a quiet retreat for the remainder of the forecast period.
4.3 Bridges, Railways and Harbours

Historically high levels of bridge construction have been undertaken in Queensland over recent years, with work done ranging between $500 and $750 million in the past four years alone. Overall, in the next five years, activity is expected to contract from roughly $500 million in 2010/11 to around $200 million by 2014/15. This level of work done reflects the absence of major projects similar to those undertaken in the past few years and is consistent with forecast levels of road construction over the next five years. Along with mining and heavy industry construction, harbours and railways construction has a very strong outlook. Work done is forecast to nearly triple over the next five years and remain elevated over much of the next decade. Short term activity will receive a temporary boost from reconstruction work, but the real driver of growth will come from work on a number of passengerrelated projects in the south east corner and further upgrades and expansions to Queenslands vast coalrelated networks. Sustained, strong demand for coal will continue to drive considerable investment in coal handling related infrastructure in the long term, while new rail infrastructure to support population growth will also be a key driver of activity.
4.6 Mining & Heavy Industry

The mining and heavy industry construction category is far and away the largest segment of engineering construction in Queensland and is the key driver of growth in the state. From just $650 million in 2000/01, annual construction work boomed to $3.5 billion by 2005/06 and $6 billion per annum by 2008/09 when the GFC hit. The recent recovery in coal and coal handling work combined with a boom in LNGrelated construction has seen total activity in the sector rise to over $10 billion in 2010/11. Of this, roughly half is coal and coal handling-related construction and one third is oil and gas-related construction (not including the gas pipelines work described earlier). The remainder is mostly comprised of alumina/aluminium upgrades, other minerals developments and other heavy industry. Over the next three years, total mining and heavy industry construction in Queensland is forecast to double again to $20 billion in work done per annum. Most of this growth will be driven by a further tripling of the domestic construction requirements of up to 4 major LNG developments in the Gladstone region, although there remain concerns that not all projects will be able to be completed in proposed timeframes if undertaken simultaneously. Meanwhile, sustained demand for both coking and thermal coal from Asia is expected to see substantial expansions in traditional coal mining regions but also the development of the Surat and Galilee Basins. Overall, coal and coal handling construction activity is forecast to rise 70% over the next four years, not including associated railways and harbours works. Meanwhile, other minerals construction activity is predicted to double over the next two years and remain elevated. Gold, copper, zinc and phosphate projects have all been earmarked for development and are likely to drive a record volume of construction work. On the other hand, aluminium activity, after rising to record levels, will fall away sharply in line with the completion of major projects including the Yarwun alumina refinery expansion and the Boyne Island smelter modernisation.
4.4 Water & Sewerage

Strong population growth, uncertainty surrounding future potable water supplies and the need to supply the waterintensive resources sector will continue to provide the impetus for growth over the next five to ten years in water and sewerage works. Currently, a number of dam and pipeline projects are underpinning $2.7 billion in activity across the state. However, once these major projects wind down, activity will fall below the $2 billion mark through 2013/14 and 2014/15 with further dam and pipeline work, but on a much smaller scale, supporting activity.
4.5 Electricity & Gas Pipelines

Overcoming the threat of power shortages and ensuring sufficient energy capacity for both business and residential consumers will continue to be a key driver of activity over the next decade. Queensland has a greater number of high energy users (typically resource sector and heavy industry users) than other states. Additionally, Queensland also has the fastest growing population placing further stress on electricity generation, transmission and supply networks for residential and commercial use. As reported in the recent Statement of Opportunities published by the Australian Energy Market Operator (AEMO), energy demand in Queensland is expected to grow at an average pace of 4.1% per annum through the next five years, compared to a National Electricity Market (NEM) average of just 2.3% per annum. Strong growth in demand for energy, as well as the development of domestic and LNG-based gas supply systems will see further strong growth in electricity and gas pipeline construction. From a combined value of $2.5 billion in 2010/11, work done is expected to rise to $3.2 billion in 2011/12 and above $4 billion in 2012/13.
5. QUEENSLAND MAJOR PROJECTS

5.1 Basis of the QMCA Major Projects List
The QMCA 2011 Major Projects List is presented in the Appendix to this report. The Major Projects List is for projects in excess of $100 million and was developed by BIS Shrapnel in coordination with QMCA member knowledge though October and November 2011.
5.2 Major Projects Commitments

Figure 13 highlights the current activity projections for major projects (i.e. greater than $100 million) for the period 2010/11 to 2015/16 that were developed through this exercise. This is based on data available to September 2011. The graph also compares the activity projections for the key engineering construction sectors.
Figure13
$Billion 8 7 6 5 4 3 2 1 0
Year EndedJune
Source:BISShrapnel,QMCA
2011/12
Oil&Gas Harbours/Ports Pipelines
2012/13
Coal Water Telecom
2013/14
2014/15
2015/16
Roads& Bridges Electricity OtherHeavyIndustry
Rail Sewerage Bauxite,Alumina &Aluminium
FIGURE 13: Queensland Major Projects Work Done by Sector Forecast.
Total engineering construction on major projects in Queensland, according to this analysis, is expected to rise from $10.7 billion in 2011/12 to $19.7 billion in both 2013/14 and 2014/15. Based on the existing major project pipeline, activity on major projects is expected to peak in 2014/15, before declining in 2015/16 as currently identified projects move to a completion phase. Oil and gas, along with coal, will be the primary drivers of activity in the engineering construction sector for projects over $100 million in value over the five year forecast horizon. Oil and gas activity is set to peak in 2014/15 at nearly $8 billion of work done while coal mine and coal handling is expected to peak over 2014-15 at roughly $5.2 billion per annum on average, out of a total of almost $20 billion for all sectors combined. Rail; roads and bridges; and harbours and ports are the next strongest contributors to activity, with most major projects aimed at boosting coal export capacity. All peak at roughly $2 billion in work done but with staggered peaks through the forecast horizon: road and bridges are expected to peak first in 2011/12, then harbours and ports in 2012/13 and finally rail in 2014/15.
$Billions 25 20 15 10 5 0 2011/12 2012/13 2013/14 2014/15

YearEndedJune
Thousands 35 30 25 20 15 10 5 0
2015/16
FIGURE 14: Major Projects Work Done & Workforce Demand All Segments.
5.3 Major Projects Workforce Resourcing

Due to the intensive labour requirements of engineering construction activity, there exists a direct relationship between major project prospects and future labour demand. In compiling the major project list, a workforce estimate has been ascribed for each project, in terms of construction labour required. This information has been drawn from various published sources. Where information on required workforces were not available, the workforce requirement has been estimated based on similar projects elsewhere. By mapping out workforce requirements by major project, it is then possible to build up an estimate of total workforce requirements by engineering segment through the next five years. Furthermore, by acknowledging which projects have been awarded funding, presentations can be made of the outlook for workforce requirements in aggregate, or for funded projects only.
It is important to acknowledge that this projection is based on a $considered and reasonable view of the likely development Billions Thousands 16 25 of projects in the state, as detailed in the Major Projects List 14 20 the (attached in the Appendix to this report), whether or not 12 projects have currently received funding approval. This is 15 likely 10 to 8provide a more realistic outlook of major projects activity 10 in 6 Queensland, and shows how the workforce requirement is 4 likely to be sustained over several years. If the exercise 5were 2 simply narrowed to consider just those projects which currently 0 0 2011/12 2012/13 2014/15 2015/16 had funding approval, then2013/14 major projects activity would not Mining &HeavyIndustry NotFunded (LHS) Mining &HeavyIndustry Funded (LHS) Total Labour Demand (RHS) an increase Funded Labour Demand (RHS) experience as large through the next few years (and would be lower in 2015/16). However, this would not be a realistic outlook for activity given many (currently unfunded) projects are very likely to be given a funding commitment over the next 12-18 months.
Figure19
5.4.1 Roads & Bridges

