Queensland Report on Construction Productivity

 More recommendations and reform directions focused on regulation and planning

 

 

The Queensland Productivity Commission (QPC) released their interim report on Opportunities to Improve Productivity of the Construction Industry on 31^st July. Construction productivity has recently been the subject of two other reports, with this one following the NSW Productivity and Equality Commission report Housing Supply Challenges and Policy Options in August 2024 and the Productivity Commission report Housing Construction Productivity: Can We Fix It? in February 2025. 

 

The motivating force behind the three reports is a political requirement to be seen to be doing something to address the housing crisis, which is fundamentally due to a mismatch between a long-term lack of supply of new dwellings and the high level of demand, driven by a combination of increased immigration and decreased household size. The result has been rising house prices, falling affordability, particularly for first home buyers, increased rents and very low vacancy rates. Another factor is the high level of engineering construction, due to the size and number of transport and energy projects, many of which are for the public sector. Queensland also has the effects of additional demand from the 2032 Olympic Games projects, currently estimated at $7 billion (which based on other Olympic Games will be much more).

 

The QPC report says ‘While many problems were identified, stakeholders were generally confident that better outcomes are possible. There is broad agreement amongst stakeholders, for many of the solutions identified, on how to address the problems facing the industry.’ Unfortunately, some 342 pages later, most of the problems discussed are about regulation and planning, onsite construction productivity barely gets a mention, there is no evidence stakeholders are in agreement on solutions and more information is requested for the recommendations, and how the problems will be addressed is not included because ‘Implementation issues, including prioritisation and sequencing, are not considered in this interim report but will be considered in the final report.’

 

This post starts with the QPC interim report’s terms of reference and Queensland construction productivity, then looks at the recommendations and reform directions in the report. Some of the report’s  key points on planning and approvals and regulation are covered, and other important industry issues and opportunities not addressed in the report are discussed. 

 

The Terms of Reference Were Extremely Broad

 

To understand how complex the issues surrounding  construction productivity are and why this report (and the others) are so unsatisfactory it is necessary to start with the terms of reference given to the QPC (heavily edited to key points) :

 

•        Conditions in Queensland’s housing market, residential development, and non-residential construction, including housing supply and affordability;

•        Key trends including input costs, prices, competition, and supply chain developments;

•        Factors shaping Queensland’s productivity including legislation and regulation, industrial relations, procurement policies and labour force needs;

•        Opportunities for improvement including regulatory and non-regulatory mechanisms;

•        Priority areas for reform in the short, medium and long term (including labour, skills and competition, suitability and availability of qualified head contractors and sub-contractors etc.);

•        Impact on small and medium scale subcontractors in regional areas and their ability to compete for government tenders due to regulatory requirements;

•        Availability of labour, skills development, and matching supply with demand;

•        How government procurement and contracting arrangements affect construction productivity, including Best Practice Industry Conditions (BPICs are wages and conditions on public projects introduced to encourage enlistment of workers);

•        Barriers to entry, investment and innovation in the sector.

 

Including issues around government procurement and contracting allowed the QPC to address some important productivity determinants that were not in the other recent reports. However, the problem is the breadth of these terms of reference, and the loose or long-term relationship many of the others have with onsite construction productivity, which is what is being measured by the statistics. 

 

The QPC report, and the NSW and Productivity Commission reports that preceded it, are not really about construction productivity, which is being used as a stalking horse for the long-term lack of supply of new housing. These reports are more concerned with the complex, cumbersome and sclerotic planning and approvals process that deters, delays and prevents residential construction, and the effects of regulation and the building code.

 

Queensland Construction Productivity

 

The QPC found Queensland construction productivity is only 5 per cent higher than it was in 1994-95, compared to a 65 per cent increase in labour productivity in the market economy. As Figure 1 shows, the variation in aggregate productivity is explained by compositional changes due to the rapid growth and subsequent decline in heavy and civil engineering activity in the LNG investment boom.

 

Figure 1. Queensland productivity

 

This is also what a previous post on construction productivity in the states and territories found. In 2014 the Australian mining boom peaked with the value of work done reaching $80 billion in Queensland, mainly due to construction of three LNG plants. The pro-cyclical nature of construction productivity is clearly seen in Figure 2 as gross value added (GVA) per hour worked followed the fall in the volume of work, which declined by around 30 percent in Queensland [1].

 

Figure 2. Gross value added per hour worked and construction work done

Sources: ABS 5220, ABS 6150, ABS 8755.

 

The quotes below on the causes of slow productivity growth have been taken from the QPC report.

 

‘Although empirical evidence on the causes of slow productivity growth is incomplete, it suggests that regulation is likely to have played a key role’:

·      Evidence from the United States and New Zealand suggests restrictive land use regulation may have made it more difficult and expensive to construct housing and other buildings [2].

