E3101 Road and Bridge Construction in Australia Industry Report

IBISWorld | Road and Bridge Construction in Australia Dec 2023
INDUSTRY REPORT
Road and Bridge

Construction in
Australia
Dec 2023
1
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Table Of Contents
1. About............................................................................. 5 5. Geographic Breakdown........................................ 37
Definition...................................................................... 5 Key Takeaways......................................................... 37
Related Terms............................................................. 5 Business Locations..................................................38
What’s Included......................................................... 6 6. Competitive Forces................................................ 42
Companies................................................................... 6 Highlights...................................................................42
Related Industries......................................................6 Key Takeaways......................................................... 42
Additional Resources............................................... 7 Concentration...........................................................43
2. At a Glance...................................................................9 Barriers to Entry....................................................... 45
Key Takeaways............................................................9 Substitutes................................................................. 47
Products and Services........................................... 10 Buyer & Supplier Power....................................... 48
Major Players............................................................ 11 7. Companies.................................................................51
Key External Drivers............................................... 12 Key Takeaways......................................................... 51
Industry Structure................................................... 12 Market Share............................................................ 51
SWOT........................................................................... 13 Companies................................................................. 53
Executive Summary................................................ 13 8. External Environment............................................ 65
3. Performance..............................................................16 Highlights...................................................................65
Highlights...................................................................16 Key Takeaways......................................................... 65
Key Takeaways......................................................... 16 External Drivers........................................................ 65
Executive Summary................................................ 17 Regulation & Policy............................................... 68
Performance Snapshot......................................... 18 Assistance.................................................................. 70
Volatility...................................................................... 24 9. Financial Benchmarks............................................ 72
Outlook....................................................................... 26 Highlights...................................................................72
Life Cycle.................................................................... 28 Key Takeaways......................................................... 72
4. Products and Markets........................................... 30 Cost Structure...........................................................73
Highlights...................................................................30 Key Ratios.................................................................. 76
Key Takeaways......................................................... 30 10. Key Statistics.......................................................... 78
Products and Services........................................... 31 Industry Data............................................................ 78
Major Markets.......................................................... 34
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About
A quick definition of the industry, its
products and services, major
companies and other key identifiers
help you confirm you’re in the right
place.
4
1. About
https://my.ibisworld.com/au/en/industry/E3101/about
ANZSIC 2006 3101
Definition
Industry firms construct, repair and maintain roads, bridges, aerodrome runways and parking lots. Firms
also carry out the quarrying of earth, soil or filling, in conjunction with road or bridge construction.
Related Terms
TOLL ROAD
A road that users pay a toll to use (includes structures such as bridges and tunnels).
BUILD-OWN-OPERATE-TRANSFER (BOOT)
An arrangement that involves a private developer funding, constructing and operating public infrastructure
for a set period before transferring ownership to a government.
PUBLIC-PRIVATE PARTNERSHIP (PPP)
A contractual agreement between a public agency and private company to share skills, assets and financial
resources to deliver a facility for public use.
PAVEMENT
The durable road surface that comprises material such as asphalt and concrete laid down on an area to
handle vehicular and foot traffic.
OUTSOURCING
The use of outside service providers to perform various non-core activities.
WET HIRE
The hire or lease of plant and machinery with a qualified operator working under direction of the prime
contractor. Wet hire can be paid on an hourly, daily or weekly basis.
DRY HIRE
The hire or lease of plant and machinery without an operator. Dry hire can be paid on an hourly, daily or
weekly basis.
5
What’s Included
 Road and tunnel construction
 Bridge and overpass construction
 Maintenance and repairs to infrastructure
 Alterations and additions to existing infrastructure
 Airport runway construction
Companies
 Transport for NSW
 CIMIC
 Transport for Victoria
 Roads
 Acciona Energy
 Acciona Construction Holdings Pty Ltd
 John Holland
 Department of Transport and Main Roads QLD
 Fulton Hogan
 Boral
 Main Roads Western Australia
 BMD Holdings Pty Limited
Related Industries
Industries in the Same Sector

 Competitors:
o No data available
 Complementors:
o Heavy Industry and Other Non-Building Construction in Australia
o Site Preparation Services in Australia
o Concreting Services in Australia
o Landscaping Services in Australia
o Metal Cladding, Waterproofing and Scaffolding Services in Australia
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International Industries
 Bridge & Elevated Highway Construction in the US
 Road & Highway Construction in the US
 Bridge & Elevated Highway Construction in Canada
 Road & Highway Construction in Canada
 Road and Bridge Construction in New Zealand
 Road & Motorway Construction in the UK
 Bridge & Tunnel Construction in the UK
 Infrastructure Maintenance Services in the UK
 Road & Motorway Construction in Germany
 Bridge & Tunnel Construction in Germany
 Road & Railway Construction in Ireland
 Bridge, Tunnel and Subway Construction in China
 Road & Highway Construction in China
Additional Resources
 Department of Infrastructure, Transport, Regional Development, Communications and the Arts
 Bureau of Infrastructure and Transport Research Economics (BITRE)
 Civil Contractors Federation
 Roads Australia
 Victoria’s Big Build
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At A Glance
Evaluate key industry data and trends
and get an overview of important
report sections to use in meetings
and presentations.
8
2. At a Glance
https://my.ibisworld.com/au/en/industry/E3101/at-a-glance
Revenue Employees Businesses
$41.5bn 58,425 2,613

