The construction sector in Australia has faced huge challenges over the last year. Although the market accounts for 10 per cent of Australia’s GDP, there has been a slew of collapses in the latter half of 2023, with 1,400 construction firms going insolvent.
The rising costs and limited supply of key materials, and the shortage of labour to meet increasing demand of new construction projects, are squeezing already tight margins. Given this, construction firms, especially those responsible for large infrastructure and energy projects, are having to drive more efficiency and cost reductions in their operations to fulfil contracts, and most importantly, survive.
Resourcing pressures
One of the ways developers, contractors – and other entities responsible for the delivery of construction or infrastructure projects – have been looking to drive financial security and profits is by improving the resourcing of construction and commercial consultants.
In any large project there is a massive contract administration burden on the contractor team. These projects are complex to design and function in practice, because they need to satisfy different parties’ interests. From a resourcing perspective, it requires a well-planned process to appoint commercial professionals who understand the complexities of large infrastructure projects and provide added expertise at each stage of the project lifecycle.
It’s common for contracts to begin without the right expertise in sufficient numbers to satisfy its requirements. Yet having enough highly-skilled commercial professionals is essential to the delivery of a project.
So often construction and commercial consultants are resourced in the industry through word of mouth and professional endorsements, but this can be an unreliable and costly process, especially when contractors need to fill sometimes hundreds of vacancies, and quickly too.
This has been felt all too keenly recently – there have been huge shortages in those specialising in trades as well as labourers, but at the end of 2023, Infrastructure Australia’s CEO Adam Copp, said that white-collar jobs made up the largest worker shortages in the industry.
This is creating a pressure-cooker environment for contractors and developers, who are needing commercial directors, contractor administrators, contract managers, project managers, logistics coordinators, town planners, quantity surveyors, claims specialists and costs planning experts, as well as other highly experienced professionals in project delivery.
Solutions
There’s been an increased appetite to use flexible resourcing models to resolve these issues. This is where firms provide a panel of construction and commercial consultants that are readily available and can parachute in to a project at any stage, providing certainty and quick resolution for resourcing issues. More professionals are starting to join these panels, due to the reliability of work, brand kudos, and the ability to have more flexibility, security and autonomy over the projects they’re involved in.
These models allow contractors to manage workloads effectively, being able to plug resource gaps in response to demand fluctuations without long-term commitments. This can drive greater cost efficiencies, improved project management, as well as greater value in delivery – at Vario we on-board construction and commercial consultants who are technically strong professionals and communicative, resilient, and flexible. These individuals are adaptable, who can build relationships quickly and jump straight into doing mode, whatever stage of the project lifecycle they join, whether that be engineering, procurement, construction, and commercial and technical management.
But why are law firms like ours providing these flexible resourcing panels? Construction clients have long relied on their lawyers to manage contractual relationships; the liabilities throughout a project lifecycle; and to step in when disputes arise. Lawyers know the issues in commercial teams which risk the profitability of a construction project. Strong relationships are built between commercial executives and their lawyers due to the complex regulatory environment and increased potential for disputes.
Commercial executives are therefore forthcoming with their lawyers about their commercial operative needs, coming from concerns that legal issues could arise from poor resourcing. Large and experienced construction law teams, like ours, tend to have good connections with the professionals’ executives need due to a wide clientbase.
Becoming more resilient
Engaging with firms who offer flexible resourcing models for construction and commercial professionals can minimise risks, costs and drive greater value, particularly in this challenging construction market. Ensuring complex infrastructure projects have the right people and expertise are essential to delivery. An on-hand flexible service to resource quality construction and commercial specialists can ensure efficiency, value and compliance is delivered throughout a project’s lifecycle. This can help contractors be more resilient during this difficult period for the industry.