Uncategorized Archives - Mitchell Brandtman

This Mitchell Brandtman Quarterly Construction Cost Update

has been put together to help keep you informed on the

movements of the market to better position yourself for your

current and future projects.

For NSW Quarterly Cost Update click here

For VIC Quarterly Cost Update click here

This Mitchell Brandtman Quarterly Construction Cost Update

has been put together to help keep you informed on the

movements of the market to better position yourself for your

current and future projects.

For QLD Quarterly Cost Update click here

For VIC Quarterly Cost Update click here

This Mitchell Brandtman Quarterly Construction Cost Update

has been put together to help keep you informed on the

movements of the market to better position yourself for your

current and future projects.

For NSW Quarterly Cost Update click here

For QLD Quarterly Cost Update click here

This Mitchell Brandtman Quarterly Cost Solutions has been put together
to keep you informed on market movement and the impact on construction costs.
This quarter, we are continuing our efforts to help clients manage shifting costs and
expectations. The constantly evolving market and differing performance between
States and regions highlight the importance of our commitment to providing highly
detailed and transparent cost analysis.

Australian Review

Seasonally adjusted ﬁgures from September show that while the value of total
Australian residential building was ﬂat at $8.04b, total dwellings approved rose
4.4%. While dwellings excluding houses also rose for the month, they remain
consistently down over 12 months.
Overall, Australia is moving away from the period when property values increased
faster than construction cost escalation. This price volatility is why we encourage our
clients to obtain detailed cost estimates from an early stage.

Victoria

Local Update

The construction market in Victoria is seeing slow but steady residential
developments and limited activity across apartment and ofﬁce towers.
Industrial works are peaking, childcare and medical centre works are ongoing,
but new public and infrastructure projects are experiencing uncertainty at this
point in time.

Quarterly Result

Managing Costs for Victorian-based Projects

With labour and material expenses changing constantly for Victorian projects, we
make a point of asking, ‘What if?’
When conducting feasibility reports, we review a range of project options, including
repurposing, extensions and commercial opportunities. Value engineering and
budget control are also high on our radar when helping developers explore their
options.
Generally, labour and materials comprise 70% of project costs, with the remaining
expenses going towards site management, insurance, safety etc.
When we prepare material options appraisals, we consider ﬁnancial and non-ﬁnancial
criteria so we can ﬁnd the best value alternatives. This happens on a
project-by-project and location-by-location basis, so we can save our clients from
under/over capitalising while ensuring the ﬁnished product appeals to the target
buyer.
The cost of materials is changing. For example, bricks are less cost-effective than
they used to be, and there have been price ﬂuctuations in timber over recent years
due to bushﬁres in different locations around the world. When we work with clients,
we explore the material options that make the best sense right now, whether this
means buying locally or importing prefabricated components.
Life-cycle costing also comes into play with quantity surveying — the cost from the
initial acquisition of the site through to development and construction, and then
ongoing maintenance. When we review project costs, we look at lifespan and
durability as well as purchase price. Consider windows for example: will they be
double-glazed, tinted, reﬂective etc? All these choices will impact long-term costs.
Finally, it is important to remember that every project and building is different. Even
the same building would cost a different amount at different locations because of
factors like ground quality and local utilities.
Cost management is multi-faceted for every element of a build. Even for something
as simple as door handles, we need to review:

Where will they come from?

What they will be made of?

Who will install them?

Coordinating all these costs can be extremely difﬁcult and there is deﬁnitely such a
thing as false economy. This is why proper planning and preparation from an expert
team are so important. We carefully review every expense to create a comprehensive
picture rather than a list of ‘per square metre’ prices.

New South Wales

Local Update

The construction market in NSW is operating in two distinct but competing
segments. Government work, generally speaking, appears to be smoother, with good
margins and the capacity for funded variations. Meanwhile, the non-detached
residential market comprises projects that are more difﬁcult to plan and complete,
and where proﬁt margins are shrinking.
Contractors who can move between sectors are ﬁnding the Government sector much
more attractive. Government projects appear to have more conﬁdence, ﬂexibility and
funding available. There is plenty of activity and subcontractors have more certainty
about being paid, so those with the experience and skills are actively seeking these
projects.
While residential projects are facing challenges due to the current state of the
market, this doesn’t mean things are impossible. Being forewarned means being
forearmed, so you can have a holistic, upfront understanding of costs before
proceeding.