’19-’24 ↑ 4.4 % ’19-’24 ↑ 3.7 % ’19-’24 ↑ 2.4 %
’24-’29 ↓ 4.1 % ’24-’29 ↓ 3.1 % ’24-’29 ↓ 2.1 %
Profit Profit Margin Wages
$1.5bn 3.7% $9.7bn

’19-’24 ↑ 6.2 % ’19-’24 ↑ 0.3 pp ’19-’24 ↑ 4.5 %
’24-’29 ↓ 4.5 %
Key Takeaways
Performance
Work on landmark road projects like the WestConnex in Sydney and the WestGate Tunnel in Melbourne
have underpinned an unprecedented level of industry activity. Road construction has slumped on new
housing subdivisions following a hike in mortgage interest rates.
The completion of landmark road construction projects will contribute to a downturn in the industry's
performance through 2028-29. Still, the industry will be winding back from unprecedented levels and will
remain busy by historical standards.
External Environment
Constructing roads on new residential subdivisions is a core source of revenue for many small-scale
contractors. A recent hike in mortgage interest rates and the end of the HomeBuilder stimulus will drive
down road construction for new subdivisions.
Much of the work on public road projects requires contractors to hold ISO international certification. These
include Quality Management Systems, Occupational Health & Safety Management and Environmental
Management certificates.
Two-thirds of the funding for road and bridge construction comes from federal, state and territory
governments. Comprehensive public transport policies directly drive the industry's performance.
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Products and Services
10
Major Players
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Key External Drivers

Key External Drivers Impact
Capital expenditure by the public sector Positive
Private non-residential construction capital expenditure Positive
Demand from house construction Positive
10-year bond rate Negative
Industry Structure
Characteristic Level Trend
Concentration Low
Barriers To Entry Moderate Steady
Regulation and Policy High Increasing
Life Cycle Mature
Revenue Volatility High
Capital Intensity Low
Assistance Low Steady
Competition High Steady
Innovation Moderate
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SWOT
Strengths Weaknesses Opportunities Threats

Low Imports Low & Steady Level High Revenue Low Revenue
Low Customer of Assistance Growth Growth
Class Concentration High Competition (2019-2024) (2024-2029)
High Revenue per High Volatility Capital expenditure Low Performance
Employee Low Profit vs. Sector by the public Drivers
Low Capital Average sector Private non-
Requirements High Product/Service residential
Concentration construction
capital
expenditure
Executive Summary
Leading construction companies are riding a wave of road construction thanks to record-breaking
investment in landmark developments like the WestConnex motorway in Sydney, the West Gate Tunnel in
Melbourne and the Coomera Connector (Second M1) on the Gold Coast. An injection of public funding and
progress on landmark public-private partnership (PPP) developments has lifted the Road and Bridge
Construction industry to unprecedented levels. Industry revenue is expected to climb at an annualised 4.4%
through 2023-24 to reach a record $41.5 billion.
The principal stimulus for industry expansion has come from state and territory governments bringing
forward the investment pipeline for significant road projects to combat the economic fallout from the
COVID-19 pandemic. Key public road and tunnel developments include the early stages of the Coffs
Harbour Bypass and the M6 Stage 1 in Sydney. Robust growth in private sector investment in toll roads and
PPP-funded developments has also boosted the largest private contractors, like CIMIC and John Holland,
who often participate in strategic joint ventures with financiers and infrastructure management groups.
Smaller industry contractors have benefited from government spending on shovel-ready road upgrades
during the pandemic and a surge in roadwork on residential subdivisions that accompanied accelerated
growth in new housing construction under the Federal HomeBuilder subsidies. A recent hike in mortgage
interest rates has contributed to a more recent slump in roadwork on new housing subdivisions and an
anticipated contraction in industry revenue of 1.7% in 2023-24. Still, the industry continues to perform at
near-record levels, and profit margins have widened despite supply chain blockages putting upwards
pressure on input prices.
Going forwards, the industry's revenue performance will deteriorate as several multi-stage developments
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reach completion. Despite industry activity easing from historically high levels, some contractors will derive
stimulus from public and private funding commitments on large-scale developments, including the North
East Link in Victoria and the Western Harbour Tunnel & Beaches Link in Sydney. Industry revenue is
forecast to weaken at an annualised 4.1% over the five years through 2028-29, falling to $33.7 billion.
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Performance
Track historical, current and forward-
looking trends in revenue, profit and
other performance indicators that
make or break an industry.
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3. Performance
https://my.ibisworld.com/au/en/industry/E3101/performance
Highlights
Revenue Employees Businesses
$41.5bn 58,425 2,613