·      Research suggests there have been significant increases in the complexity of building regulation, which has increased overheads and construction costs.

·      Regulatory design, including regional variations, have created incentives that keep the industry fragmented and dominated by smaller firms, who are less likely to innovate and have lower productivity.

·      Where regulators have poor incentives or are underfunded, results in unnecessary delays, high administrative costs and poor oversight, which can undermine productivity.

 

‘Recent changes to the National Construction Code (NCC) have been adopted without a case being established that they would provide a net benefit to the community. Similarly, Queensland introduced its trust accounts framework without undertaking a regulatory impact assessment.’

 

‘While regulatory issues seem to be a key driver of poor performance over longer time periods, more recent productivity declines seem to have been materially impacted by policy choices relating to Queensland Government procurement.’ 

 

‘Insufficient attention has been given to how procurement practices or new projects are impacting the market. This has been exacerbated by poor project selection.’

 

‘Government procurement practices, particularly BPICs, have created unnecessary inefficiencies’

 

The Report’s Recommendations and Reform Directions

 

The preliminary recommendations are ‘specific reforms that the Commission is seeking feedback on.’ There are 21 recommendations, of which six are on planning and approvals, and four on the NCC and regulation. The recommendations are:  

 

·     Government procurement - recommendations 1, 2 and 3;

·     BPICs removal –  recommendation 4;

·     Planning and approvals – recommendations 5, 6 (infrastructure charges), 7, 8, 9, and 10;

·     Regulation –  recommendations 11 (NCC), 12 (building codes), 13 (minimum financial requirements), and 14 (trust accounts);

·     Modern methods of construction (MMC) – recommendation 15;

·     Worker health and safety – recommendations 16 and 17;

·     Workforce – recommendations 18 and 19 (occupational licensing), and 20 (mobility);

·     Utility connections - recommendation 21.

 

The reform directions are ‘areas where there is a clear case for action, but the Commission is seeking further information to support the development of specific recommendations.’ There are 12 reform directions, of which

 

·    Government selection and staging of infrastructure – reform direction 1;

·    The pre-qualification system – reform direction 2;

·    Re-setting industry practices and increasing competition – reform direction 3;

·    Tendering and contracting, including building information modelling (BIM) and collaborative contracts - reform direction 4;

·    Planning and zoning reform – reform directions 5, 6 (community support);

·    Review of regulations – reform directions 7 and 8 (QBCC);

·    Worker health and safety - reform direction 9;

·    Workforce - reform directions 10 (training), 11 (migration), 12 (labour hire).

 

There are also two requests for information, on the 2024 Energy Queensland Union Collective Agreement, and on foreign investor taxes and housing construction. 

 

If the aim really is to improve construction productivity, recommendations would be focused on improving project management, logistics and supply chain efficiency, increasing investment in machinery, equipment and software, contractual relations and the structure of the industry. While the recommendations on procurement are important, and with those on workforce development and industrial relations relevant to productivity, the majority of the QPC’s recommendations are on legislation, regulation, and the planning and approvals process. 

 

A comparison with the 2024 NSW Productivity and Equality Commission report Review of Housing Supply Challenges and Policy Options for NSW is useful. That report found barriers to housing supply included high construction and borrowing costs, capacity constraints in the construction sector, and bottlenecks in the development process, with over half of the 32 recommendations on planning. It recommended reforming planning to streamline the development process and reduce approval times, and reviewing planning policy because ‘prescriptive rules’ on land block innovation. Other recommendations included education and skills, business regulations and tax, improving infrastructure and transport, replacing stamp duty with a land tax, establishing an Urban Development Program to report on the housing market and a housing supply council to advise on housing targets, and incentives for local government to meet targets. It argued for non-regulatory approaches wherever possible, and avoiding excessive regulation. While there are many overlapping recommendations, this is a more ambitious agenda than the one envisaged by the QPC. 

 

The structure of the QPC Interim  Report echoes the Productivity Commission’s February report, which had five issues and seven reform directions. The PC’s issues were: the complex and slow approvals process; fragmentation due to regulation; the lack of innovation; the regulatory burden; and workforce issues. The reform directions were: coordinated and transparent planning approvals and appropriately funded regulators; review building regulations and the NCC’s objectives; implement ratings systems on new and existing building quality; increase diffusion of technology; public research and development funding; reduce regulatory impediments to MCC; and improve workforce mobility and flexibility. The PC suggested states should consider establishing coordination bodies to speed up the process and address delays such as the Queensland State Assessment and Referral Agency, which got two mentions but no discussion in the QPC report [3]. 

