Connecting...

W1siziisimnvbxbpbgvkx3rozw1lx2fzc2v0cy9sywdvbs1jb25zdwx0aw5nl2pwzy9iyw5uzxitzgvmyxvsdc5qcgcixv0

State of Play | Nov 2019

State of Play | Nov 2019

Posted on 12/12/2019 by Will Tilley

W1siziisijiwmtkvmtivmtivmdavmjkvmtavodyyl1n0yxrlig9mihbsyxkgtm92ide5lmpwzyjdlfsiccisinrodw1iiiwiotgwedywmfx1mdazzsjdxq

At the beginning of the year, I wrote an article on the state of play in Victoria’s Infrastructure industry, with a focus on Major Projects. There has been quite a bit happening since then, especially in the last three months, and we might finally be at the point where the BOOM becomes just that and we move away from steady to all systems go.

Since the last “State of Play” article there have been developments across a variety of key civil infrastructure projects.

 

Major Road Projects Victoria (MRPV)

  • Mordialloc Freeway | $375M | Decmil & McConnell Dowell JV
  • Echuca-Moama Bridge | $323.7M | McConnell Dowell
  • M80 Upgrade (Sydney to Edgars) | $518M | CPB Contractors
  • Monash Freeway Upgrade (Stage 2) | $1.07B | CPB Contractors
  • South Gippsland Highway | $50M | CPB Contractors
  • Suburban Roads Upgrades | South Eastern and Northern Packages

Down to the final two bidders, and initially due to go to preferred status before Christmas. This has been pushed back to preferred status in March, with financial close in May. The remaining consortia are Netflow (Plenary, Cintra Global, Salini Impregilo, Broadspectrum and Amey Consulting) and Access Arterial (Pacific Partnerships, DIF Management, CPB Contractors and Ventia).

  • M80 Upgrade (Princes to Western)

Has been priced by CPB Contractors and John Holland, but with a hefty price tag, higher than the number Fulton Hogan had set mid-2018. Sources say that the government has put this section to bed for now, with the project likely to be re-released to the market in 2021 or 2022.

 

North East Link Project (NELP)

  • Early Works | $200M | CPB Contractors
  • Main PPP Contract | Three consortia are currently putting their bids together, with the tender closing in May 2020.

 

Level Crossing Removal Project (LCRP)

All the alliances have been given a good pipeline of work, and all have been awarded at least one project in the past twelve months and all have more projects in the development and TOC phases. Given the number of projects, I won’t go into each individually, however, some highlights are:

  • Bell to Moreland | $542M | Recently awarded to North Western Program Alliance (NWPA)
  • Preston Level Crossing Removals (Bell Street, Cramer Street, Oakover Road, Murray Road) | elevated rail design announced | project in development by NWPA
  • Cranbourne Line Upgrade | $750M | in development to be delivered in two sections by Western Program Alliance (WPA) and South Eastern Program Alliance (SEPA).
  • North East Program Alliance

Has had a massive change up (and ceased to exist) since the closeout of the Hurstbridge Line Upgrade (Stage 1), which saw three level crossings removed and a new station built at Rosanna. As many of you reading this will be aware, NEPA was not awarded their next package of works, which was to include High Street, Reservoir which is now being delivered by NWPA and Bell Street, Preston which is now part of the much larger elevated rail project, which is under development by NWPA. Laing O’Rourke and Fulton Hogan have had their divorce, and two new alliances have been born out of this; South Eastern Program Alliance and Metropolitan Roads Program Alliance.

 

Rail Projects Victoria (RPV)

  • Avon River Bridge | $90M | CPB Contractors
  • Sunbury Line Upgrade | Stages 1 & 2 | Awarded to the existing Rail Infrastructure Alliance (RIA).
  • There are several Regional Rail Revival (RRR) projects at tender stage with the Warrnambool Line Upgrade (WLU) due to be awarded shortly, along with the North-East Line Upgrade (NELU) which is being delivered by ARTC.

 

Melbourne Airport

  • T4 Express Link | Set to be awarded to Seymour Whyte in coming weeks.
  • Project Zulu | awarded to Fulton Hogan earlier in the year and now underway.
  • The Third Runway Project | Officially delayed whilst Melbourne Airport reviews their plans and decides on a North-South or East-West orientation.

 

Melbourne Water

It has been reasonably quiet through 2019 on the Melbourne Water Framework front, with work starting to flow through again in the second half of the year. With RCR Infrastructure's collapse, Downer has partnered with Abergeldie Infrastructure as a JV, with John Holland the other contractor in the new framework.

Seymour Whyte won the contract to deliver the Upper Yarra Reservoir Dam Upgrade, which due to the size of the project falls outside the Framework setup.

 

Renewable Energy

The Renewable Energy Sector continues to tick along, with several wind and solar energy projects underway across the state. These include three significant wind projects in the West of Victoria, Murra Warra (116), Stockyard Hill (149) and Moorabool (107) featuring over 100 turbines each.