2019-24 CAGR ↑ 4.4 % 2019-24 CAGR ↑ 3.7 % 2019-24 CAGR ↑ 2.4 %
2024-29 CAGR ↓ 4.1 % 2024-29 CAGR ↓ 3.1 % 2024-29 CAGR ↓ 2.1 %
Profit Profit Margin
$1.5bn 3.7%
2019-24 CAGR ↑ 6.2 % 2019-24 CAGR ↑ 0.3 pp
Key Takeaways
 Work on landmark road projects like the WestConnex in Sydney and the WestGate Tunnel in
Melbourne have underpinned an unprecedented level of industry activity. Road construction
has slumped on new housing subdivisions following a hike in mortgage interest rates.
 The completion of landmark road construction projects will contribute to a downturn in the
industry's performance through 2028-29. Still, the industry will be winding back from
unprecedented levels and will remain busy by historical standards.
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Executive Summary
Leading construction companies are riding a wave of road construction thanks to record-breaking
investment in landmark developments like the WestConnex motorway in Sydney, the West Gate Tunnel in
Melbourne and the Coomera Connector (Second M1) on the Gold Coast. An injection of public funding and
progress on landmark public-private partnership (PPP) developments has lifted the Road and Bridge
Construction industry to unprecedented levels. Industry revenue is expected to climb at an annualised 4.4%
through 2023-24 to reach a record $41.5 billion.
The principal stimulus for industry expansion has come from state and territory governments bringing
forward the investment pipeline for significant road projects to combat the economic fallout from the
COVID-19 pandemic. Key public road and tunnel developments include the early stages of the Coffs
Harbour Bypass and the M6 Stage 1 in Sydney. Robust growth in private sector investment in toll roads and
PPP-funded developments has also boosted the largest private contractors, like CIMIC and John Holland,
who often participate in strategic joint ventures with financiers and infrastructure management groups.
Smaller industry contractors have benefited from government spending on shovel-ready road upgrades
during the pandemic and a surge in roadwork on residential subdivisions that accompanied accelerated
growth in new housing construction under the Federal HomeBuilder subsidies. A recent hike in mortgage
interest rates has contributed to a more recent slump in roadwork on new housing subdivisions and an
anticipated contraction in industry revenue of 1.7% in 2023-24. Still, the industry continues to perform at
near-record levels, and profit margins have widened despite supply chain blockages putting upwards
pressure on input prices.
Going forwards, the industry's revenue performance will deteriorate as several multi-stage developments
reach completion. Despite industry activity easing from historically high levels, some contractors will derive
stimulus from public and private funding commitments on large-scale developments, including the North
East Link in Victoria and the Western Harbour Tunnel & Beaches Link in Sydney. Industry revenue is
forecast to weaken at an annualised 4.1% over the five years through 2028-29, falling to $33.7 billion.
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Performance Snapshot
↑ 2019-24 Revenue CAGR +4.4%
Revenue:
Revenue
2024 Revenue CAGR Revenue Volatility
$41.5bn ↓ 1.7 % ↓ High
’19-’24 ↑ 4.4 %
’24-’29 ↓ 4.1 %
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Employees:
Employees Employees per Business Revenue per Employee
58,425 22 $710k
’19-’24 ↑ 3.7 % ’19-’24 ↑ 1.2 % ’19-’24 ↑ 0.7 %
’24-’29 ↓ 3.1 % ’24-’29 ↓ 1.0 % ’24-’29 ↓ 1.0 %
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Businesses:
Businesses Employees per Business Revenue per Business
2,613 22 $15.9m
’19-’24 ↑ 2.4 % ’19-’24 ↑ 1.2 % ’19-’24 ↑ 1.9 %
’24-’29 ↓ 2.1 % ’24-’29 ↓ 1.0 % ’24-’29 ↓ 2.0 %
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Profit:
Total Profit Profit Margin Profit per Business
$1.5bn 3.7% $587.6k