 

The Planner Productivity Problem

 

Over 45 pages the QPC details regulation of land use that ‘can be complex, restrictive, inconsistent across local governments, inconsistent between regulatory instruments and impose costly and unnecessary requirements’, a planning system that ‘is complex, difficult to navigate, inefficient and lacks transparency and accountability’, and approvals processes that ‘create uncertainty, have high transaction costs, require expensive or unnecessary modifications to building design or cause excessive delays.’ 

 

The QPC recommends an alternative development pathway for significant developments [4], amending the Planning Regulation, and reviewing the Building and Planning Acts. The Government should ‘investigate digital planning and permitting technologies to improve the efficiency, accuracy and transparency of the approval process.’ To ‘build community support for housing development’ the QPC suggests improved consultation, citizen panels, independent hearing panels, and negotiable conditions. To improve zoning financial incentives for local government might be used. 

 

It is universally recognised that the time and cost of development approvals is a problem, but that is an issue of planner productivity not construction productivity. Research from YIMBY Melbourne found ‘In 1986, for every practicing planner, Australia built around 54 homes. Now, we build fewer than nine homes per planner. A planner 40 years ago was on average responsible for the development of six times the number of homes per year than a planner working today.’ 

 

Figure 3. Planner productivity

Source: There is no planner supply shortage, YIMBY Melbourne Research Note. 

 

The Research Note concluded ‘The demand for planners has mainly increased not through an increase in construction output and project delivery, but through an increase in regulatory process and complexity.’ This is QPC’s reform direction 4, and addresses 

the problem that development projects such as new housing estates and apartment complexes can take ten years or more to complete, with most of the time spent getting approvals. 

 

Regulation and the NCC

 

The QPC says ‘evidence suggests that several regulations affecting the construction industry are not effective or efficient, and are likely to be reducing productivity. Building regulations are becoming more complex with increased risk they are impeding productivity. Reduced levels of attention are being paid to the costs of new regulation, with regulatory best practice not being followed.’

 

Figure 4. The Queensland building regulation system

 

 

The outcome is the QPC’s view that recent changes to NCC 2022 for liveable housing and energy efficiency have increased construction costs, and ‘regulatory impact analysis undertaken showed these benefits were unlikely to justify the costs they impose.’ The recommendation is for Queensland to opt out of NCC 2022 and ‘only adopt future NCC changes in Queensland codes where these have been through robust regulatory impact analysis to demonstrate they provide net benefits to the community.’ 

Under Reform direction 8 ‘consideration should be given to whether the regulatory framework underpinning the QBCC provides the right incentives for ongoing

improvements to regulatory performance.’

 

Modern Methods of Construction and BIM

 

There is a short chapter in the interim report on MMC, included in the section on regulation. The QPC argues there is no market failure and no reason for government intervention to promote MMC. The report makes some general observations about regulatory barriers to MMC, none of which are new, and did not endorse MMC as an alternative to conventional building. There is no discussion on the cyclical boom-bust nature of residential building, which makes industrialisation of modular and prefabricated housing difficult, the reluctance of most banks to finance modular and prefabricated houses, and the lack of standards or an industry quality assurance accreditation system for modular and prefabricated buildings. 

 

The QPC acknowledges the existence of the MMC program that QBuild and the Office of the Queensland Government Architect have, which is a partnership with 12 industry suppliers to supply housing in regional and remote areas. In 2023 QBuild established a training and production facility at Eagle Farm in Brisbane, and two more production facilities have since opened in Zillmere in north Brisbane, and Cairns in Far North Queensland. 

 

Although QBuild has the best developed MMC program in Australia that has produced over 500 houses, the QPC does not discuss or make any recommendation on the program. The QPC did not use the opportunity to report data from QBuild on MMC productivity, costs and time performance, or provide feedback from occupants on the build quality and  liveability of their houses, or from users of modular or prefabricated public buildings like schools and hospitals. 

 

Another oversight is the lack of discussion on the use of Building Information Modelling (BIM) or other digital tools like design for manufacture and assembly (DfMA). These are making offsite manufacturing of building modules and components more efficient and have been used for over a decade. At the end of the section on Contracting for Efficiency the QPC asks for information on ‘the key barriers to increased adoption of digital technologies, such as BIM, and the policies or practices that would allow the opportunities for digital technologies to be fully leveraged.’

 

Queensland has had a BIM mandate for public projects over $50 million since 2019, however the QPC does not think this worth mentioning or, worse, investigating. This was another missed opportunity to assess the costs and benefits of their BIM mandate, and the failure to recommend its retention and/or extension a mystery. Also, the BIM mandate is under the Queensland Department of State Development and Infrastructure, which has a 2024 Infrastructure and Workforce Productivity Plan with details on current and planned initiatives, The QPC does not refer to this plan or its effectiveness [5]. 