As described earlier, roads and bridge construction work is expected to contract over the next five years as the Federal and State governments attempt to consolidate their budgets, as plans are developed for the next round of Nation Building Program projects (from 2013/14), and given no new major private toll roads are on the forecast horizon. Consequently, demand curves for both funded and total major project workforce demand are trending downward from the peak of around 4,900 persons in 2011/12. Total workforce demand is forecast to reach a trough of just over 2,500 persons in 2013/14 before signs of strengthening from 2014/15 onward. It is important to note that while road construction activity in the state will be supported by flood reconstruction and recovery efforts, it is more likely that these works (which are significant in aggregate) will be spread widely in smaller packages, and so are not included in the major projects demand projections.
5.4 Total Major Projects Demand

Considered in sum, workforce demands for engineering construction projects greater than $100 million in Queensland are forecast to double between 2011/12 and 2014/15, from just over 15,000, to just over 30,000 persons. Although largely driven by work in the mining and heavy industry segment (see more detail below), it should be noted that all engineering segments (with the exception of roads) will see a
rising major project workforce requirement during this period. Figure 14 shows that it will not be until 2015/16 that currently identified major projects move to completion and hence the measured workforce requirement eases. However, the workforce requirement will still be far above historical levels for the engineering construction sector in that year; nearly 50% higher than 2011/12. Furthermore, as stated previously, there is a high likelihood that further major projects will be revealed over the next few years which could see the investment cycle extended into the subsequent five year period. This would see a shallower downturn in 2015/16, with the prospect of a sustained high level of activity (and major project workforce Figure14 demand) beyond.
Figure15
Figure17
$ Billions 2.5 2.0 1.5 1.0 0.5 0.0
Year EndedJune
Thousands 6 5 4 3 2 1 0
$Millions 800 700 600 500 400 300 200 100 0
YearEndedJune
Hundreds 9 8 7 6 5 4 3 2 1 0
2011/12
2012/13
Roads&BridgesFunded (LHS) Total Labour Demand (RHS)
2013/14
2014/15
2015/16
2011/12
2012/13
2013/14
2014/15
2015/16
Roads&BridgesUnfunded (LHS) FundedLabour Demand (RHS)
Water &SewerageFunded (LHS)
Water&SewerageUnfunded (LHS) Total Labour Demand (RHS)
FundedLabour Demand (RHS)
FIGURE 15: Major Roads and Bridges Projects Work Done & Workforce Demand Forecast.
FIGURE 17: Major Water and Sewerage Work Done & Workforce Demand Forecast.
Figure18 5.4.4 Electricity, Pipelines and Telecoms
5.4.2 Railways and Harbours

InAnnual contrast %Change to roads and bridges, major railways and harbours 25 project work is expected to grow strongly from here, along with 20 workforce demand. Major railways project work is expected to 15 climb from just under $1 billion in 2011/12 to $1.5 billion by 10 5 2013/14 and over $2 billion by 2014/15. Meanwhile, harbours 0 major project work is expected to rise from $855 million in 5 2011/12 to just over $2.2 billion in 2012/13 and stay over $2 10 Figure1 billion in 2013/14. As shown in the Appendix projects list, the 15 00 01 02 03 04 05 06 07 08 09 10 11 12 vast bulk of rail and harbours work is driven by the demands $Billions Thousands PublicInvestment PrivateInvestment Total Investment 35 of 25 the coal sector.
Year EndedJune Forecast Source:BIS Shrapnel,ABSData
Figure4
YearEndedJune
As shown in Figure 16, major projects workforce requirements 25 for 15railways and harbours activity is set to ramp up from 1,900 20 persons in 2011/12, to a peak of 6,000 persons in 2014/15 15 10 (for all projects, whether funded or unfunded). The completion 10 5 of a range of projects is then expected to see the labour 5 0 requirement ease back to 4,600 persons by 2015/16, but 0this 2011/12 2012/13 2013/14 2014/15 2015/16 is still much On(LHS) a funded basis, Totalhigher Funded (LHS) than the current level. Total Not Funded Total Labour Demand (RHS) Total Funded Labour Demand (RHS) work done on major projects is expected to peak in 2012/13 almost $3 billion (with a corresponding labour requirement at Figure 16 persons) before declining in subsequent years. of 3,750
$Billions 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2011/12 2012/13 2013/14 2014/15 2015/16
Railways&Harbours Funded (LHS) Total Labour Demand (RHS) Railways&Harbours Unfunded (LHS) FundedLabour Demand (RHS)
20
30
Year EndedJune
Thousands 7 6 5 4 3 2 1 0
Workforce demand for major projects in the electricity, $Billions Thousands 1.80 3.5 pipelines and telecoms segment is expected to more than 1.60 3.0 double by 2012/13 to just under 3,300 persons from an 1.40 2.5 estimated construction labour force of just 1,400 in 2011/12. 1.20 1.00 Unlike the forecast for this segment described in section 2.0 4.5 0.80 1.5 where activity is expected to remain extremely strong after 0.60 1.0 0.40 2012/13, filtering out the projects less than $100 million in 0.5 0.20 value creates a different picture. For large projects over $100 0.0 0.00 2012/13 2013/14 2014/15 2015/16 million, 2011/12 there is likely to be a decline in both work done and Electricity,Pipelines and Telecome Funded (LHS) Electricity,Pipeline &Telecom Unfunded (LHS) workforce requirements after 2012/13. Most of the decline Total Labour Demand (RHS) FundedLabour Demand (RHS) Figure 17 is driven by the completion of gas pipeline work for several LNG developments through 2013/14 and 2014/15, as well as $Millions Hundreds the 800timing of large electricity generation projects. Conversely, 9 8 be if 700 some of these electricity generation projects were to 600 7 delayed, the workforce requirement would grow more slowly 6 500 over 2012/13, and be more sustained at higher levels 5over 400 4 2013/14 and 2014/15. However, the segment overall will 300 3 still 200be affected by the completion of gas pipeline construction 2 100 1 which comprises the bulk of the workforce requirement. 0 0 Overall, 2011/12 workforce2012/13 requirements segment will trend 2013/14 for this 2014/15 2015/16 Water &Sewerage Funded (LHS) years to 2015/16. Water&Sewerage Unfunded (LHS) labour downward over the three However, FundedLabour Demand (RHS) Total Labour Demand (RHS) force requirements are likely to remain strong throughout the forecast period as smaller projects will remain active during Figure18 this period.
Year EndedJune Source:BIS Shrapnel,ABSData
$Billions 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40

Year EndedJune
Thousands 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
0.20 0.00 2011/12 2012/13 2013/14 2014/15 2015/16

Electricity,Pipelines and Telecome Funded (LHS) Total Labour Demand (RHS) Electricity,Pipeline &Telecom Unfunded (LHS) FundedLabour Demand (RHS)
FIGURE 16: Major Railways and Harbours Work Done & Workforce Demand Forecast.
5.4.3 Water and Sewerage

Water and sewerage-related construction activity is supported by strong population growth and the need to supply water for mineral projects. As activity on major dam and pipeline work winds down, so will labour requirements towards the end of the five year forecast period. However, as shown in Figure 17, labour requirements gravitate in the range of 530 persons at the trough in 2012/13 to a peak of 840 workers in 2013/14 with an average of 685 persons over the forecast period. It should be noted that many projects in the water and sewerage segment will not exceed $100 million individually (e.g. most typical waste water treatment plants, along with reticulation works etc), and so are not included in this analysis.
FIGURE 18: Major Electricity, Pipeline and Telecom Work Done & Workforce
Demand Forecast.
5.4.5 Mining & Heavy Industry

Mining & heavy industry construction is forecast to be the most significant employer in the engineering construction sector over the forecast period in terms of both sheer numbers employed and in terms of its aggressive growth path. According to the analysis of major projects, work done on major mining and heavy industry construction projects is expected to rise from $5.4 billion in 2011/12 to nearly $14 billion by 2013/14. Most of this growth will be driven by oil and gas ($3.4 billion in 2011/12 to nearly $8 billion by 2013/14) and coal
Figure14
$Billions 25 20 15 10 5 0 2011/12 2012/13 2013/14 2014/15

