News of Cost Blowouts & Labour Shortages

This morning’s news headlines call out the cost blowouts and labour shortages being faced by the building industry at present. It’s not new news, but it is important to anyone considering a project involving construction or interior fitout in the coming months.

According to InDaily, the housing industry is most heavily impacted, however the rise in cost of labour and materials is being seen across the board at rates of up to 25%. Infrastructure Australia have released market capacity work where they interviewed industry on cost escalations. Industry feedback was that non-labour inputs increased 24%pa and labour inputs increased 17%pa. According to their report, which aims to capture a forecast for the next 3 years, the greatest demand for labour forces will be in the finishing trades (painters, cabinetry, tiling, etc.) and structures and earthworks contractors where the demand is predicted to rise by up to 140%. While pressure on materials is predicted to rise by 150% for steel and up to 240% for rock and bluestone.

What does that mean for your project, and how do you make decisions moving forward? Here’s our suggestions:

  1. Assume your project will take longer and cost more that you thought. But that doesnt mean it’s not worth doing. Balance up what you will gain, what new customers you will attract, who you might lose if you don’t undertake the work.
  2. Get professional cost advice from an Architect or Quantity Surveyor. Speculative advice may be misleading. And give yourself a healthy buffer or contingency for unforseen items that can blow out project costs.
  3. Use that knowledge to update your business plan or project payback calculations with your business advisors.
  4. Take advantage of your Architect or Designer’s knowledge and go through a value management exercise.
  5. Be prepared to re-assess what will add value.
  6. Consider whether breaking the project up over a few stages is appropriate.
  7. Understand that pressure on resources may stabilise, but it is unlikely that labour and materials costs will reduce significantly in the future.
  8. Pre-plan a ‘big picture’ strategy so you dont waste money on things that have to be changed later.

We know it’s a difficult time, and we’re always happy to chat. Give us a call and let’s just start with a coffee.


For most tourism businesses, working on your buildings and grounds is a big deal. There is a lot of money and time at stake and can be difficult to know where to start. So let’s just start with a coffee.