The report published by Australian Constructors Association " All Risk No Reward — Fixing the Building Industry's Profitless Boom" (July 2023) provides insights and proposes practical measures to tackle the concerning financial state of the industry. It draws attention to the rate at which construction companies are entering administration, the decline in profit margins and the growing issues related to liquidity. The report raises concerns regarding the adversarial culture and short-term focus within the sector and identifies the traditional reliance on fixed-price contracts as a key contributor to the sector’s instability.

In terms of addressing the market failure in the building industry the report outlines the paradigm shift required. 

‘Fundamentally, maximising the chances of win-win outcome on a building project requires that contracting becomes far more relational than transaction. Building is not a spot-marketing transaction; it is an ongoing process of interaction between parties throughout delivery; a relationship’. 
 
Key principle reforms proposed for success include:
- Involving the contractor in the design process at the earliest opportunity 
- Do not set a formal cost at the start – commission a fee for service basis 
- Incentivise collaborative out-performance – painshare/gainshare models to drive commercially viable outcomes for all parties  

The report highlights the importance of government involvement in leading the way toward a more profitable construction industry.  As an organisation deeply committed to sustainability, innovation and progress within the construction industry, NAWIC supports the proposals put forth in the report and welcomes further exploration on how these changes can be enacted 

For further information,

View the report in full here.

+ Practice Standards

+ Regulatory Impacts

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