’19-’24 ↑ 6.2 % ’19-’24 ↑ 0.3 pp ’19-’24 ↑ 3.7 %
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Performance Snapshot
What's driving current industry performance?
Work on landmark road projects drives the overall economy
 Road and bridge construction activity has soared to new heights throughout the COVID-19
pandemic, propelled by government stimulus spending and an injection of private investment
through public-private partnership (PPP) arrangements.
 The federal and state governments committed to additional road funding in order to stimulate
economic activity during a COVID-19 pandemic downturn, bringing the pipeline of major road and
bridge projects forwards and pumping funds into shovel-ready local roads.
 Many road contractors have derived stimulus from work repairing and reconstructing roads and
bridges following devastating floods in Queensland, New South Wales and, to a lesser extent,
Victoria in 2022.
Two-thirds of road funding comes from the public sector
 Public investment has climbed over the past few years to account for two-thirds of road and bridge
funding, focusing on upgrades to large-scale road networks to ease traffic congestion in the capital
cities.
 Federal funding has contributed to constructing the Ipswich Motorway, the Bruce Highway upgrade
in Queensland, the T2T Project in Adelaide and the NorthLink WA projects in Perth.
 State investment has focused on upgrades or alterations to existing roads, like the Pacific Highway
and The Northern Road in New South Wales, widening the Monash Freeway in Victoria and
generational investment in the Level Crossing Removal Project in Melbourne.
Private investment fuels work on mega projects
 Private funding has underpinned some of Sydney and Melbourne's most significant road and bridge
projects ever constructed. Work has proceeded on the $16.8 billion PPP-funded multi-stage
WestConnex project since 2016-17, with 51% of the project owned by a Transurban-led consortium.
 In Melbourne, CPB Contractors and John Holland began constructing Transurban's $6.7 billion West
Gate Tunnel project in early 2018, but costs have blown out with disputes over contaminated soil
and construction delays. The project value will likely exceed $10.0 billion by completion in 2025-26.
 Another critical source of private road investment has come from developing residential
subdivisions to meet a surge in new house construction through to a 2021-22 peak, which
accompanied the Federal Government's HomeBuilder scheme and favourable borrowing conditions.
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Maintenance funding provides a stable revenue base
 A steady flow of funding for scheduled maintenance and periodic repair of road and bridge
infrastructure has been a long-term core source of revenue for contractors of all sizes.
 Small-scale local contractors traditionally shouldered much of the local and regional road upkeep,
working under the direction of local governments and state road authorities. Big players like DM
Roads (Downer) and Fulton Hogan have swooped in to secure long-term exclusive contracts to
maintain state roads.
 Technological advancements have helped to monitor roads and bridges to track and anticipated
when repairs are needed. This has streamlined operations for many contractors.
Industry profit margins have widened despite supply chain blockages
 The industry’s profitability has strengthened through 2023-24 in response to a surge in construction
activity on significant road developments and earlier work on new housing subdivisions through
2021-22.
 Road and bridge construction contractors have improved their operating efficiencies from work on
large multi-stage projects. These developments’ scale has allowed contractors to allocate human
and capital resources more efficiently and widen their profit margins without negatively affecting
their cashflow.
 Pandemic-related global supply chain disruptions have partly constrained the industry’s profit
margins. These disruptions led to delays in material and equipment deliveries and inflated input
prices, increasing pressure on profit margins.
Employment and participation have surged to meet a construction backlog
 Employment numbers have matched accelerated road and bridge construction investment over
recent years and have risen solidly. Wage costs are expected to climb through 2023-24 as real wage
rates climb with skilled labour shortages.
 There is a tendency for contractors to expand their permanent workforce to construct major urban
motorway projects rather than relying on the flexibility of a subcontracted workforce. A plethora of
major road projects has encouraged this practise.
 Participation has risen with new enterprises attracted to the industry by the favourable trends in
revenue and profitability. There are few barriers to entry for enterprises competing within narrow
regional or niche service markets.
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Volatility
High
What influences industry volatility?
Revenue volatility fluctuates with the start-up and completion of major projects
 The Road and Bridge Construction industry exhibits high revenue volatility, stemming from the
commencement and completion of large-scale developments like the North East Link in Melbourne.
 Fluctuations in government budgetary allocations and policy priorities, along with the injection of
private sector investment through public-private partnership (PPP) arrangements, influence the
industry's performance.
Maintenance work and local road projects moderate revenue
 The requirement for ongoing maintenance of the existing road assets and the long-term nature of
government capital works expenditure on transport infrastructure tends to moderate the industry's
revenue volatility.
 Roadwork on new housing subdivisions has provided a stable platform for local road construction
and was supported by a boost in house construction to a peak in 2021-22 under the Federal
Government's HomeBuilder scheme. A recent hike in interest rates has dampened work on new
subdivisions.
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How do successful businesses overcome volatility?

Secure a highly skilled workforce
Industry contractors require employees with extensive technical skills to successfully manage complex
construction projects. Contractors also require employees with engineering skills, and administrative
and business management abilities.
Develop links with suppliers