YearEndedJune
Thousands 35 30 25 20 15 10 5 0
2015/16
6. KEY POINTS, IMPLICATIONS AND CHALLENGES
FIGURE 19: Mining and Heavy Industry Projects Work Done & Workforce Demand
Forecast.
Overall, the key points, implications and challenges of this analysis are as follows: 1. Growth in Queensland construction activity slowed substantially between 2008/09 and 2009/10 as large private projects were put on hold in the wake of the GFC. While the extent of the slowdown was mitigated by a strong counter-cyclical fiscal stimulus (in the form of the BER scheme) this only had limited benefits for the major project engineering construction market. In turn, the slowdown in the construction industry, combined with the impact of the high Australian dollar on tradables industries, and the GFC on tourism particularly, pushed Queensland effectively into recession during the period. The latest engineering construction data from the ABS suggests that the Queensland engineering construction market turned the corner in 2011, with a 25% lift in activity coming through in the June quarter and an 18.5% increase in the financial year. Analysis and forecasts provided by BIS Shrapnel suggest that this is just the start of a very strong upswing in engineering construction work, with total annual engineering construction work done expected to rise from $23.6 billion in 2010/11 to $34.7 billion by 2013/14. In turn, annual work done on Queenslands major engineering projects (i.e. those with a value greater than $100 million) is expected to rise from $10.7 billion in 2011/12 to just under $20 billion in both 2013/14 and 2014/15. This includes both funded and unfunded projects currently, but represents a balanced and reasonable outlook for major projects activity given forecast global and national economic conditions. Restricting the analysis to funded projects only, major projects work done is still expected to rise to $10.6 billion in 2011/12 and then to just under $14 billion in 2012/13, before retreating in subsequent years as currently funded works move into a completion phase.
Figure19
($1.4 billion in 2011/12 to over $5 billion by 2013/14). Smaller rises are expected for other minerals projects, while the $ Billions Thousands 16 25 completion of alumina/aluminium works will see major project 14 20 workforces decline in this segment in 2011/12 and 2012/13 12 before a pick-up in 2013/14 (based on a likely expansion 10 15 to the8Weipa bauxite mine).
Figure 19 illustrates that major project workforce requirements 4 5 for 2 mining and heavy industry projects in 2011/12 is forecast to 0 be 06,400 employees. By 2014/15, more than 19,000 persons 2011/12 2012/13 2013/14 2014/15 2015/16 will be employed onmajor in this segment Mining &HeavyIndustry NotFunded projects (LHS) Mining &Heavy Industry Fundedrepresenting (LHS) Total Labour Demand (RHS) FundedLabour Demand (RHS) a tripling in the work force requirement for this sector. Most of this growth in the workforce requirement will come from oil and gas (rising from an estimated 3,500 persons in 2011/12 9,800 persons by 2014/15) and coal (rising from 1,700 to persons in 2011/12 to 7,800 persons by 2014/15). Again, note that these figures are based on identified coal mine and coal handling construction projects worth more than $100 million and do not include coal mine production employees or construction workers on related infrastructure such as railways and ports (which are expected to grow in number substantially also through the forecast period). Consequently, the impact of coal investment on major project workforce demand will be higher than that indicated for coal mine and handling projects alone. In terms of currently funded work only, major project construction work done is expected to peak in 2012/13 at $8.6 billion and be sustained at this level through 2013/14 around 60% higher than in 2011/12. This is expected to drive a strong rise in the workforce requirement to 11,000 persons (from 6,200 persons in 2011/12), with falling yet still very high Figure20 requirements over 2013/14 and 2014/15 as funded works move to completion.
Thousands 25 20 15 10 5 0 2011/12
Oil&Gas
10
2.
3.
2012/13
Coal OtherMinerals
2013/14
OtherHeavy Industry
2014/15
2015/16
Bauxite,Alumina &Aluminium
FIGURE 20: Mining & Heavy Industry Construction Workforce Demand by Segment.
At Figurethe 10 end of the forecast period, in 2015/16, the near completion of several major projects in the list (LNG and coal) Annual%an Change drives easing in major project work done and estimated
13 11 9 7
Forecast
4. Even if the analysis is restricted to cover only those projects with funding approval or commitment, work done on major projects will rise significantly in 2012/13 and remain very high in 2013/14, entailing a workforce requirement shifting up to nearly 20,000 persons in 2012/13 and 17,300 persons in 2013/14, up from just under 15,000 persons in 2010/11. This is significantly higher than estimates provided in the 2010 Major Projects
workforce demand. Again, however, it should be noted that there remains a strong possibility that new mining and heavy industry projects will be revealed over the next few years which could sustain activity at very high levels in 2015/16 and beyond.
5. The analysis undertaken in this study suggests that, based on a likely and reasonable scenario of current and future project work, the engineering construction workforce required to deliver Queenslands major projects will need to rise substantially over the next four years. From around 15,300 persons in 2011/12, the major project construction workforce is expected to rise to just over 30,000 persons by 2014/15. This suggests an effective doubling in the major project workforce requirement in four years. The large ramp up in workforce requirements implied in this study suggests that procuring and retaining skilled workers will be crucial through the forecast period. 6. Combined with an eventual pick-up in residential building and non-residential building work, the sharp increase in major engineering project works will drive a substantial increase in total building and construction activity. This is likely to see further strong growth in construction wages in Queensland above that of Australia as well as a re-acceleration in construction costs generally. A potential risk to project timelines is meeting environmental standards of development through the environmental approvals process. While many major projects have already received environmental approvals, the time taken to pass this stage (and the quantum of environmental conditions attached to development) has been, in some cases, substantial. Furthermore, some environmental approvals are currently being challenged through the legal system which will further delay project implementation. Given the size and complexity of many of the major projects proposed for Queensland over the next 5 years, it is not unreasonable to expect that some projects may face delays as a result of the approvals process. Overall, however, if projects are delayed through capacity constraints or approvals processes, this is more likely to extend the cycle in major project work.
9. The substantial increases in the major projects construction workforce through the next four years will likely need to be met through transferring skills between industries as well as importing skills from outside of Queensland, either from the rest of Australia or from overseas. In the case of the latter, this is likely to drive an overall reacceleration in population growth, with annual net immigration into Queensland likely to rise from just under 40,000 persons in 2010/11 to over 70,000 persons by 2012/13. This will have implications for the adequacy of housing and infrastructure needed to sustain and support these population increases, particularly in the regions outside of Brisbane where much of the project work (i.e. mining and heavy industry related) will be taking place. It also has implications for the ability to source people who are willing to work in these regions and outside of the South East corner. 10. The analysis for this report indicates that the engineering construction landscape in Queensland will be transformed over the next five years and beyond (although not all projects have yet received funding commitments or environmental approvals). The very strong outlook presents challenges to the industry in terms of avoiding skills and equipment shortages, bottlenecks and rising costs which have characterised previous booms. This requires a transformation in thinking about the way projects and skills are developed and innovation in how they are delivered. In this environment, attention to skilling through education and training initiatives will be crucial. In the short term, it will be difficult to meet the workforce requirements on major projects through education and training initiatives alone, with much of the increased workforce requirement likely to be met by higher interstate and overseas migration. However, through the medium to longer term, targeted education and training programs will be vital in boosting the available supply of workers to meet demand. In high skill areas, such as the engineering professions, education and training initiatives will be necessary simply to replace older workers who are retiring over the coming decade, let alone building up larger workforce capabilities to meet projected demand. 11. The strongest outlook for major projects activity and hence the strongest outlook for workforce requirements relates to the substantial mining and heavy industry construction segment. Major project work in this sector alone is expected to rise from $5.4 billion in 2011/12 to $13.5 billion by 2013/14. Much of this is in turn driven by LNG and coal-related works in the Surat and Bowen Basins, Gladstone and Mackay regions. Apart from creating hot spots in these regions in terms of
7.
8. As a result of the previous 3 points, there remains a substantial risk that major engineering construction projects in Queensland will be placed under cost pressures or could be delayed beyond the timelines proposed by the proponent or suggested here. Consequently, barring any significant changes to the global economic outlook (affecting demand for metals, minerals and energy), there still remains the risk that the engineering construction cycle could be extended in duration, albeit with a weaker ramp up period, if cost pressures or skills shortages begin to bite. Even so, the major project list, compiled in conjunction with Queensland
