AUSTRALIAN INFRASTRUCTURE METRIC

Transcription

1 AUSTRALIAN INFRASTRUCTURE METRIC December Quarter 216 The IPA/BIS Oxford Economics Australian Infrastructure Metric (the Metric) is the leading indicator of real investment in Australia s civil infrastructure. Key highlights for the quarter include: Total construction work won has risen after weak results in the September 216 quarter, to a level just 1.5 per cent below the long-run trend The December 216 quarter saw civil construction activity strengthen significantly following the subdued performance in the September 216 quarter, driven by solid transport and utilities work won, as both sectors surged above their respective long-run trends. Figure 1 December Quarter Work Won Trends September 216 Quarter Index Value December 216 Quarter Index Value While the December 216 quarter saw the Australian Infrastructure Metric headline result boosted by investment in roads, telecommunications and water infrastructure, mining work won continued along its low and flat trajectory. This is further evidence of the emergent trend of non-mining investment buoying civil infrastructure investment in Australia, as construction activity continues to shift from the mines into the major cities. Per cent change (four quarter rolling average) December quarter vs long-run average Mining related investment remains very low at 94 per cent below the long-run average Non-mining investment rose significantly in the December 216 quarter, due to considerably higher levels of both transport and utilities work won Total Civil % 1.5% Mining % 93.9% Non-Mining % 34.% Transport % 35.3% Utilities % 53.% Non-mining work done is forecast to increase by $315 million over FY216/17 and $4.7 billion over FY217/18. It is forecast to retreat slightly over FY218/19 by $339 million. 1 Australian Infrastructure Metric December Quarter 216

2 AGGREGATE TRENDS Figure 2 Total Civil Work Won Index September 216 Quarter Index Value December 216 Quarter Index Value Per cent change (quarter on quarter) Per cent change (four quarter rolling average) December quarter vs long-run average Total Civil % 2.1% 1.5% The December quarter saw the headline work won index rise sharply to 87.6 compared to the weak result in the September quarter; Total civil work won is now just 1.5 per cent below the long run trend (see Figure 2); and The four quarter rolling average saw a small increase of 2.1 per cent, with the Metric alternating between high and low levels of work won over the past five quarters (see Figure 3). ABS data shows both civil construction commencements and civil work done rising dramatically from a weak base through the 2s (see Figure 3), as both the public and private sectors funded major transport and utilities initiatives. The mining boom also saw the development of new rail and port infrastructure to handle the rapid increase in mining capacity. Since 211, total civil commencements have been on a declining trend. Resources-related commencements continued to rise, but were partly offset by tightening public sector funding for new infrastructure (following a large GFC-related stimulus), a lack of new Public Private Partnership (PPP) style projects and, from 212, a sharp fall in non-lng mining-related infrastructure as the capital phase of the mining boom ended. Civil work done has remained at high but declining levels, as existing projects are progressed and move to completion. However, the large gap that opened up between work done and (much lower) commencements over 211 has begun to narrow (see Figure 3), which suggests the declining trend will begin to moderate as non-mining investment begins to recover. Data for the Australian Infrastructure Metric, which surveys actual work won by civil contractors, has been collected since the March 21 quarter (index value 1). This data exhibits a similar spike in growth over FY21/11, and trend decline since FY211/12 in later years driven by the collapse in mining investment. FY214/15 represented the worst financial year for total work won as recorded by the Metric, with a four quarter reading of 66.8 (around 22.8 per cent below the long-run average reading of 86.4) (see Figure 4). But the FY214/15 result masked an emerging recovery in non-mining sectors, with the non-mining index moving above the long-run trend. This twin speed investment outlook continued over FY215/16 with strengthening non-mining investment offsetting low mining investment. This included the high level of major civil infrastructure projects won for roads & bridges and railways, such as Capital Metro which was signed in the June 216 quarter. The December quarter headline figure of 87.6 is a significant increase on the September quarter figure of Civil construction activity has been volatile over the last five quarters, however, the four quarter index has risen slightly to 58.3 from 57.1 last quarter. Work won for the non-mining sector over FY216/17 (year to date) is 11 percentage points below the long-run trend, however mining sector activity remains well below its long-run average, as seen in Figure 5. The total work won reading indicates that the December 216 quarter civil commencements will be between $14.5 billion and $18.5 billion (see Figure 3). 2 Australian Infrastructure Metric December Quarter 216