 

Industry Issues

 

There are other important industry issues not discussed, starting with construction costs and the volatility of the building cycle. Improving productivity through better project management and reform of the VET system are also overlooked. There is no discussion of digitisation and automation, digital tools and platforms, AI enhanced systems, and automated planning and code compliance checks. Also, industry contractual relationships and risk allocation are not considered. Subcontracting is flexible and a method to manage costs and risk, but direct employment has a smaller span of control and is more efficient. 

 

Although there is extensive coverage of building regulation and the NCC, the QPC does not discuss building defects and the lack of implementation of the 2018 report Building Confidence: Improving the Effectiveness of Compliance and Enforcement Systems for the Building and Construction Industry Across Australia recommendations on mandatory inspections and fire safety. Nor is the problem of flammable cladding in Queensland in the report, where from 2019 to 2023 there was a Safer Buildings Taskforce to advise the government on policies and actions and how to rectify combustible cladding. In August 2025 three public buildings still needed rectification and some unknown number have been rectified and removed from the online list on The Department of Housing and Public Works page, which says: ‘As of 31 May 2024:

·       976 private buildings require a solution to address cladding risk;

·       308 are potentially at risk and need to complete the checklist process;

·       345 have notified of removal or rectification.

 

Although the terms of reference were to look at other jurisdictions, there is no discussion of the NSW iCIRTsystem, developed by ratings agency Equifax, for assessing contractor and consultant capability and performance, despite clear evidence of the effectiveness of the system in NSW in improving building quality and addressing the problems of building defects and phoenixing by developers and contractors. Discussion of the 10 year latent defects insurance scheme that has started in NSW is also missing. 

 

Conclusion

 

The QPC has focused on regulation and planning as the main issues, but these are just two of the factors that affect onsite productivity, and arguably skills, technology and project management are more important. Also, while no-one disputes the importance of issues like costs, prices, competition, the supply chain, labour, skills, occupational licensing, procurement and contracting, these have been discussed and dissected over and over again. The QPC makes no new contribution to these issues.

 

The QPC’s 21 recommendations and seven reform directions are in four key areas. The first is improving government procurement policies, where well-known ideas on collaborative contracting, and selecting, sequencing, and sizing of public projects are recycled. These would all make the Queensland Government a better client and would probably increase productivity on public projects, but that can only have a small effect on the overall level of construction productivity in the state because most of the work done is for the private sector. The Queensland Government (and the other Australian Governments) have received these recommendations many times over the years. 

 

The second key area is improving land use regulations, including approvals and zoning, which are a third of the recommendations. The QPC does not directly address the reality that local government opposes new housing, although it does recommend an alternative development pathway for significant developments and reviewing the Building and Planning Acts. The issue here is planner productivity, which has fallen as regulatory complexity has increased, not construction productivity. Planning and zoning decisions have no effect on supply side issues such as the cost of construction materials and mortgage finance for new housing, providing the infrastructure needed for new developments, and the rate of conversion of approvals into commencements by developers.

 

The third key area is the regulation of building activity. The QPC recommends opting out of the 2022 NCC updates on building accessibility and thermal performance because of their cost effects, reviewing the regulatory framework and performance of the QBCC, and pausing rollout of trust accounts while investigating their costs and benefits. The QPC argues no government support for MMC is required, but regulatory barriers should be addressed. 

 

The fourth key area is improving labour market operation, mainly through reform of apprenticeship and training pathways, occupational licencing, skilled overseas migration, labour hire licensing, and allowing recognition of qualifications from interstate. These issues were recognised and had similar recommendations in the NSW and Productivity Commission reports. 

 

What the QPC report shows is that construction productivity in general, and residential productivity in particular, is being used as a stalking horse for the lack of supply of new housing. As in the previous reports from the NSW Productivity and Equality Commission and the Productivity Commission, the main focus is on a sclerotic planning and approvals process that delays and often prevents new housing. The real issue there is local government opposition to new housing and planner productivity, not construction productivity. 

 

Houses are larger and apartments smaller than a few decades ago, but how they are procured and built, and what they are made of, has not substantially changed in decades. Fundamentally, that is also why the level of productivity has not changed. While there are more electrical appliances and offsite manufacturing of trusses, windows, doors and cabinetry, the building structure and services like electricity, water and plumbing in a 1960s dwelling are those found in a new build today.

 

Construction in general and housing in particular has a well-established system of production that is efficient and flexible. It will only change if and when there is a clearly superior method of delivery that is also profitable. Tinkering with regulations, the NCC, planning and approvals processes, and occupational licensing might make a difference at the margin, but will not deliver the big improvement in productivity that is required. For that a commitment to increased digitisation and automation is necessary, with government policies, procurement and finance aligned. 