Report, although the shape of growth in demand remains similar, with a peaking in funded major projects demand coming through in 2012/13.
contractors, represents a balanced and reasonable expectation of major project development in the state.
12. The regional focus of many mining and energy projects (particularly in the Mackay/Fitzroy statistical divisions and, notably, Gladstone) in turn will create substantial challenges for the construction industry. For instance, how will skills be attracted outside of the major population centres in the South East corner of the state (and other metropolitan regions in the rest of Australia) into these regions? What infrastructure plans are in place and being progressed in these regions to accommodate and provide services for the large numbers of skilled persons required in both the construction and production phase of these developments? In summary, the coming mining and energy investment cycle will necessitate substantial investment in social infrastructure in these regions, from housing to schools, hospitals, parks and recreational facilities to attract working families on top of the more fundamental economic infrastructure requirements across transport segments and the utilities. While Fly in / Fly out or FIFO working arrangements may become more prevalent, it will not be a panacea for investing in sustainable communities in these regions. 13. The almost singular focus on mining and energy projects as a key driver of major projects growth also differs substantially from the pre-GFC period, when both the public and private sectors were boosting demand for major project work. By contrast, the next few years will see fewer major project opportunities provided by the public sector, as State and Federal Governments seek to restore their financial positions after moving into deficit during the GFC and its aftermath. Furthermore, where public works are offered, it will be less likely to be aggregated into very large packages as governments seek to spread work amongst medium sized and smaller contractors and in-house workforces and seek competitive efficiency gains. This will have implications for the procurement strategies of Queensland contractors. 14. The importance of mining and energy projects to the outlook, relative to the public sector, also means that Queenslands major projects outlook is now, more than ever, tied to the fortunes of the global economy, particularly China and the Asian region. While mining projects run some risk of being delayed if Chinese growth were to slow precipitously (and more than anticipated) and commodity prices were to fall, the energy (i.e. LNG) projects are more likely to proceed under more adverse global economic conditions. This is because of
15. Conversely, given the dominance of the public sector in roads provision, major road and bridge project works are expected to decline through the forecast period. This will be accelerated by the completion of the large (and privately funded) Airport Link project, but is also affected by declining highways and arterials major project work in the state after 2011/12. While the introduction of a new Nation Building Program for funding of land transport from 2013/14 may see the major projects outlook improve, the analysis in this report suggests that major road and bridge projects work done will slip from $2 billion per annum in 2011/12 to $1.2 billion per annum between 2012/13 and 2014/15. Consequently the workforce requirement on major road and bridge projects will fall from 4,900 persons in 2011/12 to 2,600 persons by 2013/14. These workforces are likely to shift to areas of greater need in the engineering construction segment (and not necessarily just in Queensland). 16. Both activity and major project workforce requirements are projected to ease in 2015/16 as the next round of major projects begins to wind down. Even so, activity is projected to remain well above that of 2011/12. Furthermore, this outlook is based on a reasonable assessment of currently known projects only. It is highly likely that more major projects will be developed and identified over the next few years including further mining and energy projects in the regions and new infrastructure investment in the urban centres which could boost activity in 2015/16 and beyond. Consequently, any downturn in 2015/16 may be shallower than presented here and transitory in nature. This has implications for the long term development of skills to match construction industry demand after 2015/16. Contractors will need to keep abreast of developments in order to plan for works in 2015/16 and beyond.
cost and infrastructure requirements, these projects will be in direct competition for resources with other similar projects in Western Australia, South Australia (i.e. Olympic Dam), the Northern Territory and New South Wales. This will make resourcing of Queensland projects more challenging.
their large upfront capital costs (which are likely to fall in times of weaker economic conditions because of the flow through of lower commodity prices and labour costs for construction) but also the long run nature of their supply contracts. This means that a substantial portion of the increase in mining and heavy industry project work is already locked in for the next five years.
Sponsor 1500 200 40e 360 20 20 120 60 20 40 120 50 120 60 20 200 250e 100e 600e 50e 75e 800e 150e 800e 400 14 22 20 90 50 12 BrisConnect Qld Government/BCC Federal Government Qld Government Qld Government/BCC/Feds Qld & Federal Governments BAC Qld & Federal Governments Qld Government Qld & Federal Governments Qld Government Qld Government 50e 50e 20 100e 100e 8 537 1115 376 781 Underway > 2015/16 Mid 2012 < 2025/26 120e 400e 90 4000 1700 190 115 1415 300 1500 150 124 3500 1500 143 86 1160 150 1000 122 99 Underway Underway Underway Underway Underway 2011/12 2012/13 2013/14 2014/15 Mid 2012 2014/15 2012/13 2012/13 < 2020/21 2013/14 < 2020/21 2014/15 2016/17 3500 320 75e 660 340 55 20 20 20
Total Project Value ($m)
Engineering Value ($m)
Expected Start Date
Expected Finish Date
Staffing Average
Staffing Peak
2011/12 $ Million
2012/13 $ Million
2013/14 $ Million
2014/15 $ Million
2015/16 $ Million
Qld Government Qld Government Qld Government Qld Government Qld Government Qld & Federal Governments Qld & Federal Governments 385 1000 300 1000 1000 240 800 800 2015/16 > 2015/16 > 2015/16 2016/18 125e 175e 220 750 2011/12 > 2015/16 2012/13 < 2025/26 75e 125e 95 1950 1100 1482 825 Underway 2014/15 2011/12 2018/19 1500 300e 2000 450e 380 101 502 400 2013/14 < 2020/21 100e 200e 227 180 2014/15 2017/18 50e 100e 60
465 480 1270
93 180 826
Underway 2013/14 > 2015/16
2011/12 2016/17 > 2024/25
80
60
30 120
60 140
90
315
Qld & Federal Governments Qld & Federal Governments Qld Government Qld Government Qld Government Qld Government
75
Qld & Federal Governments Qld & Federal Governments Qld & Federal Governments Qld & Federal Governments 1300 950 2015/16 2020/21 400e
240 140 1020
180 100 770
Underway 2011/12 2014/15
2011/12 2012/13 2020/21
100e 75e 350e
150e 100e 500e 600e
40 25
75
75 25 100 125 133 180
160 100
APPENDIX: QMCA 2012 MAJOR PROJECTS LIST
Federal Government Federal Government Federal Government Federal Government Federal Government Federal Government 2011/12 2012/13
525 998 813 600 1000 2000-3000
341 715 459 480 800 1600-2400
2012/13 2012/13 Underway 2012/13 2015/16 > 2015/16
2014/15 2015/16 Early 2014 2015/16 2017/18
100e 250e 200e 150e 400e
200e 400e 300e 250e 500e
85 134 110 80
125 127 10 200
31 125 20 100
Queensland Project Description ROADS And BRIDGES Airport Link (less Northern Busway) Northern Link - TransApex Townsville Port Access Project Cardwell Range Realignment Kingsford Smith Drive Corridor Upgrade (widen to 6 lanes - several stages) Mains/Kessels Roads Intersection (new interchange/underpass) Parallel Runway (Brisbane Airport) (Less Dredging) Burpengary-Caboolture Rd Deception Bay Rd Flood Rebuild (Various Projects) Northern Busway: Stage 2 Windsor to Kedron via Lutwyche Stage 3 (split into 2 stages) Eastern Busway: Buranda to Mains Avenue (1.05k Section) Mains Avenue to Bennnetts Road (1.2k Section) Buranda-Capalaba (Further Stages) South East Busway: Eight Mile Plains to Underwood Road (Rochedale) Centenary Highway: Western Arterial Program of Works (Jindalee to Everton) Ipswich Motorway: Dinmore - Goodna Upgrade Darra to Rocklea Upgrade Port of Brisbane Motorway: Stage 2 - Lindum Road to Pritchard Street Stages 3-4 (Port Connect) Sunshine Coast Multi-Modal Transport Corridor (MMTC): Stage 1 Caloundra-Mooloolaba Rd Stage 2 Caloundra-Mooloolaba Rd Stage 3 Caloundra-Mooloolaba Rd Gateway Motorway South (GUS) (Total Value $1.4 billion): South 2a: Mt Gravatt-Capalaba Road to Miles Platting Road South 2b: Mt Gravatt-Capalaba Road + Gateway Southbound on-ramp Futher Upgrades South (Various Projects) Gateway Motorway North (GUN) (Total Value $1.3 billion): Various Projects from Nudgee to start of Bruce Highway Bruce Highway: Curra to Sarina (variety of projects) Sarina to Cairns (variety of projects) Cooroy to Curra - Section B Cooroy to Curra - Section A Cooroy to Curra - Section C Cooroy to Curra - Section D Pacific Motorway: Section B Springwood Sth - Daisy Hill (incl. Loganlea Rd I'change) Section B Nerang to Varsity lakes (lanes & interchanges) Section A Section C Qld & Federal Governments Qld & Federal Governments Qld & Federal Governments Qld & Federal Governments 422 420 1100 317 315 880 Underway Underway > 2015/16 > 2015/16 100e 100e 250e 150e 120 85 45
Not Funded Before 2015/16 Logan Motorway Upgrade Cunningham Highway Upgrade + Interchange at Amberley-Ipswich/Rosewood Road Toowoomba Range Bypass Qld & Federal Governments Qld & Federal Governments Qld & Federal Governments 4300 950 1750 3096 713 1313
> 2015/16 > 2015/16 > 2015/16
< 2025/26 < 2020/21
250e 100e
800e 150e
Funded Not Funded
2091.0 0.0 2091
877.3 361.0 1238
430.0 701.8 1132
220.0 1025.0 1245
20.0 1366.0 1386
Roads and Bridges Major Projects Work Done
The QMCA Major Projects List is for projects in excess of $100 million and was developed by BIS Shrapnel in coordination with QMCA member knowledge through October and November 2011.
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2012 MAJOR PROJECTS REPORT Queensland CONSTRUCTION OUTLOOK 2012 MAJOR PROJECTS REPORT Queensland EngineeringEngineering CONSTRUCTION OUTLOOK