3 Figure 3 All Civil Work Won, Commencements and Work Done $ BILLION 65 INDEX Jun 4 Dec 4 Jun 5 Dec 5 Jun 6 Dec 6 Jun 7 Dec Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 IPA/BIS Oxford Economics Work Won Metric All Civil (RHS) Total Work Done by Quarter (ABS Data) (LHS) Total Commencements by Quarter (ABS Data) (LHS) IPA/BIS Oxford Economics Work Done Forecast 216/17 (quarterly average) All Civil (LHS) IPA/BIS Oxford Economics Work Done Forecast 217/18 (quarterly average) All Civil (LHS) IPA/BIS Oxford Economics Work Done Forecast 218/19 (quarterly average) All Civil (LHS) Figure 4 Average Work Won Index, FY21/11 to FY216/17 YTD Total Civil Mining Non-Mining Non-Mining Average (91.5) 8 Total Civil Average (86.4) Mining Average (74.6) FY21/11 FY211/12 FY212/13 FY213/14 FY214/15 FY215/16 FY 216/17 YTD 3 Australian Infrastructure Metric December Quarter 216

4 MINING 1 Figure 5 Mining Work Won Index September 216 Quarter Index Value December 216 Quarter Index Value Per cent change (quarter on quarter) Per cent change (four quarter rolling average) December quarter vs long-run average Mining % 15.1% 93.9% Similar to previous quarters, the mining sector recorded tiny levels of investment in the December quarter; While the four quarter rolling average increased as small contracts were signed, the sector remains significantly below long-run trends; and Mining work won is still expected to keep mining and heavy industry commencements at low levels. As such, mining work done is forecast to decline to pre-mining investment boom levels by FY217/18 (see Figure 6). Mining was once the largest single category of civil construction, representing circa 46 per cent of total work done ($58.7 billion in FY212/13). Both ABS civil commencements and ABS civil work done in this construction segment boomed during the 2s, and again after the GFC with several large LNG projects and a burst of new investment in coal and iron ore mining. However, since FY211/12, the value of mining commencements while highly volatile has been on a declining trend. Lower levels of commencements relative to existing levels of work done suggest that a sharp fall is a prospect for mining-related work done over FY215/16, FY216/17 and FY217/18. The Metric shows work won in mining peaked in FY211/12, after which it has been volatile around a general downward trend. This volatility was evident in FY213/14, with mining work won reaching high levels in the first half of the year. FY214/15 saw new mining work won collapse to zero for much of the period since December 214, with a tiny spike in activity in the September 216 and December 216 quarters. This recent activity in the past two quarters brings the four quarter index up by 15.1 per cent. The work won reading for mining indicates commencements will be in the $3 billion to $5 billion range for the December 216 quarter (see Figure 6). 1. This includes the construction of mines, refineries, smelters, chemical processing plants, materials handling and storage facilities, oil refineries and platforms, blast furnaces, steel mills and other heavy industrial facilities. 4 Australian Infrastructure Metric December Quarter 216

5 Figure 6 Mining Work Won, Commencements and Work Done $ BILLION INDEX Jun 4 Dec 4 Jun 5 Dec 5 Jun 6 Dec 6 Jun 7 Dec 7 Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 IPA/BIS Oxford Economics Work Won Metric Mining (RHS) Mining & Heavy Industry Work Done by Quarter (ABS Data) (LHS) Mining & Heavy Industry Commencements by Quarter (ABS Data) (LHS) IPA/BIS Oxford Economics Work Done Forecast 216/17 (quarterly average) Mining & Heavy Industry (LHS) IPA/BIS Oxford Economics Work Done Forecast 217/18 (quarterly average) Mining & Heavy Industry (LHS) IPA/BIS Oxford Economics Work Done Forecast 218/19 (quarterly average) Mining & Heavy Industry (LHS) 5 Australian Infrastructure Metric December Quarter 216