 

There are some glaring omissions in the report. The QBuild MMC has produced over 500 houses, but the QPC does not discuss or make any recommendation on the program. Queensland has had a BIM mandate for public projects over $50 million since 2019, however the QPC does not think this worth mentioning or, worse, investigating. There is almost no discussion on the use of BIM or other digital tools like design for manufacture and assembly. Construction costs and the volatility of the building cycle, improving productivity through better project management and reform of the VET system are also overlooked. Although there is extensive coverage of building regulation and the NCC, the QPC does not discuss building defects and the lack of implementation of the 2018 Building Confidence report. 

 

The productivity issues in the QPC report are not new and can be found in many other reports on the industry, although there are some that are specific to Queensland. The interim report’s recommendations are limited and most would be little more than modifications to the current system. While those may be worthwhile, because the current system can clearly be improved, there is no suggestion that a more radical approach might be needed or taken.

 

                                                            *

 

[1] The effect of the mining boom was the subject of a 2023 post on The Long Cycle in Australian Construction Productivity using GVA per person employed.

 

[2] The US research was discussed in an October 2024 post Recent Research on Construction Productivity.

 

[3] Discussed in the post Housing Productivity Report a Missed Opportunity on the  Productivity Commission’s report Housing Construction Productivity: Can We Fix It? 

 

[4] The QPC does not refer to the NSW Housing Development Authority, established in January 2025 to approve State Significant Developments and rezonings. By August it had approved 187 projects with over 70,000 dwellings. NSW has introduced a Pattern Book of six low and mid-rise housing designs with a 10 day approval pathway. Also in August, Victoria introduced a Single Home Code for deemed-to-satisfy houses that need no further approvals. This follows the Townhouse and Low-Rise Code introduced earlier in 2025.

 

[5] A 2021post was on BIM Mandates and  Construction Industry Policy

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MMC in Australia: State of Play 2024

Recent data on offsite manufacturing and modern methods of construction

 

The Australian Bureau of Statistics annual Australian Industry data is now available for the 2022-23 financial year. This data includes output as Industry value added (IVA, in current dollars for the financial year) and employment in June for industries and their sub-divisions. For manufacturing the data is more detailed with output and employment at the level of industry class.

 

There are 12 construction related manufacturing industry classes, such as those producing paint, cement and structural steel. Two of those classes are Prefabricated wooden structures and Prefabricated metal buildings, and this post first presents the data for those industry classes up to 2023. However, as well as manufacturing, other industries involved in offsite manufacturing (OSM) are construction, design services and business services. Therefore, the second part of the post collects recent information on prefabricated and modular building at the state level to get a wider view on current industry trends, with a focus on prefabricated buildings recently delivered for State Governments, typically under a modern methods of construction (MMC) policy. The third section looks at possible actions by government and industry that would increase the use of MMC in Australia. 

 

The ABS data is limited to the relatively small number of firms that classify themselves as prefabricated building manufacturers, and thus excludes offsite work by firms that are classified as building or trade contractors (e.g. Hickory Building Group), architectural (e.g. Dimension X) or engineering (e.g. James Energies) practices. It also excludes OSM done inhouse by other industries like hotels for tourism, student housing, manufactured housing estates, retirement and aged care accommodation. 

 

Therefore, unfortunately, the actual extent and depth of prefabrication and OSM used in Australian construction cannot not found from ABS data. The lack of accurate and up to date data on how many and what type of prefabricated buildings and components are produced each year in Australia is a significant gap in knowledge and understanding of the industry. Because OSM and prefabrication have an important role to play in increasing housing completions, particularly social housing, and addressing the industry challenges of sustainability, productivity and skills this gap also has important policy implications. 

 

 

Prefabricated Wooden Structures and Prefabricated Metal Buildings

 

In June 2023 total employment in the two industry classes was 10,048. The great majority are employed in Prefabricated metal building with 8,636 people, compared to Prefabricated wooden building with 1,412. However, since 2015 employment in Prefabricated wooden building has doubled, increasing by 102%, while Prefabricated metal building employment increased by 59%. While these employment figures are fully representative of the industry, they may be the one of the best indicators available for the growth of OSM in Australia. 

 

Figure 1. Employment in prefabricated building

Source: ABS.

 

When Prefabricated metal building and Prefabricated wooden building are combined, their percentage in IVA and employment of total construction related manufacturing has been gradually increasing since 2018. As Figure 2 shows, IVA growth dipped in 2017 and 2018 and employment was the same in 2016 and 2017. From 2018 to 2023 there was continual year on year increases in the shares of IVA and employment. Although not spectacular, this growth is indicative of wider industry growth.  