Road contractors benefit from establishing good relationships with key sources of material inputs, like
gravel, asphalt and concrete, to ensure adequate product quality and supply timeliness.
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Outlook
↓ 2024-29 Revenue CAGR -4.1%
What's driving the industry outlook?
Construction activity is set to remain historically high despite a substantial contraction
 Revenue is set to fluctuate considerably over the short term as work on large-scale projects starts
and ends. Still, ongoing maintenance and upgrade activity on roads and bridges will help cushion
the blow from landmark construction projects reaching completion.
 Work on the giant WestConnex and Sydney Gateway developments in New South Wales and
Melbourne's WestGate Tunnel project are scheduled for completion in the next few years. Still, work
will ramp up on several Sydney projects, notably the Western Harbour Tunnel, the Warringah
Freeway Upgrade, the Beaches Link and the $2.5 billion M6 Stage 1 project in the longer term.
Contractors face a few bumps in the road ahead
 A slump in new housing construction following rising interest rates and the end of the HomeBuilder
stimulus points to weaker demand for roadwork on housing subdivisions and local roads. These
markets are critical for many of the industry’s small-to-medium contractors.
 The state road authorities are forecast to rein in spending on new roads and will continue to
encourage private equity participation through public-private partnership (PPP) arrangements.
 Federal funding under the Infrastructure Investment Program and the Freight Highway Upgrade
Program will continue to provide a multi-year revenue for constructing critical arterial and national
roads. The Roads to Recovery Program (R2R) will continue to deliver funding for local road
networks.
PPP funding of public roads and joint-government funding of upgrades will provide avenues for
expansion
 The industry will remain busy on the back of road funding coming through the PPP model and
Federal-State government commitments, including funding for the Level Crossing Removal Project
in Melbourne, involving the removal of 110 railway level crossings by 2030.
 Major publicly funded upgrades and extensions to existing roads include the Coffs Harbour Bypass
in New South Wales, the Rockhampton Ring Road on the Bruce Highway in Queensland and the
multi-staged Northern Road upgrade in New South Wales.
 Construction on the PPP-funded $16.5 billion North East Link project in outer Melbourne will ramp
up over the coming years, and includes 6.5-kilometre three-lane twin tunnels set for completion in
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2028-29.
Profitability is set to deteriorate as competition intensifies
 The completion of several landmark road, bridge and tunnel projects will contribute to narrowing
profit margins through 2028-29, as competition gradually intensifies across most market segments.
 Upwards pressure on material input prices is projected to ease as global supply chains recover from
pandemic disruptions. A minor reduction in industry wage costs may favour some contractors’ profit
performances.
 Smaller contractors face fierce competition chasing work on local road projects and road
maintenance, contributing to a forecast decline in enterprise numbers as contractors exit the
industry. Industry employment is also set to contract in response to weaker construction of new
road projects.
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Life Cycle
Mature
Why is the industry mature?
Contribution to GDP
The industry is in the mature stage of its life cycle. Industry value added is expanding slower than the
Australian economy but is currently performing at historically high levels. Governments invest in transport
infrastructure construction to improve economic efficiency.
Market Saturation
The market widely accepts road and bridge construction services, and the industry is approaching
saturation. Population and economic growth continue to drive the requirement for road construction.
Contractors may strengthen their market position by improving price and technological competitiveness.
Innovation
Innovation has principally come from the widespread acceptance of private equity participation in public
infrastructure projects through public-private partnership agreements (PPPs).
Consolidation
The industry mainly comprises small-scale businesses that contest narrow regional or niche service markets.
There is limited scope for consolidation, but several large-scale contractors, like CPB Contractors Acciona
and John Holland, secure the lion's share of major road projects.
Technology and Systems
Technological advancements in construction materials, capital equipment and construction techniques have
contributed to incremental improvements in road and bridge construction. Advances in modelling software
can deliver productivity improvements in project design, management, budgeting and task scheduling.
28
Products and
Markets
Find out what the industry offers,
where trade is most concentrated and
which markets are buying and why.
29
4. Products and Markets

https://my.ibisworld.com/au/en/industry/E3101/products-and-markets
Highlights
Largest Market
Product Innovation
$27.8bn Moderate
Road and tunnel construction
Key Takeaways
 Two-thirds of industry revenue is derived from constructing new road projects, including
multi-lane highways, toll roads and local street networks. The start-up of landmark road
developments in the major capital cities has boosted activity in recent years.
 Record road and upgrade funding from the state and territory road authorities has driven
robust expansion for the industry. The injection of additional funding for transport infrastructure
during the COVID-19 pandemic boosted the market.
30
Products and Services
How are the industry’s products and services performing?
An injection of funding has boosted new road and tunnel construction
 Two-thirds of industry revenue is derived from constructing new road projects, including multi-lane
highways, toll roads and local street networks. This share has trended upwards slightly through
2023-24 with the beginning of work on landmark road developments in the major capital cities.
 Revenue in this segment fluctuates with the start-up and completion of landmark road projects.
Many smaller contractors depend on the development of roadwork on new housing subdivisions.
 Landmark road tunnel projects have characterised the industry's recent performance, including the
twin tunnel development on the WestConnex project in Sydney and the WestGate Tunnel Project in
Melbourne.
31
Limited upgrade work on existing highways and freeways has constrained growth
 State road authorities often prefer investing in upgrades to existing roads over new road
construction, which requires feasibility studies, extensive planning, land acquisition, design and
construction.
 The federal and state governments have invested heavily in significant upgrades over recent years,
including on the Pacific Highway and Princes Highway in New South Wales, the Bruce Highway in
central Queensland and the Monash Freeway in Victoria.
 Revenue from upgrades to existing infrastructure has contracted through 2023-24, reflecting the
recent completion of work on several urban freeways.
Spending on maintenance is stable as investment focuses on new projects
 Maintenance and repairs to existing road infrastructure have remained steady as a share of revenue
through 2023-24, moderated by the magnitude of growing investment in new construction and
significant freeway upgrade projects.
 The state road authorities, like VicRoads and Main Roads WA, play a central role in road network
maintenance. The prominent contractors capture the lion's share of long-term maintenance
contracts on public and private roads.
Construction work on bridges and overpasses climbed as part of large-scale motorway projects
 Work on constructing bridges, overpasses and non-road infrastructure has climbed as a source of
industry revenue, principally reflecting the construction of overpasses on significant motorway
developments.
 Bridge construction is a relatively minor share of revenue in Australia compared with most large
countries like the United States, Canada and China, reflecting the flat terrain and arid conditions.
 The industry's non-road projects include airport runways, private driveways, car parks, drainage and
guttering infrastructure for roadworks. New runways slated for Melbourne International Airport and
Western Sydney Airport will strengthen activity in this segment.
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What products or services do successful businesses offer?