6 NON-MINING 2 Figure 7 Non-Mining Work Won Index September 216 Quarter Index Value December 216 Quarter Index Value Per cent change (quarter on quarter) Per cent change (four quarter rolling average) December quarter vs long-run average Non-Mining % 1.5% 34.% Transport %.9% 35.3% Utilities % 37.2% 53.% The December 216 quarter saw non-mining work won return to high levels of 123, following the low of 35.3 in the September quarter, some 34 per cent above the long-run trend (Figure 7); and The non-mining four quarter rolling average increased 1.5 per cent. Non-mining construction is traditionally the largest component of engineering construction; representing circa 51 per cent (circa $64 billion) of work done in FY213/14. During the 2s, investment in nonmining infrastructure boomed, driven by both public and private investment. However, since the December 21 quarter, the Metric has shown work won outside of mining and heavy industry to be on a declining trend. This was driven by tightening public investment initially, but has been joined by falling miningrelated investment, such as associated rail and port infrastructure. While volatile quarter to quarter, the nonmining work won index fell progressively from FY21/11 to FY212/13. From an average index reading of in FY21/11, non-mining work won fell to a series low of 71.4 in FY212/13 (see Figure 4). This low level of investment was sustained over the course of FY213/14, which saw an average reading of This downward trend in work won corresponds with a fall in commencements (as measured by the ABS) from mid-211, and indicates further declines in future construction activity. However, from FY213/14 nonmining work won saw a slight improvement, with this investment recovery accelerating in FY214/15, culminating in an extremely strong June 215 quarter result. While robust, the September 215 and December 215 quarters declined off the back of the very strong June 215 quarter (see Figure 8). Investment in the non-mining sector has become the main driver of the headline Metric result with the collapse in mining investment since 215, as the volatility in the headline result over the past five quarters mirrors the activity in the non-mining sector. For instance the high headline reading in December 216 is a consequence of large increases in investment in both transport and utilities sectors, at 35.3 and 53 per cent above their long-run averages respectively. Total non-mining work won indicates that commencements are expected to reach between $11.5 billion and $14 billion for December Non-mining and heavy industry construction includes the development of transport (roads, bridges, railways and ports), utilities (electricity, water and sewerage, gas and telecommunications) and other work (including recreation and site clearing). While not including the direct construction of mines and heavy industry facilities, this category of work still includes the development of mining-related infrastructure, such as railways, ports and gas pipelines. 6 Australian Infrastructure Metric December Quarter 216

7 Figure 8 Non-Mining Work Won, Commencements and Work Done $ BILLION INDEX Jun 4 Dec 4 Jun 5 Dec 5 Jun 6 Dec 6 Jun 7 Dec 7 Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 IPA/BIS Oxford Economics Work Won Metric Non-Mining (RHS) Non-Mining Work Done by Quarter (ABS Data) (LHS) Non-Mining Commencements by Quarter (ABS Data) (LHS) IPA/BIS Oxford Economics Work Done Forecast 216/17 (quarterly average) Non-Mining (LHS) IPA/BIS Oxford Economics Work Done Forecast 217/18 (quarterly average) Non-Mining (LHS) IPA/BIS Oxford Economics Work Done Forecast 218/19 (quarterly average) Non-Mining (LHS) 7 Australian Infrastructure Metric December Quarter 216

