Impact of COVID on Australian construction project timelines

COVID-19 has significantly impacted decision-making timelines and project durations in the Australian construction industry, causing delays across various stages from concept to completion.

The pandemic has led to extended project timelines due to several factors, including supply chain disruptions, labour shortages, and changes in work practices.

The $180 million Hyatt hotel project in Adelaide’s CBD was cancelled due to persistent challenges, such as supply chain issues and fluctuating material availability, further highlighting the pandemic’s impact on larger construction endeavours.

Impact on Project Timelines

Overall Project Duration

The Housing Industry Association (HIA) reported a substantial increase in the average time to build a house in Australia:

  • Pre-COVID: 8.3 months
  • By March 2022: 12.2 months [27]

This represents an increase of approximately 47% in the overall project duration.

Construction Commencement Delays

The surge in construction activity following government stimulus measures led to bottlenecks and delays in project commencements:

  • In June 2021, there was a significant influx of new house constructions moving through various stages simultaneously [16]
  • This created competing demand for trades and materials, causing construction delays

Completion Time for Different Housing Types

CoreLogic reported increases in completion times for various housing types:

  • Units: 8.3 quarters (over two years), up from 6.3 quarters pre-pandemic
  • Townhouses: 4.1 quarters (just over a year)
  • New houses: 3.1 quarters (more than nine months), up from just over six months pre-pandemic [2]

These figures indicate an increase of about 6 months for unit construction and 3 months for house construction.

Factors Contributing to Delays

Supply Chain Disruptions

  • Material shortages were cited as the largest barrier to construction [27]
  • Delays in delivery of building materials, especially those imported from overseas [6]
  • Cost increases of 15-20% for some imported materials [22]

Labor Shortages

  • Reduced workforce due to illness, quarantine requirements, and travel restrictions [26]
  • Productivity drop to around 60% in some cases [22]

Regulatory and Approval Processes

  • Delays in market and approval processing [27]
  • Interruptions to onsite inspections, especially for cultural heritage surveys [30]

Stage-Specific Impacts

Concept and Planning Stage

  • Increased time for feasibility studies and project planning due to market uncertainties [8]
  • Delays in obtaining necessary permits and approvals [8]

Design Stage

  • Extended timelines for design revisions to accommodate new health and safety requirements [1]

Procurement Stage

  • Longer lead times for material procurement due to supply chain disruptions [6]
  • Increased time for contract negotiations to address COVID-related risks [15]

Construction Stage

  • Reduced on-site productivity due to social distancing measures and worker limitations [1]
  • Interruptions in work schedules due to lockdowns and quarantine requirements [11]

Completion and Handover Stage

  • Extended timelines for final inspections and obtaining occupancy certificates [27]

Regional Variations

The impact on project timelines varied across different Australian states:

  • Victoria experienced significant disruptions due to strict lockdown measures [24]
  • Western Australia saw a 175.8% increase in dwellings under construction from 2019-20 to 2023-24, indicating substantial delays in project completion [16]

In conclusion, the COVID-19 pandemic has caused significant delays in Australian construction projects, with data showing increases in project durations ranging from 3 to 6 months for residential constructions, and potentially longer for larger projects. The impact has been felt across all stages of construction, from concept to completion, with supply chain disruptions and labour shortages being the primary contributing factors.

Citations and useful references:

[1] https://www.infrastructureaustralia.gov.au/listing/media-release/infrastructure-beyond-COVID  

[2] https://www.savings.com.au/news/no-end-in-sight-to-building-delays  

[3] https://www.hunterlabourhire.com.au/effects-coronavirus-australias-construction-industry/  

[4] https://www.virtuetalent.com/post/covid-19-and-construction-project-delays-in-australia  

[5] https://www.ahuri.edu.au/sites/default/files/migration/documents/AHURI-Final-Report-341-Responding-to-the-pandemic-can-building-homes-rebuild-Australia.pdf  

[6] https://www.gjgardner.com.au/learn/building-with-gj/australian-construction-material-supply-causing-delays-for-home-builders/  

[7] https://sbshaustralia.com.au/covid-induced-construction-delays-pushing/  

[8] https://constructlaw.com.au/understanding-your-position-when-faced-with-delays-in-residential-builds/  

[9] https://www.tpmbuilders.com.au/construction-outlook-2020-covid-19-2/  

[10] https://opus.lib.uts.edu.au/rest/bitstreams/ee676430-5830-4c2f-b750-1b57c6e0005c/retrieve  

[11] https://ro.ecu.edu.au/cgi/viewcontent.cgi?article=2818&context=ecuworks2022-2026  

[12] https://cdn.aigroup.com.au/Economic_Indicators/PCI/2021/PCI_Aug_2021_06840f.pdf?_cldee=ZGF2aWQubGxld2VsbHluLnNtaXRoQGdtYWlsLmNvbQ%3D%3D&amp%3Brecipientid=lead-9ae0861b155ee61180cd0050568067c2-ab189980c12f4583a4bc0fc3e3f075c1&amp%3Besid=b2907e99-ee0b-ec11-b6e6-002248106bf3

[13] https://www.propertycouncil.com.au/media-releases/covid-19-hits-property-industry-sentiment  

[14] https://www.turnerandtownsend.com/insights/the-lasting-impact-of-covid-19-on-the-australian-construction-sector/

 [15] https://constructlaw.com.au/covid-19-and-its-potential-affect-on-building-and-construction-contracts/  

[16] https://www.abs.gov.au/articles/home-building-through-pandemic  

[17] https://www.lavan.com.au/advice/construction_infrastructure/a_force_to_be_reckoned_with_covid_19_related_delays_and_force_majeure_clauses_in_construction_contracts  

[18] https://www.researchgate.net/publication/386190438_Impacts_of_COVID-19_Pandemic_on_Construction_Costs_in_Australia  

[19] https://www.linkedin.com/pulse/20212022-australian-construction-forecast-stephen-boyd  

[20] https://www.siteforcerecruitment.com.au/navigating-the-cycles-construction-post-covid-to-2024

 [21] https://www.acif.com.au/resources/coronavirus-construction-industry-challenges  

[22] https://www.tpmbuilders.com.au/construction-outlook-2020-covid-19-2/  

[23] https://www.cornwalls.com.au/covid-19-and-the-building-and-construction-industry-some-practical-considerations/  

[24] https://www.mdpi.com/2071-1050/14/5/2580  

[25] https://sbshaustralia.com.au/covid-induced-construction-delays-pushing/  

[26] https://www.contractsspecialist.com.au/articles/covid-19-impact-construction-material-labor-costs/  

[27] https://www.gjgardner.com.au/learn/building-with-gj/australian-construction-material-supply-causing-delays-for-home-builders/  

[28] https://www.fairtrading.nsw.gov.au/housing-and-property/home-building-delays  

[29] https://www.infrastructureaustralia.gov.au/sites/default/files/2020-12/Final_COVID%20Impacts%20on%20Infrastructure%20Sectors%20Report_14%20Dec%202020.pdf  

[30] https://pmc.ncbi.nlm.nih.gov/articles/PMC9526197/