Specialise in a product or service that is considered essential by legislators
Road and bridge construction contractors provide essential services to keep the country running. An
increasing acceptance of PPP arrangements among governments has meant contractors are
increasingly interacting with public bodies to secure work.
Provide superior after-sales service

Many contractors secure maintenance contracts as part of construction agreements, to ensure they
have stable ongoing revenue streams. Being a reliable source for post-construction maintenance and
repair works can make a contractor's tender more appealing.
What are innovations in industry products and services?
Road funding models are changing with public-private partnership (PPP) agreements
 Greater use of PPP agreements to fund large-scale public road projects has enhanced the pace of
industry expansion.
 Federal, state and territory governments have implemented PPP arrangements to deliver
improvements in the road network while not overburdening public budgets.
 Significant road projects funded under PPP arrangements include the WestConnex in Sydney, the
Bruce Highway Upgrade in Queensland and the WestGate Tunnel in Melbourne.
Technological advancements have improved the precision of project design and construction
 Innovations in road construction have come from technological improvements in project design,
construction techniques and capital equipment. These have included the use of project
management software to monitor progress and automate procurement and computer-aided design
(CAD) software to deliver greater precision in construction.
 Contractors increasingly used GPS-guided directional and levelling machinery to accurately lay road
pavement and specialist asphalt recycling machinery to recycle existing road pavement.
 Advancements in road tunnel construction using sophisticated tunnel boring machines (TBMs) have
broadened the scope of project design. These TBMs can automatically place precast concrete tunnel
lining during the boring process.
33
Major Markets
What’s influencing demand from the industry’s markets?
An injection of state funding on landmark developments and upgrades has provided a boost
 The state and territory road authorities manage, maintain and construct arterial road networks and
during the COVID-19 pandemic these authorities distributed additional funding for transport
infrastructure projects.
 State road funding has climbed as a share of industry revenue through 2023-24, reflecting the scale
of current public road projects and an injection of private equity under public-private partnership
agreements (PPPs).
 States and territories fund the bulk of their road activities through own-source revenue (e.g. taxes,
vehicle registration and fines), with the balance from federal grants.
34
A slump in private funding of roads on new housing subdivisions has hindered growth
 Funding of toll roads and PPP-related developments has underpinned the private sector share of
total road and bridge construction. Still, private funding for road infrastructure for housing
subdivisions has collapsed following a recent hike in mortgage interest rates and the end of the
HomeBuilder subsidy.
 Major private toll road projects, like EastLink in Melbourne and Lane Cove Tunnel in Sydney, are
typically promoted by a consortium comprising financial institutions, construction contractors,
engineering and other consultants.
 Major PPP road projects, like WestConnex in Sydney and the West Gate Tunnel in Melbourne, are
based on the build-own-operate-transfer principle and revert to state ownership after 25 to 30
years.
Infrastructure Australia has expanded Federal Government funding
 The Commonwealth Government disburses tied grants for specific projects and general grants to
the state governments. It has traditionally funded roads of national significance under the National
Highway Upgrade Program, the National Freight Highway Upgrade Program and the Black Spot
Program.
 Federal road and bridge funding has trended upwards as a share of revenue through 2023-24,
reflecting a boost to the financing for nationally significant roads under the Infrastructure
Investment Program.
Weaker spending by local governments has worn down revenue
 Tight municipal budgets and a greater dependence on own-source revenue have dampened local
government funding of road construction projects through 2023-24. Much of the funding for local
roads for subdivisions comes from private land developers.
 Local road and bridge construction focuses on scheduled maintenance and repair work, funded
through directly tied grants from the Federal Government or through own-source revenue.
35
Geographic
Breakdown
Discover where business activity is
most concentrated in this industry
and what’s driving these trends.
36
5. Geographic Breakdown
https://my.ibisworld.com/au/en/industry/E3101/geographic-breakdown
Key Takeaways
 Victoria's share of national road construction has recently risen with the start of major road
projects. Still, the state's concentrated population has historically contributed to a below-average
share of road construction.
 Queensland has a comparatively high share of industry enterprises, reflecting the road
network's wide dispersal. Road construction in Queensland has fallen following the recent
completion of significant road projects.
37
Business Locations
Percentage of total industry Establishments,Population in each region
State/Territory Establishments Population