 

Figure 2. Prefabricated building manufacturing industry share

Source: ABS.

 

There are other, much larger, ABS construction related manufacturing industry classes that produce building components with some unknown proportion of OSM and prefabrication in their output. These other industry classes include Wooden structural fittings and components (employs 27,908 people), Concrete products (employs 8,133 people), Structural steel fabricating (employs 21,521 people), and Architectural aluminium products (employs 16,703 people). 

 

Measured as IVA per person employed (in current dollars), the productivity of the prefabricated building industries is higher other wood and metal manufacturing industries. As Figure 3 shows, Prefabricated wooden building has 60% more IVA per person than Wooden structural fittings and components, and 40% more than Veneer and plywood manufacturing (employs 1,268 people).

 

Figure 3. Wood product manufacturing productivity

Source: ABS. IVA in current dollars. 

 

There is a similar story for metal products, in Figure 4. Prefabricated metal building has 45% more IVA per person than Architectural aluminium products and around 11% more than both Structural steel and Metal roof and guttering manufacturing (employs 4,162 people). 

 

Figure 4. Metal products manufacturing productivity

Source: ABS. IVA in current dollars. 

 

 

Queensland

 

QBuild’s modern methods of construction (MMC) program is building homes in a factory at Eagle Farm in Brisbane, opened in 2022. There is also a Rapid Accommodation and Apprentice Centre that provides training.A second, smaller RAAC operates at Zillmere. A third factory and RAAC in Cairns will open in mid-2024. There are 11 industry partners: Ausco, Fleetwood, Hutchies Modular, Modscape, Blok Modular, Eco Cottages, James Engineering, ModnPods, Saltair Modular, Volo Modular, and WestBuilt Homes. 

 

The government’s Homes for Queenslanders initiative aims to deliver 53,500 new social homes by 2046, with more than 100 modular homes built in 2023 and more than 150 homes expected by mid-2024.  The June 2024 budget includes $2.8 billion for up to 600 modular homes in 2024-25, and the medium term goal is to increase social housing production to 2,000 homes by 2027-28, a goal that puts Queensland at the front of housing policy in Australia. 

 

In Hervey Bay, 11 Volo Modular homes manufactured at Volo’s Yatala facility were delivered over two days in November 2023. Volo is also producing seven homes to go to Eidsvold. Also in Hervey Bay, a modular 24-bed medical ward is expected to be completed by the end of 2024 as part of the expansion of the hospital. In Gladstone, six two-bedroom modular homes constructed in Hutchinson Builders’ Toowoomba factory have been completed. 

 

New South Wales

 

In May the NSW Government and the Building 4.0 CRC committed $2 million each to developing and testing prototypes of medium-density social housing projects that incorporate MMC.

 

In May forestry company Pentarch group invested in Green Timber technology (GTT), a modular builder fabricating a timber kit of parts of walls, roofs and floors that is setting up a new factory in Orange. GTT has been prequalified for the School Infrastructure NSW scheme that uses a standardised design for buildings. 

 

Through Homes NSW the Government opened an offsite procurement list in April as part of a $10 million MMC development programme. The procurement list covers 3D primary structural systems (volumetric or modular), 2D primary structural systems (kit-of-parts), additive manufacturing, and non-structural assemblies and sub-assemblies like floor and wall cassettes and kitchen and bathroom pods. Applications are to include a description of ‘how your business contributes to the skills development of the MMC workforce, and the NSW Government’s skills and training policy’.

 

The Manufacturing for Schools program incorporates prefabricated elements to deliver new and upgraded school buildings for School Infrastructure NSW. In February the APP Group was awarded the Manufacturing Partner contract, responsible for connecting the supply chain to deliver the ‘kit of parts’, with partners including Lipman, Ark, MBM, WSP, Woods Bagot, Bennett and Trimble, Richard Crookes Constructions, and Roberts Co.

 

In November 2023 a modular construction taskforce was set up, with representatives from PreFab Aus, Shelter NSW, Community Housing Industry Association, Local Government NSW, Property Council of Australia, Government Architects, Industry suppliers and union representatives. alongside people with lived experience of social housing. In the 2023-24 NSW budget $10 million was allocated to new social housing supply and innovative solutions to get people off the social housing waitlist. 

 

Victoria

 

Melbourne-based Modscape opened a new Modbotics division in a 20,000 square metre facility in Essendon Fields in May 2024, after a two year installation and commissioning period. Modbotics was established to manufacture open and closed walls, passive house walls, and floor and roof cassettes, using a Randeck Robotics production system. Randeck are a leading provider of automated production systems and equipment for prefabricated house production. 

