BDO Construction Survey 2023

The BDO Construction Survey 2023 offers an analysis of Tier 1 and Tier 2 companies in Australia’s construction industry, shedding light on both financial and non-financial metrics. It uncovers crucial insights on areas ranging from financial performance to environmental sustainability and workforce well-being.

Key takeaways

Positive revenue growth amidst profit margin pressures

The survey highlights a positive trend in revenue growth for the construction industry in 2023. However, it also points to a persistent challenge - gross profit margins remain under pressure. Rising costs and subcontractor issues continue to pose significant risks, underscoring the importance of robust risk management strategies.

Mitigating future challenges

The good news is that construction companies are becoming more adept at addressing their future financial challenges. The report suggests that in the upcoming fiscal year (FY24), the impact on profit margins is expected to decline. This optimistic outlook is attributed to heightened awareness and better preparedness within the industry, with companies factoring in anticipated cost increases into their budgeted projections.

ESG adoption and reporting gaps

The survey indicates a commendable level of adoption of Environmental, Social, and Governance (ESG) practices within the construction sector. However, there is room for improvement in reporting and the measurement of GHG emissions. Only 36 per cent of the survey respondents felt confident in the accuracy of reporting in their waste management and recycling initiatives. This signals a critical area where companies can make significant strides toward sustainability and attract and retain Gen Z talent.

Diversity, Equity, and Inclusion imperatives

As the industry faces a talent crisis, diversity, equity, and inclusion efforts become paramount. To remain competitive, construction companies must position themselves as attractive employers for Australians. Failing to do so could jeopardise their ability to secure a reliable pipeline of young talent. This aspect deserves close attention and active efforts from all stakeholders.

Workforce well-being: The human element

The survey delves into the mental health and well-being of construction workers, uncovering essential insights. It is evident that a five-day working week is widely favoured among those that work 6 or more days. Moreover, job security emerges as a common concern among the workforce. Addressing these issues not only improves productivity but also fosters a healthier and more motivated workforce.

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Participant overview

14 construction organisations participated in the survey with 72 per cent reporting FY23 revenues of less than $750M. These companies predominantly operate in commercial, industrial, and residential subsectors, with an increasing number also involved in government and build-to-rent projects.

The organisations surveyed represent approximately 10 per cent of the active Tier 1 and Tier 2 construction companies in Australia (Source: IBISWorld).

For the purposes of our report, Tier 1 construction companies are defined as companies with turnover of over $500 million and Tier 2 construction companies are those with turnover of over $100 million but under $500 million.

We also surveyed over 200 construction workers to garner insight into the mental health and broader well-being of the workforce in construction. The participants worked for businesses with more than 20 employees and consisted of a broad spectrum of workers in the industry, and across the country.