Sponsor Total Project Value ($m) Engineering Value ($m) Expected Start Date Expected Finish Date Staffing Average Staffing Peak 2011/12 $ Million 2012/13 $ Million 2013/14 $ Million 2014/15 $ Million 2015/16 $ Million
QR Fed/Qld Government/GCC Fed/Qld Government QR QR QR Qld Government 31 170 130 40 40 70 180 120 60 65 533 25 260 100 455 180 175
646 949 1150 859 637 177 168
452 550 860 601 473 140 135
Underway Underway 2011/12 201/13 2014/15 2014/15 2014/15
Late 2013 Late 2014 2015/16 2016/17 2016/17 2017/18 2015/16
262 375 500 325 272 80 60e
300e 421e 560e 400e 300e 120 100e
155 171 90
265 220 300
19 128 300 50
QR National Consortium featuring ATEC WICT Consortium Private WICT Consortium Adani QR National QR National QR National QR National 50 80 120 QR QR National QR QR QR Qld Government Qld Government Fed/Qld Government/GCC Xstrata 974.0 0.0 974 2000 700 180 352 1000 8000 7000 1000 300 1500 490 126 246 800 6000 5250 700 200 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 1000 263 68 136 145 2875 2287 365 1200 300e 80e 160e 160e 4000e 3150e 480e
Queensland Project Description RAIL (Passenger) Darra to Springfield Rail -- Richlands to Springfield (Stage2) Gold Coast Rapid Transit System: Stage 1 Moreton Bay Rail Link (Petrie to Kippa-Ring) Varsity Lakes to Elanora extension Caboolture-Beerburrum-Landsborough duplication Coomera to Helensvale: 2nd track Lawton to Petrie (Coal / Freight) Goonyella to Abbot Point (to 50mtpa) - Northern Missing Link Surat Basin Rail (Southern Missing Link) and Spur Lines Wiggins Island (WICT) rail: Stage 1 Gallilee Rail Link (Common User) (to Hay or Abbot Point or both) Wiggins Island (WICT) rail: Stage 2 Dudgeon Point Various Upgragdes to Goonyella Coal System (to 140mtpa) Goonyella to Abbot Point Extension (to 75mtpa) Goonyella to Abbot Point extension (to 100mtpa) Goonyella to Abbot Point extension: electrification Not Funded Before 2015/16 CAMCOS rail: Beerwah to Maroochydore Monto to Banana link Eastern Access Rail Corridor (Townsville) Ipswich Line: Corinda-Darra-Redbank 3rd track Mt Isa - Townsville upgrades Brisbane Inner City Rail (1st stage) Brisbane Inner City Rail (next stage) Gold Coast Rapid Transit System: Stage 2 Balaclava Bay Rail 830 1500 400 3000 260 400 300 800 700 350 705 1000 350 2100 130 200 210 520 420 245 Underway 2011/12 2011/12 2013/14 2014/15 2014/15 2013/14 2013/14 > 2015/16 > 2015/16 Early 2012 2014/15 2013/14 2016/17 2016/17 2015/16 2015/16 2016/17 260 900 136 1212 74 117 122 273 245 140 320e 1100 160e 1400 85e 134e 140e 315e 280e 160e 260 70 700 20 100 120 285 700 80 100 60 115 1195.0 0.0 1195 1162.0 345.0 1507 651.0 1385.0 2036 60.0 1420.0 1480
Funded Not Funded
Rail Major Projects Work Done
HARBOURS / PORTS
Van Oord/Dredging International QGC & BG Group WICT Consortium Santos & Petronas Origin & Conoco Phillips Private Shell/Arrow/Bow Rio Tinto WICT Consortium Adani 387 200 1450 250 250 300 250 400 1400 1500 400 200 800 600 1500 1000 1000 300 125 200 400 750 600 600 > 2015/16 > 2015/16 > 2015/16 > 2015/16 300 150 725 210 225 250 225 200 700 750 Underway Underway 2011/12 Underway 2011/12 2012/13 2013/14 2013/14 2013/14 2014/15 2012/13 2012/13 2013/14 2013/14 2013/14 2013/14 2014/15 2015/16 2015/16 2015/16 Van Oord/Dredging Qld Government Seymour Private Xstrata Waratah Coal Hancock Coal
APPENDIX: QMCA 2012 MAJOR PROJECTS LIST Continued
Gladstone Harbour Dredging Western Basin Stage 1 Jetty at Curtis Island LNG Wiggins Island Coal Terminal (WICT) to 27mtpa Jetty at Gladstone LNG Jetty at AP LNG Dredging for Brisbane New Runway Jetty at Shell LNG Weipa bauxite mine upgrade: port component Wiggins Island Stage 2 - 27mtpa to 50mtpa Dudgeon Point Stage 1 - 30mtpa Not Funded Before 2015/16 Gladstone Harbour Dredging Western Basin Stage 2 Port of Brisbane: new wharves at Berths 13 and 14 Urangan Boat Harbour Abbot Point Multi-Cargo Facility Balaclava Bay Coal Terminal Galilee Basin Coal Export Port Galilee Basin Coal Export Port
35 50 350 50 50 30 50 350 450 450
40 100 600 100 100 40 100 400 700 700
150 70 80 60 15
150 80 300 140 150 100
265 10 60 150 75 45 200
125 80 300 240
75 200 420
Projects designated as coal projects by ABS but should be harbours Hay Point: Stages 3 & 4 Port of Abbot Point: T2 (Terminal 2) 50mtpa to 80mtpa Port of Abbot Point: T3 (Terminal 3) 80mtpa to 110mtpa Not Funded Before 2015/16 Port of Abbot Point: T4 (Terminal 4) 110mtpa to 140mtpa Port of Abbot Point: T5 (Terminal 5) 140mtpa to 170mtpa Port of Abbot Point: T6 (Terminal 6) 170mtpa to 200mtpa Port of Abbot Point: T7 (Terminal 7) 200mtpa to 230mtpa Dalrymple Bay Coal Terminal expansion (to 111mtpa) BMA BHP Hancock Coal Private Private Private Private Prime Infrastructure 1100 1100 1100 1100 1000 500 1800 1800
375 1350 1350 715 715 715 715 800
2011/12 2012/13 2013/14 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16
2013/14 2014/15 2015/16
450 450 400
800 800 700
480
880 450
720 520
380 400
515
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Funded Not Funded 855 2250 2045 1525 1210
Project Description
Sponsor
Expected Start Date
Staffing Average
Staffing Peak
2011/12 $ Million 855.0 0.0
2012/13 $ Million 1700.0 550.0
2013/14 $ Million 1055.0 990.0
2014/15 $ Million 0.0 1525.0
2015/16 $ Million 0.0 1210.0
WATER Qld Government Qld Government Private Sector Private Sector GCCC/Alliance QGC Santos & Petronas Origin/Conoco Phillips SunWater 578 80 190 100 75 100 150 150 50 75 160 120 85 30 140 90 30 SunWater Xstrata Qld Government Qld Government Qld Government Qld Government SunWater 2016/17 405 250 250 326 350 415 683 350 150 175 245 315 291 500 2013/14 2013/14 2012/13 2014/15 2015/16 2015/16 2015/16 2014/15 2015/16 2015/16 350 105e 360e 236e 650e 600e 150e 50 40 60 120 30 60 50 348 451 440 360 395 310 350 300 384 283 315 330 256 312 217 245 210 300 Underway Underway Underway Underway Underway Underway 2011/12 2012/13 2012/13 2011/12 2011/12 2011/12 2011/12 2011/12 2012/13 2013/14 2014/15 2014/15 271 650 231e 179e 300 152e 172e 147e 260 5 37.0 80 60 25.0 180 60
Harbours Major Projects Work Done
Wyaralong Dam Northern Pipeline Interconnector: Stage 2 Unknown private sector project Unknown private sector project Hinze Dam Stage 3 Kenya to Chinchilla Weir Pipeline Gladstone LNG (water component) APLNG (Water Component) Connors River Dam
Connors River Dam Pipeline to Moranbah Wandoan Coal (Water component) Cedar Grove Connector (was Sthn Regional Pipeline Extension) Nathan Dam Nathan Dam Pipeline (260km) Water for Bowen Pipeline (extend to Proserpine) Moranbah to Galilee Pipeline (Alpha) Stage 1
Borumba Dam - Stage 3 Moranbah to Galilee Pipeline (Alpha) Stage 2 Wyaralong Dam WTP Tugun Desalination Plant - Expansion Gladstone to Fitzroy River Pipeline Eden Bann Weir Stage 1 Eden Bann Weir Stage 2 Rookwood Wier 447.0 0.0 447
Not Funded Before 2015/16 Qld Government SunWater Qld Government Qld Government SunWater SunWater SunWater SunWater 250 300 100 1260 345 171 196 238 175 200 80 1010 207 130 150 180 > 2015/16 > 2015/16 > 2015/16 > 2015/16