8 TRANSPORT While volatile over the last four quarters, the transport work won index surged in December 216 from 51.9 to 139.6, a level which is 35.3 per cent higher than the long-run average (see Figure 9); and There were large increases in investment in roads & bridges and railways infrastructure, while the work won index for harbours remained at zero for the second consecutive quarter. Civil commencements and work done in the transport sector rose through the 2s, driven initially by large private sector funded projects in roads, but later by new public investments as well as mining-related projects. A large spike in commencements in the December 21 quarter was driven in part by new road infrastructure (e.g. Hunter Expressway and Pacific Highway), but mainly by new port and rail requirements for the iron ore and coal mining industries. Data from the Metric tracks movements in transport work won since March 21 (Index = 1). The Metric spiked in FY21/11, before progressively retreating over the course of FY211/12 and FY212/13. Transport work won has picked-up slightly over FY213/14 and FY214/15, a trend that continued in the September and December 215 quarters. Work won in the transport sector has been volatile for the past four quarters alternating between high and low levels of activity. The September 216 quarter saw the level of transport work won fall significantly to 51.9, from in the June quarter. However in the December 216 quarter, work won for railways and roads & bridges have again lifted the index to high levels, as the transport reading reached The recent movements in the work won index for transport suggests that commencements will be in the $6.5 billion to $7.5 billion range for the December 216 quarter. Figure 9 Transport Work Won, Commencements and Work Done $ BILLION INDEX Jun 4 Dec 4 Jun 5 Dec 5 Jun 6 Dec 6 Jun 7 Dec 7 Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 IPA/BIS Oxford Economics Work Won Metric Transport (RHS) Transport Work Done by Quarter (ABS Data) (LHS) Transport Commencements by Quarter (ABS Data) (LHS) IPA/BIS Oxford Economics Work Done Forecast 216/17 (quarterly average) Transport (LHS) IPA/BIS Oxford Economics Work Done Forecast 217/18 (quarterly average) Transport (LHS) IPA/BIS Oxford Economics Work Done Forecast 218/19 (quarterly average) Transport (LHS) 8 Australian Infrastructure Metric December Quarter 216

9 Sub-Categories An analysis of transport subcategories shows that movements in the roads & bridges sector tends to dominate the overall transport reading, followed by railways and harbours. Much lower measures of work won for roads over FY211/12 and FY212/13 saw the headline transport reading trend downwards through this period, despite a large cycle of harbours and railways investment being largely maintained at 21 highs as shown in Figure 1. The December 216 quarter reading for the transport sector saw several large roads & bridges and railways projects signed including level crossing works in Victoria, the Mernda Rail Extension and works for the Northern Road Upgrade in Western Sydney. Since the start of FY213/14, investment in roads & bridges has bounced back, continuing to rise to FY215/16 which has brought the transport work won index up. The year-to-date reading (21 = 1) for roads & bridges in FY216/17 shows a fall to 46.4 as a result of the very low level of work won in the September 216 quarter. Figure 1 Transport Sub-Groups, FY21/11 to FY216/17 (Four Quarter Average Index) 2 Roads Rail Harbours FY21/11 FY211/12 FY212/13 FY213/14 FY214/15 FY215/16 FY216/17 YTD 9 Australian Infrastructure Metric December Quarter 216

10 UTILITIES 3 The utilities work won index surged in the December 216 quarter to a reading of 94.2, following three consecutive quarters of very low activity (see Figure 11); There were significant increases in investment in telecommunications and water infrastructure to bring the December 216 quarter result 53 per cent higher than the long-run average; and The four quarter rolling average index for utilities increased more than 37 per cent to 32.8, from 23.9 in the September 216 quarter with this quarter seeing a larger spike in work won compared to the December 215 quarter (see Figure 7). ABS commencements and work done in utilities sectors exhibited a rising trend through the 2s, driven by upgrades and capacity expansions across the electricity network as well as a number of drought-busting water infrastructure initiatives, including the construction of desalination plants in most Australian capitals. Between 29 and 213 the development of large LNG projects in Queensland (involving the construction of gas pipelines) also drove a significant burst of work. More recently, the completion of these projects along with the breaking of drought conditions and the end of a long-run phase of electricity investment has seen commencements start to trend downwards, with commencements now well below current levels of work done. While the Metric shows high readings for work won through FY21/11, FY211/12 and FY212/13, utilities work won fell over FY213/14, before picking up over the final quarter of FY214/15 (see Figure 11). While strong in the first quarter of FY215/16, utilities work won softened over the first three quarters of 216, largely due to the drop NBN related investment. The large spike in December 216 reflected the deployment of Fibre-to-the-Curb technology in the NBN project, and various renewable energy generation and wastewater projects across Australia. This still left the four quarter reading for work won over the calendar year at 34.6 compared to 81.2 for 215. The level of utilities work won indicates that commencements for this sector for the December 216 quarter will be between $5 billion and $6 billion. Sub-Categories An analysis of work won trends in the utilities sub-categories shows that telecommunications and sewerage infrastructure is growing compared to the energy sector. As shown in Figure 12, there has broadly been a downward trend in work won in pipelines, water and electricity infrastructure between FY21/11 to FY215/16. This pattern of activity in the utilities largely continued in the first quarter of FY216/17, with no work won in the electricity and pipelines categories and the low level of telecommunications and sewerage work won resulting in the overall utilities index falling to one of the lowest readings since the index began. The December 216 quarter has seen a recovery in work won for telecommunications and sewerage categories while the water sector also recorded significant infrastructure investment. 3. Utilities includes electricity, water, sewerage, telecommunications and gas pipelines, servicing both the mining and non-mining sectors of the economy. 1 Australian Infrastructure Metric December Quarter 216