Quarterly Result

Managing Costs for New South Wales Projects

Developers are increasingly asking about mitigating rising material costs while
maintaining project quality and timelines. With ﬂuctuations still occurring, it is all
about identifying where savings can take place.
We gather information about current costs by speaking directly to subcontractors
and reviewing data from the hundreds of projects we work on, across a range of
sectors each year.
Having real-time information and exploring value-management options helps our
clients access up-to-date material costs. There is usually an alternative to explore
and we can provide the necessary information to better match project budgets and
expectations.
In addition to exploring material and construction costs, Mitchell Brandtman has our
ﬁnger on the pulse in relation to the price of labour and contractor availability. While
a great deal of our data comes from spreadsheets, we also spend time actively
reaching out to our networks so we can share cost data that is real and based on
actual projects.
Finally, it’s worth keeping risk management in mind. At this stage, regardless of
project size, contingencies for design and construction are essential. If a project is
forecast at $10 million, an extra $500k (as a minimum) as a safety net makes sense to
prevent setbacks. We understand that this is not the best news when you’re working
on a new development but we set out to be pragmatic and realistic when compiling
reports so everyone is protected.

Queensland

Local Update

The Queensland construction market, particularly South East Queensland, is
experiencing a unique set of challenges. Right now, the region is experiencing the
‘calm before the storm’ as it prepares for the pre-Olympics surge of activity.
The outlook is more positive now than a year ago as there is more acceptance around
the fact that conditions have changed and there is no going back. It’s now a matter of
working with what we have got and adapting to the new normal.

Quarterly Result

Managing Costs for Queensland Projects

In 2024, the industry has begun to embrace a shared risk model, where builders and
developers work together to manage risks and costs. When this takes place at a
contractual level, it’s easier for projects to forge ahead. This is a model we advocate
for, with the proviso that contracts beneﬁt all parties.
We are seeing an industry that is more excited to collaborate and support each other,
which is a fantastic trend, especially at a time when cost is a barrier to feasibility and
projects are also struggling when it comes to authority and meeting council
regulations.
When it comes to cost management and reduction, robotics, Building Information
Modelling (BIM) and real-time data have a huge role to play. When subcontractors are
limited and can almost name any price, there needs to be a way to mitigate the cost
of labour. Technology can be applied as an investment that enhances productivity
and eases the burden of other expenses.
At Mitchell Brandtman, we are always on the lookout for ways to do things better and
offset high labour and material costs. Exploring opportunities to leverage technology
is part of this.

For more information, please contact us: Marketing @mitbrand.com

This Mitchell Brandtman Quarterly Construction Cost Update

has been put together to help keep you informed on the

movements of the market to better position yourself for your

current and future projects.

For more information, please contact Colin Prince: cprince@mitbrand.com

On November 13th, Mitchell Brandtman Partner
Tass Assarapin led the Financiers’ Construction Market Update Presentation for
our NSW clients, focusing on key strategies for navigating within today’s
construction industry.

Key takeaways included:

Contractor Suitability & Careful Planning: Emphasis was placed on selecting suitable contractors and investing in detailed planning to ensure favourable project outcomes.

Market Trends & Future Outlook: Clients gained insights into current trends and future expectations for building approvals, labour, and material costs, essential for forward planning.

Risk Management in Procurement: Tass highlighted the importance of prioritising strong risk management practices to mitigate potential project risks.

Thank you to all who attended and contributed to the success of this insightful event!

Mitchell Brandtman has you covered…

Now is the time to start thinking about your projects and in particular your obligations prior to Christmas 2024 and your plans for the New Year.

One of the most critical obligations to plan for leading into Christmas are Progress Claims/Payments, so we have put in place a target date of Wednesday 11th December 2024 being the last day for all site inspections and all progress claim information. This will ensure all reports are completed and issued prior to Christmas shutdown which is the 21st of December 2024 to the 5th of January 2025.

Remember to also discuss timing dates for payments with the rest of your project team and specifically, your Financier to ensure obligations can be met through this period.

Looking at commencing construction early in the New Year? To ensure we can cater for your project’s pre-funding requirements, we have set a target date of Monday 2nd of December 2024 to receive all required information for Pre-Funding Initial Reports. This will ensure that any new Initial Reports are issued prior to the Christmas shutdown and will help you hit the ground running in 2025.

We understand that it is not always possible to predict when a report or assessment will need to be done. So, if you have any concerns, please do not hesitate to give us a call, right up until 11am Friday, 20th of December 2024 and we will be happy to talk through how we can help.

Please contact our team at MB to book your Pre-Christmas inspections / reports.

Our office will be closed from 21st of December 2024 and will re-open on Monday, the 6th of January 2025.