Funded Not Funded
370.0 75.0 445
340.0 320.0 660
170.0 350.0 520
40.0 370.0 410
SEWERAGE Local Authority Government/s QUU Xstrata 189 600 105 100 113 390 84 60 Underway Underway Underway 2013/14 2011/12 2012/13 2011/12 2014/15
Water Major Projects Work Done
Mt St John Sewage Treatment Plant upgrade Unknown project/s Goodna Sewage Treatment Plant 4A Wandoan Coal Project (Sewage component)
94e 55 76e 54e
117e 80 87e 62e
20 150 48 218.0 0.0 218
150 45 150.0 0.0 150 45.0 0.0 45 15 15.0 0.0 15 0 0.0 0.0
Funded Not Funded
ELECTRICITY ERM Power CS Energy QGC/BG APA Group and AGL Energy NQ Bio-Energy Corporation Transfield Services AGL 550 105 500 500 425 560 600 385 80 425 425 298 336 360 2011/12 2011/12 2012/13 2012/13 2012/13 2012/13 2011/12
Sewarage Major Projects Work Done 2013/14 2012/16 2013/14 2013/14 2014/15 2014/15 2014/15 279 400 200 200 255 85 170 300 100 200
Braemar 3 Kogan Creek Solar Boost Project Kumbarilla Power Station (Gas) Diamantina Power Station (Gas) North Queensland Bio-Energy Plant Mt Emerald Wind Farm Coopers Gap Wind Farm (1st stage)
70 12
193 33 250 200 70 70
53 28 150 225 140 135 100
88 120 180
11 80
Not Funded Before 2015/16 New/expanded base-load power station Spring Gully Stage 1 Swanbank F Galilee Power Station CopperString transmission line Private sector Origin Energy CS Energy Galilee Power Pty Ltd CuString/Leighton 1000 500 500 1250 1500
650 350 325 875 1050
> 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 11.8 70.0 82 303.0 512.5 815 393.2 437.5 831 87.5 300.0 388 91 0.0 91.0
Funded
Not Funded
Electricity Major Projects Work Done
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PIPELINES Epic Energy / Origin QGC and BG Santos & Petronas Origin and Conoco Phillips Shell 858 650 500 600 600 429 450 400 425 425 Underway Underway 2011/12 2012/13 2012/13 2012/13 2013/14 2013/14 2015/16 2016/17 500 450 450 450 450 700 650 650 650 650 304 161 53
Project Description
Sponsor
Expected Start Date
Staffing Average
Staffing Peak
2011/12 $ Million
2012/13 $ Million 254 126 154 70
2013/14 $ Million 48 105 105 175
2014/15 $ Million
2015/16 $ Million
SWQP - Stage 2 & 3 - Wallumbilla to Ballera Pipeline work for Curtis LNG Project Pipeline work for Gladstone LNG Project Pipeline work for AP LNG Project Pipleine work for Shell LNG
39 140 70
35 175
Not Funded Before 2015/16 Queensland Hunter Gas Pipeline (Qld section) Pipelines for Spring Gully Power Station Hunter Gas Pipeline Pty Ltd Origin Energy 200 200 80 86 > 2015/16 > 2015/16
517.5 0.0 518 NBN Co. 6928 4850 Underway > 2015/16 30e 50e 100
604.4 0.0 604 125
433.0 0.0 433 150
178.5 70.0 249 200
35.0 175.0 210 300
Pipelines Major Projects Work Done TELECOMMUNICATIONS National Broadband Network - Qld component
Telecommunications Major Projects Work Done
100
125
150
200
300
Oil & Gas BOC Origin QGC & BG Group QGC & BG Group QGC & BG Group Santos & Petronas Santos & Petronas Santos & Petronas Origin/Conoco Phillips Origin/Conoco Phillips Origin/Conoco Phillips Shell/Arrow/Bow Shell/Arrow/Bow Shell/Arrow/Bow 4700 14840 6000 3500 14350 10000 6500 16500 14500 3500 16000 14000 100 260
Project Description
Sponsor
Engineering Value ($m) 90 130 3700 7590 3500 2800 7500 4000 5200 8500 12000 2800 8500 6000
Expected Start Date Underway Underway Underway Underway 2015/16 Underway Underway 2016/17 Underway 2012/13 2019/20 Underway 2014/15 > 2015/16
Expected Finish Date 2010/11 Late 2012 2025 2014/15 2018/19 2025 2016/17 2020/21 2025 2017/18 2023/24 2025
Staffing Average 25e 40 100 2200 1750 90 2050 1700 125 2150 1800 90e 2050e 1700e
Staffing Peak 30e 50 125 3500 2750 110 3500 2750 150 3500 2750 110e 3500e 2750e
2011/12 $ Million 60 20 320 1585 320 800 240
2012/13 $ Million
2013/14 $ Million
2014/15 $ Million
2015/16 $ Million
Micro LNG plant Talinga Coal Seam Methane Development
Curtis LNG Upstream Field Development Curtis LNG Downstream (2 trains, 8.5mtpa) Curtis LNG Project Downstream Stage 2 (2 trains, 8.5 mtpa)
320 2200 320 2000 240 1000
240 2250 240 2000 240 1750
140 1555 120 2000 320 2250
140 200 120 800 320 2250
Gladstone LNG Upstream Field Development Gladstone LNG Project Downstream (2 trains, 7.8 mtpa) Gladstone LNG Project Stage 2 (2 trains, 7.8mtpa)
Australia Pacific LNG Upstream Field Development Australia Pacific LNG Project (2 trains, 9mtpa) Australia Pacific LNG Project Stage 2 (2 trains, 9mtpa)
Shell LNG Upstream Field Development Shell LNG Project (2 trains, 7-8mtpa) Shell LNG Project Stage 2 (2 trains, 7-8mtpa)
75
125
250
300 1250
240 2000
22
Pipelines for Spring Gully Power Station 517.5 0.0 518 NBN Co. 6928 4850 Underway > 2015/16 30e 50e 100 125 150 200 300 604 433 249 210 604.4 0.0 433.0 0.0 178.5 70.0 35.0 175.0
Origin Energy
200
86
> 2015/16
Pipelines Major Projects Work Done TELECOMMUNICATIONS National Broadband Network - Qld component
Telecommunications Major Projects Work Done
100
125
150
200
300
Oil & Gas BOC Origin QGC & BG Group QGC & BG Group QGC & BG Group Santos & Petronas Santos & Petronas Santos & Petronas Origin/Conoco Phillips Origin/Conoco Phillips Origin/Conoco Phillips Shell/Arrow/Bow Shell/Arrow/Bow Shell/Arrow/Bow 3500 16000 14000 2800 8500 6000 Underway 2014/15 > 2015/16 2025 90e 2050e 1700e 110e 3500e 2750e 75 6500 16500 14500 5200 8500 12000 Underway 2012/13 2019/20 2025 2017/18 2023/24 125 2150 1800 150 3500 2750 240 3500 14350 10000 2800 7500 4000 Underway Underway 2016/17 2025 2016/17 2020/21 90 2050 1700 110 3500 2750 320 800 320 2000 240 1000 4700 14840 6000 3700 7590 3500 Underway Underway 2015/16 2025 2014/15 2018/19 100 2200 1750 125 3500 2750 320 1585 320 2200 240 2250 240 2000 240 1750 100 260 90 130 Underway Underway 2010/11 Late 2012 25e 40 30e 50 60 20
Project Description
Sponsor
Expected Start Date
Staffing Average
Staffing Peak
2011/12 $ Million
2012/13 $ Million
2013/14 $ Million
2014/15 $ Million
2015/16 $ Million
Micro LNG plant Talinga Coal Seam Methane Development
Curtis LNG Upstream Field Development Curtis LNG Downstream (2 trains, 8.5mtpa) Curtis LNG Project Downstream Stage 2 (2 trains, 8.5 mtpa)
140 1555 120 2000 320 2250
140 200 120 800 320 2250
Gladstone LNG Upstream Field Development Gladstone LNG Project Downstream (2 trains, 7.8 mtpa) Gladstone LNG Project Stage 2 (2 trains, 7.8mtpa)
Australia Pacific LNG Upstream Field Development Australia Pacific LNG Project (2 trains, 9mtpa) Australia Pacific LNG Project Stage 2 (2 trains, 9mtpa)
Shell LNG Upstream Field Development Shell LNG Project (2 trains, 7-8mtpa) Shell LNG Project Stage 2 (2 trains, 7-8mtpa)
125
250
300 1250
240 2000
Not Funded Before 2015/16 Fishermans Landing LNG Project (1.5mtpa) LNG Ltd and Metgasco 805 564
Funded Not Funded
3420.0 0.0 3420 Rio Tinto Rio Tinto 927 700 927 420 Underway 2013/14 2011/12 2015/16 400 350 650 400 100
5205.0 1000.0 6205
5220.0 1750.0 6970
4435.0 3500.0 7935
1620.0 4450.0 6070
Oil & Gas Major Projects Work Done Bauxite, Alumina & Aluminium
Boyne Island Smelter Modernisation Weipa Bauxite Mine Expansion (South Of Embley)
