By Oliver Nichols, Director - Rider Levett Bucknall
Oliver Nichols is a Director of RLB in New South Wales, where he has been based since 2008.
With more than 25 years’ experience in quantity surveying and commercial advisory, Oliver specialises in cost planning, financial reporting and post-contract cost management. He has played a key role in delivering some of Australia’s most complex placemaking and infrastructure projects, including the Sydney Metro integrated stations at Martin Place, Gadigal and Victoria Cross, Central Barangaroo and the Sydney Football Stadium.
In June 2025, Oliver was appointed Oceania Director of Research & Development, where he now oversees the firm’s regional research strategy and major publications, including the RLB Crane Index, Rider’s Digest and the quarterly Market Intelligence Reports. His dual focus on project delivery and market insight ensures that RLB’s data and commentary are informed by real-time experience on the ground.
Rider Levett Bucknall’s latest Q2 2025 Construction Market Update for Australia presents a cautious outlook for the sector, as global instability and local constraints continue to disrupt delivery, inflate costs and dampen investment appetite.
Geopolitical risk compounds domestic challenges
The ongoing conflicts in the Middle East and Ukraine are placing renewed strain on global supply chains, escalating the cost of fuel, raw materials and shipping. Within Australia, this has collided with persistent labour shortages, rising interest rates, and tighter regulatory conditions—contributing to delays, cost overruns and heightened project risk.
Oliver Nichols, Director of RLB Oceania Research & Development, said the complex interaction between global and domestic forces was redefining the market outlook.
“Developers are grappling with tighter margins, stretched delivery timelines and softening confidence. Meanwhile, large-scale infrastructure projects are facing increasing viability challenges—especially where budgets are locked in or public funding is limited.”
Material costs and supply chain volatility pressure delivery
RLB has observed rising prices for key inputs including fuel, steel, copper and aluminium. In some locations, this is being compounded by delays in the delivery of imported mechanical and electrical components, particularly for specialist works.
These material and logistical constraints are influencing not only delivery timelines but also cost planning and investment decisions. Housing affordability, mortgage rates, and infrastructure feasibility are all being affected.
Industry insolvencies on the rise
Recent data shows a notable increase in construction sector liquidations, particularly among subcontractors and small to medium enterprises (SMEs). In an environment marked by slow approvals, project delays and tight payment terms, even marginal cost increases are forcing some firms into insolvency.
“The risk of rising insolvencies within the construction supply chain continues to be a concern,” said Nichols. “When projects are delayed or disrupted, it creates cascading impacts across all tiers.”
Adaptive strategies emerging across the sector
In response, some construction firms are diversifying their supply chains, adopting digital tools to improve workflow visibility and renegotiating contracts to include escalation clauses. These measures are designed to manage cost risk and enhance resilience.
Governments are also responding. The recently released Blueprint for the Future by the National Construction Industry Forum outlines targeted recommendations to boost productivity, workforce capability, and industry stability. However, implementation and impact will take time.
Forecasts signal varied conditions across cities
RLB’s Tender Price Index for Q2 2025 indicates that cost escalation continues nationwide, though rates vary by region. Cities such as Brisbane, Townsville, and the Gold Coast are forecast to experience sustained upward pressure over the next five years, while Canberra and Sydney are expected to see more moderate growth.
Regional market insights
Adelaide: Growth continues across defence, health, renewables and infrastructure sectors, but contractor and subcontractor capacity remains tight.
Brisbane: Government programs in health, education and corrections are sustaining pipelines, but the private sector remains constrained by cost feasibility.
Canberra: Positive outlook underpinned by major ACT Government initiatives, including North Canberra Hospital and Canberra Theatre Redevelopment.
Darwin: $2.74 billion committed in the 2025–26 Territory budget for infrastructure, including public housing, education and corrections upgrades.
Gold Coast: Cost pressures persist but are easing slightly with greater subcontractor availability in some sectors.
Melbourne: Labour shortages continue to strain delivery and drive cost escalation. Insolvencies are rising as financial stress deepens.
Perth: Market operating near capacity, with high demand in both regional and metropolitan areas fuelling pricing pressure.
Sydney: Labour remains the critical constraint, particularly on public infrastructure projects. Specialist imports continue to experience delay and cost volatility.
Townsville: A reduction in major project tenders has moderated pricing levels, shifting from opportunistic to balanced conditions.
Outlook: constrained opportunity amid heightened risk
While governments and industry stakeholders are acting to stabilise conditions, the path ahead remains uncertain. As geopolitical uncertainty persists and domestic pressures continue, Australia’s construction industry is likely to remain in a climate of heightened risk, fragile confidence and uneven opportunity.
This article was republished with permission by RLB. Read the original article here.