11 Figure 11 Utilities Work Won, Commencements and Work Done $ BILLION INDEX Jun 4 Dec 4 Jun 5 Dec 5 Jun 6 Dec 6 Jun 7 Dec 7 Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 IPA/BIS Oxford Economics Work Won Metric Utilities (RHS) Utilities Work Done by Quarter (ABS Data) (LHS) Utilities Commencements by Quarter (ABS Data) (LHS) IPA/BIS Oxford Economics Work Done Forecast 216/17 (quarterly average) Utilities (LHS) IPA/BIS Oxford Economics Work Done Forecast 217/18 (quarterly average) Utilities (LHS) IPA/BIS Oxford Economics Work Done Forecast 218/19 (quarterly average) Utilities (LHS) Figure 12 Utilities Sub-Groups Work Won, FY21/11 to FY216/17 (Four Quarter Average Index) 6 Electricity Water Sewerage Telecomms Gas Pipelines FY21/11 FY211/12 FY212/13 FY213/14 FY214/15 FY215/16 FY216/17 YTD 11 Australian Infrastructure Metric December Quarter 216

12 WORK DONE FORECASTS Measuring the work won by civil contractors provides an important indicator of future trends in civil work done (activity) as measured by the Australian Bureau of Statistics (ABS). 4 While non-mining and particularly transport work won has improved to above long-run trends, this increased investment is unlikely to be sufficient to fully offset the retreat in mining (see Figure 1). In particular, BIS Oxford Economics forecasts: Total civil work done is estimated to fall $13.4 billion over FY216/17, and decrease by $3.9 billion over 217/18, while FY218/19 work done is forecast to fall by $4.8 billion (see Figure 13) Non-mining work done is expected to increase by $315 million over FY216/17, with transport work won expected to surge by $2.9 billion, offsetting a decrease of $1.9 billion from the utilities sector In this context, BIS Oxford Economics forecasts falling levels of total construction work done continuing into FY216/17, as well as a sizeable decline in civil work over FY217/18 (see Figure 2). Despite the forecast retreat, the decline in work done has begun to moderate as the gap between commencements and work done begins to close (see Figure 14). An analysis of the data also shows that the mining sector s share of total civil work done is expected to decline from about 5 per cent during FY213/14 to less than 25 per cent by FY218/19. In contrast, the share of utilities and transport work done is expected to continue growing to 7 per cent by FY218/19 (see Figure 15). Mining is expected to see the biggest retreat of any sector, with work done estimated to fall $13.7 billion in FY216/17 compared to the previous financial year The annual change in total civil construction work is expected to remain negative over FY216/17 to FY 218/19, but fall at a slower rate as the impacts of the mining slowdown eases and nonmining sector activity grows. Total civil construction work won is expected to fall by $4.8 billion over FY218/19 4. Note Due to a range of factors, such as the time between a contract being signed and work commencing, direct comparisons of work won, as measured by the Metric, and work done, as measured by the Australian Bureau of Statistics (ABS), should be avoided. Rather, trends in work won, as well as trends in work commenced (as measured by the ABS) provide a guide as to future work done levels. 12 Australian Infrastructure Metric December Quarter 216