90 750 1200
180
150
QAL Refinery- Expansion Development of Aurukun bauxite deposit Bauxite Hills
Not Funded Before 2015/16 Queensland Alumina Ltd Major international aluminium Cape Alumina 1000 700 250 600 490 200 > 2015/16 > 2015/16 > 2015/16
Funded Not Funded
100.0 0.0 100
90.0 0.0 90
180.0 0.0 180
150.0 0.0 150
37|P 0.0a g e
0
0.0
Bauxite, Alumina & Alumin. Major Projects Work Done
23
Sponsor Incitec Pivot Austcane Energy 50 Boulder Steel Linc Sunstate Gas Felton 110.0 0.0 110 50 0 0 50.0 0.0 0.0 0.0 0.0 0.0 0 2500 1000 1500 3500 1250 7500 750 2000 > 2015/16 > 2015/16 > 2015/16 > 2015/16 2015/16 1400 2000 935 200 468 100 Underway 2011/12 2011/12 2012/13 150 75 300 100 60 50
Project Description Other Heavy Industry Moranbah Ammonium Nitrate Plant Ethanol Plant Not Funded Before 2015/16 Boulder Steel (Seamless Tube Plant) Gladstone Stage 1 Linc Energy Coal to Liquids Sunstate Gas to Liquids Felton Clean coal to Liquids Funded Not Funded 0.0 0.0
Expected Start Date
Staffing Average
Staffing Peak
2011/12 $ Million
2012/13 $ Million
2013/14 $ Million
2014/15 $ Million
2015/16 $ Million
84 750 23 140 330 10 900 55 60 270 200 315 350 350 330 790 1100 130 900 300 80 280 270 320 290 1750 1100 75 120 340 510 70 84 50 720 105 60 90 120 140 300 250 200
Other Heavy Industry Major Projects Work Done Coal Curragh Mine Expansion Burton Expansion Ensham Bord and Pillar Underground Mine Kestrel Extension Middlemount Coal Project (including stage 2) Lake Vermont Expansion Caval Ridge (Peak Downs expansion) Drake Coal Ellensfield Coal mine Broadmeadow Expansion Daunia Coal mine Moorvale West Extension Coal Project Washpool Millennium expansion Wandoan Coal mine (thermal) Stage 1 Woori Coal Project Dingo West open cut Belvedere Underground (hard coking) Stage 1 Byerwen Open Cut Goonyella Riverside expansion Grosvenor Coking Coal Eaglefield Coal Mine Expansion Eagle Downs (Peak Downs East Underground) Carmichael Coal Project Kevins Coal (Alpha Coal) Project Assumed Only 1 to Proceed China First Coal Project Wesfarmers (Stanwell) Peabody Ensham Resources Rio Tinto (Mitsui/Queensland Macarthur Coal Jellinbah Resources BMA Qcoal Vale BMA BMA MacAruther coal Aquila Resources Peabody Xstrata Cockatoo Coal Bandanna Energy Aquila Resources Qcoal BMA Anglo Coal Australia Peabody Aquila / Vale Adani Hancock / GVK Waratah Coal 150 135 70 1250 170 200 290 430 70 140 40 280 286 200 166 1800 500 200 4000 400 640 900 1600 200 320 800 3650 200 150 1400 500 1500 1300 1500 1130 6800 5250 5125 257 180 149 1600 450 140 3600 360 228 810 1440 140 224 560 2800 160 120 800 400 1050 1040 1200 904 5440 3675 3588 Underway Underway Underway Underway Underway 2011/12 2011/12 2011/12 2011/12 2012/13 2012/13 2012/13 2012/13 2012/13 2012/13 2013/14 2013/14 2013/14 2013/14 2013/14 2013/14 2013/14 2013/14 > 2015/16 2013/14 > 2015/16 2011/12 2011/12 2011/12 2011/12 2011/12 2012/13 2014/15 2013/14 2014/15 2013/14 2013/14 2013/14 2013/14 2016/17 2016/17 2014/15 2014/15 2016/17 2015/16 2017/18 2016/17 2016/17 2016/17 > 2015/16 2017/18 > 2015/16 200 60e 50 230 120 250 900 280 260 230e 350 75 180 340 100 150 170 430 400 750 350 600 330 2000 1800 1650 300 80e 80 250 160 350 1200 400 300 250e 450 75 200 350e 1300 175 220 600 500 900 400 800e 360 3000 2500 2500 57 80 46.2 400 65 70 450 95 105
1200 500 400 200 750 120 150
840 350 320 140 600 78 120
> 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16
888 200 85 115 88 140
1200 250 100 120 100 150
Not Funded Before 2015/16 Moranbah South coking coal project New Acland Stage 3 Expansion The Range Cameby Downs Expansion Minyango coal project Dingo Thermal Deposit Wonbindi Coal Project Belvedere underground (hard coking) Stage 2 Wandoan coal mine (thermal) Stage 2 Elimatta Hail Creek Expansion Arcturus Kevin's Corner South Galilee Project (Alpha) Sarum Alpha North Winchester South Hail Creek Expansion Stage 3 North Goonyella coking coal Kerlong Underground Coal Project Yamala (known as Emerald project) New Lenton Coal Mine Yarrabee North Red Hill hard coking deposit New Saraji (East ?) Arcadia Springsure Creek Stage 1 Anglo Coal Australia New Hope Corporation Stanmore Coal Syntech Resources Pty Ltd Caledon Resources Cockatoo Coal Cockatoo Coal Aquila Resources Xstrata Northern Energy Rio Tinto Bandanna Energy Hancock Prospecting Bandanna Energy Xstrata Waratah Coal Rio Tinto Rio Tinto Peabody Stanmore Coal Northern Energy New Hope Corporation Yancoal BHP Billiton / Mitsubishi BHP Billiton / Mitsubishi Bandanna energy Bandanna energy 2000 580 750 200 3000 1800 500 1000 330 750 150 200 350 250 260 450 1000 350 800 1500 464 450 180 2100 1440 400 900 230 450 100 130 280 165 170 300 800 280 600 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16
240
450
38|P a g e
24
Funded Not Funded 1369 3225 5208
Project Description
Sponsor
Expected Start Date
Staffing Average
Staffing Peak
2011/12 $ Million 1368.6 0.0
2012/13 $ Million 3015.0 210.0
2013/14 $ Million 3089.0 2119.0
2014/15 $ Million 2423.0 2760.0 5183
2015/16 $ Million 1330.0 2990.0 4320
Other Minerals
Coal Major Projects Work Done
44.5 54 70 145 17.8 19.6 200 100
Ernest Henry George Fisher Expansion Red Dome Mungana Mt Carlton (Silver Hill) Rocklands Copper project Lady Loretta Zinc Stage 2 Cloncurry Merlin Project (Molybdenum) Dugald lead/zinc prospect Einasleigh Copper Project Mt Garnet Paradise Phosphate Project - 1st stage 24 65 21.3 50 70 65 90 160 20 30 180
Xstrata Xstrata Mungana Gold Mines Conquest Mining CuDeco Xstrata Xstrata Ivanhoe Mines Minerals and Metals Group Kagara Consolidated Tin Mines Legend International Holdings
589 245 330 127 250 460 250 320 500 109 124 300
285 98 215 100 125 184 138 160 225 100 50 135
Underway Underway Underway 2011/12 2011/12 2011/12 Late 2012/13 2012/13 2012/13 2012/13 2012/13
Early 2012 Late 2012 Late 2013 2012/13 2012/13 2013/14 Late 2013 2013/14 2014/15 2013/14 2013/14 2014/15
290 180e 215 140 170e 500 170 150e 700 60e 50 750
330 200e 230 150 200e 550 200 175e 850 75e 60 1060
100 50 65 20 75 60 45
200
Not Funded Before 2015/16 Nornico Laterite Nickel Project - 1st stage Valhalla uranium Paradise Phosphate Project - 2nd stage Nornico laterite nickel Project - 2nd stage Marborough Heap Leach Project Metallica Minerals Summit Resources / Paladin Legend International Holdings Metallica Minerals Gladstone Pacific Nickel 135 400 500 632 400 100 160 225 253 160 > 2015/16 > 2015/16 > 2015/16 > 2015/16 > 2015/16
Funded Not Funded
340.0 75.0 415 5339 75 5414 10553 145
245.3 530.0 775 8605 1740 10345 13930 3239
98.5 452.4 551 8588 4321 12909 12596 7116
0.0 300.0 300 7008 6560 13568 8530 11215 0 2950 7440 10390 3405 12072
0.0 0.0
Other Minerals Major Projects Work Done Funded Mining and Heavy Industry
Not Funded Mining and Heavy Industry
Total Mining and Heavy Industry Major Projects Work Done Funded Total Major Projects >$100 Million Work Done
Not Funded Total Major Projects >$100 Million Work Done
Total Major Projects >$100 Million Work Done
10698
17168
19711
19745
15477
25