 

In March 2024 Homes Victoria announced an Expression of Interest for supply of 250 modular homes in Regional Victoria as part of the Modern Methods of Construction (Modular) Regional Victoria project, aimed at supporting the provision of social housing in the region. The project aims to deliver the homes by no later than 2026-27, with a phased delivery program expected. The Office of Projects Victoria's goal is for all projects to use offsite construction techniques where feasible and efficient. 

 

The first of 25 dwellings for the Homes Victoria and Haven Home Safe social housing project in Horsham, Victoria, built by modular builder, ARKIt, arrived on March 29. The tender process involved both traditional and modular builders, and the ARKit proposal, including all site and civil works, was approximately 8% lower in cost.

 

In what was the Ford factory in Geelong, Cross Laminated Offsite Solutions (CLOS) is installing an automated production line to produce modular and flat-pack buildings. Their Homag-Weinmann panelised manufacturing wall line can cut a kit of parts for a modular home in a single day or a three-storey townhouse in three days. Homag is a leading automation and timber frame construction company. CLOS have partnered with Geelong’s Gordon TAFE for a Construction Pathways Program, a course for new workers. However, on May 28 CLOS announced it was going into ‘voluntary administration to restructure and stabilise the business and seek investment for future growth’. More capital is needed because of the cost of establishing the new factory. CLOS claims it has a significant order book of future work. 

 

South Australia

 

Timberlink’s new cross-laminated timber (CLT) and glue-laminated timber (GLT) manufacturing plant in Tarpeena, South Australia, opened in February. The NeXTimber facility is Australia’s only combined CLT and GLT radiata pine mass timber facility, integrated with a structural timber manufacturing plant. Capable of producing CLT panels up to 16 metres long and 3.5 metres wide, and GLT beams up to 12 metres long, the project was supported by a $2 million grant from the South Australian government under the Strategic Business Round 2020 of the Regional Growth Fund. 

 

Fusco Constructions is building a modular construction factory of 4,000m2 at Tonsley Innovation District, a former Mitsubishi car manufacturing site. Fusco Constructions was a plumbing business that expanded into civil, commercial and development projects, and now modular construction.

 

Western Australia

 

The Western Australian government took delivery of 19 new social homes in Hamilton Hill, Western Australia in April. The 19 homes were manufactured by Perth-based panelised timber specialist manufacturer, OFFSITE.  Their manufacturing process uses Homag-Weinmann timber processing machinery with an integrated ‘digital twin’ software solution by hsbcad that connects the process, from design through to manufacturing and assembly.

 

Ausco Modular is delivering a $15 million double-storey school building in Kwinana, Western Australia. The modular school building is part of their Progress-ED range, developed by in-house engineers and designers. In March the WA government announced Highgate Primary School will receive a similar two-storey building. Budgeted at $12 million, the building will be constructed using the MMC methods demonstrated with the Kwinana project. 

Tasmania

 

Property developer David Marriner currently owns a factory in Brighton producing concrete segments for Tasmania’s Bridgewater Bridge. Upon the bridge’s completion, he intends converting the factory into an automated facility capable of producing precast panels for 1,700 houses annually. The conversion of the factory will require investment of approximately $30 million, and Marriner is not seeking government funding for the conversion but is looking for government support in housing orders to ensure a stable financial base for the factory. 

 

Bridges

 

Australian company InQuik has built over 200 bridges using a modular system with prefabricated formwork trays with reinforcing steel that are placed onsite and filled with concrete, reducing construction time. The formwork is made from Magnelis, a corrosion-resistant material from ArcelorMittal Europe, and remains in place after concrete is poured. The system has now been used in the United States, where a 9-metre-long, 8-metre-wide bridge in, Eau Claire County, Wisconsin, was completed in a month, compared to three-to-four-months for a traditional bridge.

 

Mass timber

 

In May Cedar Pacific, an Australian property investment firm, and Sumitomo Forestry Co., a Japanese forestry and wood management firm, entered a strategic partnership to develop a $1.2 billion portfolio of build-to-rent apartments, in Australia and New Zealand using mass timber buildings. Sumitomo Forestry will acquire just under 50% equity in the BTR projects, starting with a $375 million development in Brisbane. The joint venture has a pipeline of projects in Melbourne, Canberra, Brisbane, and Auckland. 

 

What Could the Commonwealth Government Do? 

 

In March 2024 Building Ministers ‘agreed to work together to cut red tape and enable further expansion and growth in Australia’s prefabricated and modular construction industry.’ The Australian Building Codes Board is to ‘work closely with industry bodies and jurisdictions to reduce barriers’. The next Building Ministers meeting is in June. 