13 Figure 13 Forecast ABS Work Done, Change from FY216/17 to FY218/19 ($ Million) Total Civil Mining 215/16 to 216/17 216/17 to 217/18 217/18 to 218/19 (Source: BIS Oxford Economics/ABS data) Non-Mining Utilities Transport -15, -1, -5, 5, 1, Figure 14 ABS Work Done and ABS Civil Commencements ($ Million) 6, 5, Work done and civil commencements begin to de-couple 4, Gap begins to widen Gap begins to narrow 3, 2, 1, Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec18 Jun 19 Total Civil Work Done Total Civil Construction Commencements Total Civil Work Done Forecast Figure 15 ABS Civil Work Done by Sector ($ Million) 4, 35, Transport Utilities Other Heavy mining and industry 3, 25, 2, 15, 1, 5, Jun 4 Dec 4 Jun 5 Dec 5 Jun 6 Dec 6 Jun 7 Dec 7 Jun 8 Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun Australian Infrastructure Metric December Quarter 216

14 PROCUREMENT TRENDS TheIPA/BIS Oxford Economics Australian Infrastructure Metric also collects data on the type of contracts being used for surveyed projects. Sector Wide Across all civil segments over the past four quarters, 6.8 per cent of surveyed projects have been procured through Construct Only contracts, while Design and Construct contracts account for 33.4 per cent. 4.2 per cent have been Other-type contracts (primarily managing contractor or schedule of rates), with Alliance and Public Private Partnership (PPP) contracts accounting for 1.2 and.3 per cent respectively (see Figure 16). In terms of total value of contracts signed over the past four quarters, 58.4 per cent can be attributed to Design and Construct contracts, while 26.6 per cent is accounted for by Construct Only contracts. Other-type contracts capture 8.8 per cent of total value, while PPPs account for 2.7 per cent, and Alliance contracts represent 3.4 per cent of contract values (see Figure 17). Figure 16 All Projects Procurement Type: Four Quarter Total by Volume Design and Construct (D&C) Construct only (lump sum/fixed price) Alliance PPP Other Figure 17 All Projects Procurement Type: Four Quarter Total by Value Design and Construct (D&C) Construct only (lump sum/fixed price) Alliance PPP Other 14 Australian Infrastructure Metric December Quarter 216

15 Transport Over the past four quarters, 7.3 per cent of all transport projects surveyed have been procured through Construct Only types of contracts, while Design and Construct contracts represent 27.4 per cent. 1.4 per cent have been Other-type contracts (predominantly managing contractor) and.5 per cent can be attributed to PPP and Alliancetype contracts (see Figure 18) Meanwhile, Design and Construct contracts represent the largest total value of transport contracts signed over the last four quarters with 65.4 per cent. Construct Only contracts represent 24.9 per cent of total value. PPP and Other-type contracts capture 3.7 and 3.4 per cent respectively, while Alliance contracts capture 2.6 per cent of value (see Figure 19). Figure 18 Transport Procurement Type: Four Quarter Total by Volume Design and Construct (D&C) Construct only (lump sum/fixed price) Alliance PPP Other Figure 19 Transport Procurement Type: Four Quarter Total by Value Design and Construct (D&C) Construct only (lump sum/fixed price) Alliance PPP Other Utilities Over the past four quarters, Design and Construct-type contracts accounted for 54.4 per cent out of all utilities projects procured. Construct Only contracts represented 33.8 per cent of contracts signed, while Other-type contracts (predominantly schedule of rates) accounted for 7.4 per cent. No PPP-type projects accounted were signed, while Alliance contracts had 4.4 per cent of the share (see Figure 2). In terms of total value of contracts signed, 14 per cent can be attributed to Construct Only-type contracts. Design and Construct contracts captured 66.2 per cent of the total value, while Othertype contracts accounted for 1.1 per cent (see Figure 21). No PPP contracts were signed, while Alliance contracts accounted for 9.7 per cent of the total contract value in the utilities sector over the last four quarters. Figure 2 Utilities Procurement Type: Four Quarter Total by Volume Design and Construct (D&C) Construct only (lump sum/fixed price) Alliance PPP Other Figure 21 Utilities Procurement Type: Four Quarter Total by Value Design and Construct (D&C) Construct only (lump sum/fixed price) Alliance PPP Other 15 Australian Infrastructure Metric December Quarter 216