2012 Major Projects: Queensland Engineering Construction Outlook

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2012 MAJOR PROJECTS REPORT Queensland Engineering CONSTRUCTION OUTLOOK

2012 MAJOR PROJECTS REPORT

Queensland Engineering Construction Outlook

Versatility driving success

Graeme Newton Chief Executive Officer Queensland Reconstruction Authority

Roads&BridgesUnfunded (LHS) FundedLabour Demand (RHS)

20 15 10 5 0 2011/12 2012/13 2013/14 2014/15

FIGURE 1: MAJOR PROJECTS WORK DONE & WORKFORCE DEMAND FORECAST.

2.0 1.5 1.0

Total Funded (LHS) Total Labour Demand (RHS)

. . . driving strong demand for construction workforces . . .

. . . impacting on wages and broader construction costs . . .

Implications and Challenges

Construction activity is set to re-accelerate in Queensland . . .

. . . creating issues for skills resourcing and infrastructure . . .

. . . and driving other implications and challenges for contractor strategies . . .

Australian growth outlook

Source: BIS Shrapnel, IMF World Economic Outlook 2011

TABLE 1: selected GDP Forecasts.

$ Billions 120 100 80 60 40 20 0

FIGURE 5: Construction WORK DONE Australia.

FIGURE 4: Total Investment, Australia, Real Growth Per Annum.

2.2 International and Domestic Risks

Private Investment Share ofState Final Demand (RHS)

Livestock OwnershipTransferCosts NonDwelling Construction

Dwellings Machinery and Equipment IntellectualProperty

FIGURE 7: Private Investment: Queensland.

FIGURE 6: National and State ECONOMIC Growth Comparison 2000-12.

Private Investment Share ofState Final Demand (RHS)

2.4 Population Growth

Livestock OwnershipTransferCosts NonDwelling Construction

Dwellings Machinery and Equipment IntellectualProperty

FIGURE 9: Queensland Construction WORK DONE June 2008=100.

3.2 Residential Building Figure 11

FIGURE 8: Queensland Population Growth Net INCREASE.

3.3 Non-Residential Building

3. QUEENSLAND CONSTRUCTION OUTLOOK

3.4 Engineering Construction

FIGURE 10: Construction Employment vs. Construction Wages GROWTH.

3.6 Construction Costs 3.6.1 Drivers of Construction Costs

3.5 Queensland Construction Employment and Wages

3.6.2 Engineering Construction Implicit Price Deflator

$Billions 120 100 80 60

120 115 110 105 100

EngineeringConstruction WorkDone, LHS

FIGURE 11: Engineering Construction Implicit Price Deflator (2008/09=100).

3.6.3 Overall Outlook for Construction Costs

0 4. QUEENSLAND ENGINEERING CONSTRUCTION 2000 OUTLOOK

Roads Bridges,Railways &Harbours HeavyIndustry &Mining

4.1 Structure and Overview of Engineering Construction

4.3 Bridges, Railways and Harbours

4.6 Mining & Heavy Industry

4.4 Water & Sewerage

4.5 Electricity & Gas Pipelines

5. QUEENSLAND MAJOR PROJECTS

5.2 Major Projects Commitments

Rail Sewerage Bauxite,Alumina &Aluminium

FIGURE 13: Queensland Major Projects Work Done by Sector Forecast.

$Billions 25 20 15 10 5 0 2011/12 2012/13 2013/14 2014/15

Total Funded (LHS) Total Labour Demand (RHS)

5.3 Major Projects Workforce Resourcing

5.4.1 Roads & Bridges

5.4 Total Major Projects Demand