% %
NSW 28.8 32.6
VIC 28.0 24.8
QLD 22.0 20.0
WA 12.0 10.1
SA 4.1 7.5
TAS 2.4 2.3
NT 2.2 1.0
ACT 0.5 1.6
38
Where are industry businesses located?
There is a skew in industry enterprise numbers towards Victoria
 Victoria's share of industry enterprises exceeds the state's one-quarter share of the national
population, which reflects the surge in work on new residential subdivisions under the HomeBuilder
stimulus and progress on significant developments like the West Gate Tunnel and the North East
Link projects.
 Victoria typically accounts for a below-average share of the value of the nation's road construction
and maintenance activity. The state's lower per-capita spending on road infrastructure reflects the
more concentrated population settlement.
New South Wales road construction is consistent with the state's population and economic activity
 New South Wales's share of industry enterprises falls below its share of the national population. Still,
the state accounts for about one-third of the value of road and bridge construction and is home to
several prominent contractors.
 The value of road and bridge construction in New South Wales peaked at about 40% from 2015-16
through 2018-19, coinciding with the peak construction stages of the NorthConnex and
WestConnex motorways and the Northern Road Upgrade.
Queensland's high share of enterprises reflects the size of the state's road network
 Queensland has a disproportionately high share of industry enterprises, but the value of
construction is consistent with the state's one-fifth share of Australia's population and economy. The
many enterprises reflect the spread of construction and maintenance activity across the state's
dispersed population settlement.
 Queensland's construction activity has fallen following the completion of significant road projects,
including the Ipswich Highway upgrade, the Toowoomba Second Range Crossing and the Logan
Enhancement project.
39
40
Competitive
Forces
Uncover challenges and benefits in
the operating environment, digging
into market share, buyer and supplier
power and key success factors for
operators.
41
6. Competitive Forces
https://my.ibisworld.com/au/en/industry/E3101/competitive-forces
Highlights
Concentration Competition Barriers to Entry

Low ↓ High Steady Moderate Steady
Substitutes Buyer Power Supplier Power

↑ Low Steady ↓ High Steady Moderate ↓ Increasing
Key Takeaways
 Contractors must demonstrate a proven capacity to complete projects on time, within budget
and meeting technical specifications. Price becomes a point of differentiation once contractors
have proven their capabilities.
 The industry is exposed to substitution from special construction trade contractors providing
concreting and earthmoving services. These special construction contractors often undertake
discrete phases of projects.
42
Concentration
Low
What impacts the industry’s market share concentration?
The large-scale competitors include state road authorities and civil contraction contractors
 The Road and Bridge Construction industry has a low market share concentration, with the four
largest contractors contributing about one-quarter of industry revenue. Still, the concentration has
gradually risen in response to strategic acquisitions by leading private sector contractors.
 The industry includes state and territory road authorities, like Road and Maritime Services NSW, and
large multi-disciplined engineering construction contractors, like CIMIC Group and John Holland
(CCCI Australia). Some leading contractors have expanded their market share through strategic
acquisitions, including CIMIC Group and Acciona.
Contractors have expanded employment to meet heightened activity
 The industry mainly comprises small-to-medium-scale enterprises competing within narrow

geographic or niche product markets. Over 40% of businesses have no paid employees and
comprise mainly sole proprietors and partners.
43
 While the industry has a low market concentration and many small-scale businesses, the number of
enterprises employing more than 20 workers has risen sharply in recent years to meet record levels
of road and bridge construction activity.
 Over one-third of the smallest enterprises generate annual revenue of less than $200,000. Still, the
industry includes many large-scale businesses, with one-quarter of enterprises generating annual
revenue exceeding $2.0 million and almost 10% generating over $10.0 million.
How do successful businesses handle concentration?

Compete on tender
As most publicly funded road and bridge construction contracts are let by tender, contractors must
set tender prices to allow sufficient cashflow and profitability. Many contractors form strategic
alliances to reduce tendering risks.
Develop a strong reputation

The largest road and bridge construction contractors have established reputations and track records
of successful projects. A contractor's track record is often considered before pricing when choosing
between tender applications.
44
Barriers to Entry
Moderate Steady
What challenges do potential industry entrants face?
Legal
 The Road and Bridge Construction industry has negligible legal barriers to entry. New competitors
must comply with technical guidelines set out by the state-based road authorities, and contractors
must hold internationally accredited standards (ISO) certification on most public contracts.
Start-Up Costs
 New entrants face high start-up costs in acquiring specialist and expensive road construction
machinery like GPS-guided levelling vehicles and asphalt pavement recycling machines. Rental of
capital equipment can minimise start-up costs but will likely prove less efficient over the long term.
Differentiation
 New entrants will struggle to differentiate their services from existing contractors that leverage their
proven track record and client relationships when tendering for contracts.New competitors may
differentiate their technical capabilities in the delivery of niche services.
Labour Expenses
 The bulk of industry value added comes from project management and labour services. While the
industry has a significant capital requirement, it also has a substantial requirement for skilled and
manual labour for laying asphalt pavement.
Labour Expenses
 The industry's principal value added comes from the provision of skilled labour and project
management services. While the industry has a significant capital requirement, it also has a
substantial requirement for skilled and manual work for laying asphalt pavement.
45
How can potential entrants overcome barriers to entry?