 

The Commonwealth Government is responsible for the National Construction Code and the Building Code of Australia. Revising and updating these is a slow, consultative process from initial proposal through technical advice, impact analysis, comment and review, and the process would be speeded up with more resources. These would allow the Australian Building Codes Board to develop performance standards for prefabrication and modular construction for inclusion in the NCC, and Standards Australia to review relevant standards and develop a set of ‘deemed to satisfy’ construction solutions for prefabrication and modular construction. A set of standards for MMC would be the basis for a quality assurance scheme like the UK‘s Buildoffsite Property Assurance Scheme (BOPAS) discussed below. 

 

What Could State Governments Do?

 

State governments could identify unused land or repurpose appropriate sites for housing development with MMC. By specifying the use of prefabrication, modular construction or 3D concrete printing these developments would be demonstration projects for MMC. Access to data on costs of construction for different versions of MMC for researchers should be a contract condition so a credible evaluation of comparable delivery costs can be published. There are also Commonwealth Government sites this applies to.

 

Technology and training centres like the Queensland RAAC can be established to produce social housing or essential worker housing. A version of this model could also be used for training workers and producing indigenous housing in regional areas. 

 

Institutional projects like hospitals and schools can be built with prefabrication and modular construction, the NSW Schools Infrastructure program is a model for this. Again, these can be used as demonstration projects and data on costs and defects should be published for the finance and insurance industries to assess risk associated with MMC.

 

What Could Industry do?

 

The UK Buildoffsite Property Assurance Scheme (BOPAS) was developed to address the risks associated with MMC. It provides firms independent third party accreditation to industry standards and allows access to mortgage financing and insurance for MMC projects. The scheme was developed by MMC industry association Buildoffsite with insurance companies and finance industry associations input, and started in 2013. A similar certification scheme is needed for Australian MMC producers.

 

 

Conclusion

 

The scale and extent of offsite manufacturing and MMC in Australia is not well defined at present. There are many producers, ranging from large contractors like Hutchinson to architectural practices like Dimension X. New factories are being set up in 2024 in NSW and South Australia by builders and contractors, and by government in Queensland. How many producers there are and what type of prefabricated and modular construction (volumetric, panelised, pods etc.) they are producing is not known.

 

That is because ABS industry data does not include offsite work done by firms classified as building or trade contractors, architectural or engineering practices, or work done inhouse in industries like hotels for tourism, student housing, manufactured housing estates, retirement and aged care accommodation. The ABS problem in measuring the prefabricated building industry is that the industries firms involved come from include manufacturing, construction, professional and design services, and this sort of detailed data spread across different industries is hard for the ABS to collect.

 

With OSM and prefabrication being seen as important to addressing the industry challenges of providing affordable housing and improving sustainability, productivity and skills, this lack of data is regrettable. The lack of data on how many and what type of prefabricated and modular buildings and components are produced each year in Australia is a problem if an objective of industry policy is to increase the use of prefab and modular construction. 

 

Nevertheless, there is good evidence that MMC is growing strongly in Australia, both from the ABS data and from reports from industry. State governments have started sponsoring prefabricated and modular buildings, although some of these programs are small scale, toe in the water trials where a few buildings have been procured for regional centres. On the other hand, the NSW schools program and Queensland’s housing policy are major policy commitments to MMC. Some state government owned sites should be used for housing developments specifying MMC for demonstration projects, and researchers given access to cost data for evaluation and credible comparisons. 

 

Queensland is leading in promoting MMC. Qbuild has established three factories and training centres, and produced over 100 houses in the last year. There are 11 industry partners in the Homes for Queenslanders MMC program, which has the goal of delivering 53,500 houses by 2034 through a combination of contractor and government production, and the 2024 state budget has funding for 600 prefabricated houses.

 

Timberlink’s new cross-laminated timber (CLT) and glue-laminated timber (GLT) factory in South Australia joins Xlam in NSW and Cusp in Tasmania as Australian manufacturers. There is also Crosslam Australia manufacturing CLT panels in Perth and Hyne Timber in NSW making GLT beams. The number of high-rise buildings using mass timber is growing with current projects like student accommodation for La Trobe University and the T3 office block in Melbourne, residential tower C6 in Perth, Atlassian’s new Sydney headquarters (the world’s tallest hybrid timber tower), the Sydney Fish markets, and Cedar Pacific’s build-to-rent development in Brisbane.

 

At the May Building Ministers meeting enabling growth of MMC was agreed. The Commonwealth Government should increase the resources available to the Australian Building Codes Board to develop performance standards for prefabrication and modular construction for inclusion in the Construction Code, and to Standards Australia to review relevant standards and develop a set of ‘deemed to satisfy’ standards for MMC. These would be the basis for an Australian quality assurance scheme like the UK ‘s Buildoffsite Property Assurance Scheme.