There are some other significant projects in the planning and permit stage, including WestWind's Golden Plains Wind Farm which will feature 181 Turbines and produce at least 800MW of energy. Site Exploration is also due to begin this month for Australia's first offshore wind farm off the coast of Gippsland. The HUGE "Star of the South" project is set to feature 250 turbines and produce 2000MW (yes, three zeroes), the equivalent of approximately 150% of the power output of the now-closed Hazlewood Power Plant in the Latrobe Valley.

With the continued push towards clean energy, this sector is expected to continue its strong growth over recent years.

 

Mega Projects

Of course, it would be remiss of me not to mention we still have the Mega Projects in the Metro Tunnel Project and West Gate Tunnel Project both underway and still a long way from the finish line. It is widely speculated that the Metro Tunnel Project PPP is in a financial hole, but they do have a TBM drilling a literal hole now, which is one step ahead of the West Gate Tunnel Project which is yet to get a TBM turning in the ground.

Initial site inspections and investigations have begun for both the Melbourne Airport Rail Link ($10B) and the Suburban Rail Loop ($50B+), with current plans that both will begin construction in 2022.

 

This covers off most of the major projects across Victoria and a very brief overview of who is delivering what, and where they are at. But what impact is this activity having on the market as it relates to jobs, careers and talent acquisition? What are the trends? I'm glad you asked, see below.

 

CPB winning everything

In the last 6 months, CPB has been awarded the North East Link Early Works, Stages 1 & 2 of the Sunbury Line Upgrade (with John Holland), The Monash Freeway Upgrade Stage 2, The M80 Upgrade (Sydney to Edgars), and the South Gippsland Highway Upgrade (Black Spur). They did miss out on Echuca-Moama to McConnell Dowell, but otherwise, they are on a serious hot streak.

  

Counter-offers

As the candidate market has become tighter, counter-offers are on the rise. As it becomes more difficult to source talent to replace those who plan to leave, more companies are choosing to put counter-offers in front of employees who have been offered a new role elsewhere. Often this is in the form of more money, and sometimes also a promotion. We'll save the ins and outs of whether you should or should not accept a counter-offer for another day (it depends on the why). 

If you are the employer trying to hold onto your employee, your best bet is to not wait until you're put in a position to need to counter offer your staff. If they're deserving, in this market you should be proactive about this. It'll make your employees feel valued and therefore less likely to entertain offers.

If you're the employer trying to avoid going through the hiring process only to have your preferred candidate accept a counter-offer, one of the best things you can do is to make the process a two-way street. You need to sell the opportunity, your company, the benefits. Find out what the candidates' motivators and goals are, and tailor your approach to them. If you're working with an external recruiter, actually work with them. If you've chosen wisely, they'll not only bring strong candidates to you, they will know the candidates, what makes them tick and be able to help you close the deal with your preferred candidate.

 

Rejected offers

With the number of opportunities available to candidates, the number of rejected offers has risen. It is very much a candidate market now, and it will remain this way for at least a few years. Candidates have more choice, and not only can they go on the search for the role and employer that ticks all their boxes, but they can use the market to their advantage to make sure they get their boxes ticked. If you're an employer and you're not up to scratch with market salaries, career progression, or increasingly, employee benefits and working conditions, you're going to fall behind and you'll have more offers rejected.

 

The battle for Female Talent

This has been a developing trend for a while now but has particularly gathered pace in the last 12-18 months. Many of my clients have spoken about the desire to bring more female talent into their teams, with many having targets of between 25% and 35%. There is a catch though, in an industry where women make up only 15% of the candidate market, not everyone can hit a target of 25%. This is a classic case of supply far outweighing demand. This sends the price higher (fantastic if you are a female engineer).

I love that women in the industry are being rewarded with opportunities, and I believe the impact they can have on your business is enormous. However, the numbers don't lie. They tell us there will be constraints, and employers will need to be realistic. There are of course actions you can take to help your cause and give you an edge over your competitors, but to expect that you will be able to push your numbers above 25% without significant time, effort, and money invested is unrealistic.

Employers, and the industry as a whole, need to look at the big picture and the long term solutions. One of these is getting into schools and encouraging more girls to study and choose careers in STEM. If we are serious about improving the gender balance in the industry, we need to be looking at the source and increasing the number of women entering the system.

Otherwise, you'll all still be fighting over 15% in five years.

I am currently working on an article particularly focused on the topic of Women in Engineering and Construction which will be released in the coming weeks.

 

Salaries

It's probably no surprise that salaries are on the rise. It has been this way since 2016 though salaries have been reasonably steady since mid-2018 with contractors being able to hold firm on their salary benchmarking. However, this may be set to change as the competition to secure A-Grade talent increases with the amount of infrastructure work in the market. The movement in salaries has so far come in jumps rather than as a steady increase, following the award of major projects. Something we have recently seen quite a bit of. If the trend continues, I believe we will see another jump in the coming months as the latest round of major projects ramp up and begin to build their teams. 

 

No doubt we're set for an interesting year ahead! Please feel free to get in touch if you want to have a chat about all things recruitment, resourcing, salaries, and talent attraction and acquisition.