16 Work Won Survey (METRIC) - Quarter Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Roads and Bridges Railways Harbours Total Transport Electricity Water Sewerage , , Telecommunications ,71.5 Gas Pipelines , , , Total Utilities Electricity and Gas Pipelines Total Mining Total Civil Construction Total Non-Mining Work Won Survey (METRIC) - 4 Quarter Average - 21=1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Roads and Bridges n/a n/a n/a Railways n/a n/a n/a Harbours n/a n/a n/a Total Transport n/a n/a n/a Electricity n/a n/a n/a Water n/a n/a n/a Sewerage n/a n/a n/a Telecommunications n/a n/a n/a Gas Pipelines n/a n/a n/a Total Utilities n/a n/a n/a Electricity and Gas Pipelines n/a n/a n/a Total Mining n/a n/a n/a Total Civil Construction n/a n/a n/a Total Non-Mining n/a n/a n/a Australian Infrastructure Metric December Quarter 216

17 Work Won Survey (METRIC) - Quarter Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Roads and Bridges Railways Harbours Total Transport Electricity Water Sewerage 1, , Telecommunications , , Gas Pipelines , , Total Utilities Electricity and Gas Pipelines Total Mining Total Civil Construction Total Non-Mining Work Won Survey (METRIC) - 4 Quarter Average - 21=1 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Roads and Bridges Railways Harbours Total Transport Electricity Water Sewerage Telecommunications Gas Pipelines Total Utilities Electricity and Gas Pipelines Total Mining Total Civil Construction Total Non-Mining Australian Infrastructure Metric December Quarter 216

18 ABOUT The IPA/BIS Oxford Economics Australian Infrastructure Metric (the Metric) is a major research initiative produced by Infrastructure Partnerships Australia (IPA), in collaboration with business research and forecasting firm, BIS Oxford Economics and Australia s major civil contractors. The Metric captures circa 3 per cent of private construction activity each quarter, using this data to model the work won (contracts signed) each quarter and forecasting construction activity levels across the coming years. The Metric provides a robust leading indicator of the strength and direction of the civil construction sector in Australia, increasing community, investor and sponsor certainty about the progress in addressing Australia s infrastructure deficit. Close to 2 of Australia s largest civil construction companies are participating in this quarterly study. By capturing a substantial sample of the work won by these companies each quarter, the Metric provides a timely indicator of civil construction activity across: Total civil infrastructure investment; Civil infrastructure excluding direct mining and heavy industry construction; Transport infrastructure; and Utilities infrastructure. The Metric also captures the contracting arrangements that are being employed to deliver Australia s infrastructure, allowing for an objective measurement of procurement trends over time. This Metric edition covers the December 216 quarter; with the March 217 quarter due to be published in April 217. MARKET SHARE The Metric is presently capturing around 25 per cent of total civil engineering construction work commenced each quarter, and an average of 3 per cent of total private contract engineering construction (see Figure 21). The sample size varies considerably between sectors and sub-sectors, with the sample size for the transport and mining sectors far outweighing the utilities sector. Figure 21 Data Set Market Share Sector Total Civil Commencements Total Private Contract Civil Commencements Transport Utilities Mining 3 27 All sectors CONTACTS Media: For all media enquiries please contact Sarah Dagg from Infrastructure Partnerships Australia on (2) or sarah.dagg@infrastructure.org.au Research: For further information on the research methodology please contact Gavin Chan from Infrastructure Partnerships Australia on (2) or gavin.chan@infrastructure.org.au Other: BIS Oxford Economics forecasts for civil construction work done appearing in this report are sourced from: Engineering Construction in Australia ; Mining and Heavy Industry Construction in Australia 214 to 228, Road Construction in Australia 213 to 228 For more information on BIS Oxford Economics civil construction forecasts please contact Adrian Hart on (2) or ahart@bis.com.au