Ensure ready access to investment funding
Companies seeking an equity involvement in projects must develop strong
relationships with major financial institutions, including superannuation funds, to
ensure access to adequate finance.
Compete on tender
As most publicly funded road and bridge construction contracts are let by tender,
contractors must set tender prices to allow sufficient cashflow and profitability. Many
contractors form strategic alliances to reduce tendering risks.

Road contractors benefit from establishing good relationships with key suppliers of
material inputs, such as gravel, asphalt and concrete, to ensure adequate product
quality and supply timeliness.
Establish well-developed internal processes

Contractors should ensure that project stages are completed on schedule and within
financial requirements to maintain profitability and develop a good reputation.
46
Substitutes
Low Steady
What are substitutes for industry services?
Outside competition
 The industry is exposed to substitution by special construction trades that complete discrete stages
of construction like earthmoving contractors laying the road sub-base or concreting contractors for
the placement of traffic barriers and bridge panels.
 Prime building contractors may directly compete with the industry on the delivery of specialist
projects, like constructing commercial car parks and paving community recreation facilities.
 The allocation of scarce public infrastructure funding represents another source of substitution.
Government agencies allocate investment towards alternative transport modes, like railway, air and
water transport.
Prefabricated construction components
 The greater use of prefabricated components in road and bridge construction represents a critical
substitution source for industry services by replacing the value added through on-site construction
with that added through offsite manufacturing. The prefabricated products may improve the
precision of construction and expedite the construction process.
 Most large-scale road, bridge and tunnel projects use precast concrete products like box culverts,
concrete columns, girders, traffic barriers and prefabricated steel components for bridges.
 The construction of major road tunnels for projects like WestConnex in Sydney and Melbourne's
West Gate Tunnel requires the manufacture of precast tunnel liners for placement by giant tunnel
boring machines (TBM).
47
Buyer & Supplier Power
What power do buyers and suppliers have over the industry?
Buyers: Contractors must demonstrate technical capability to win contracts
 The core buyers for road construction services are government agencies, private toll road operators,
residential subdivision developers and resource companies. The relative concentration of buyers
48
tends to strengthen their bargaining position.

 Road and bridge construction contractors must demonstrate the technical capability to deliver a
project within the design parameters and time and budget specifications. Only when buyers are
satisfied with a contractors' technical capabilities, is price competition used to differentiate between
contractors.
 Buyers can switch between contractors on most projects without incurring additional expenses. Still,
there could be less capacity to switch between contractors on highly complex or large-scale road
projects and where long-term maintenance is included in the contract.
Suppliers: Limited sources of specialist equipment
 There are limited suppliers of specialist capital equipment used in road construction, like GPS-
guided earthmoving, levelling and pavement-laying machinery, which tends to strengthen suppliers'
pricing power.
 Specialised equipment and the requirement for original equipment manufacturer parts and servicing
limits contractors' capacity to switch between equipment suppliers.
 Construction contractors have a choice of many wholesale suppliers of construction materials like
aggregate, sand, cement and concrete products, which may erode suppliers' pricing power.
 On fixed-price contracts, contractors will find it difficult to pass on higher input prices to clients,
which could significantly diminish their profitability.
How do successful businesses manage buyer & supplier

power?
Ensure ready access to investment funding
Companies seeking an equity involvement in projects must develop strong
relationships with major financial institutions, including superannuation funds, to
ensure access to adequate finance.

Road contractors benefit from establishing good relationships with key suppliers of
material inputs, like gravel, asphalt and concrete, to ensure adequate product quality
and supply timeliness.
49
Companies
Find out which companies hold the
most market share and how revenue,
profit and market share have shifted
over time for these leaders.
50
7. Companies
https://my.ibisworld.com/au/en/industry/E3101/companies
Key Takeaways
 The state road authorities, like Main Roads WA and VicRoads, retain pivotal roles in
promoting, designing and managing major road construction projects. Road authorities
increasingly outsource construction on significant developments while retaining design and
management roles.
 Participation in consortiums is the preferred approach for many larger contractors when
bidding on public road projects. Consortium membership allows contractors to spread the risk
and optimise their resources for contract tenders.
Market Share
51
Chart displays current year only in the PDF version of this report. You can view and download chart
for all other years associated with this industry on my.ibisworld.com.
52
Companies
Company Market Share (%) Revenue ($m)
2024 2024
Transport for NSW 11.3 4,700.0
CIMIC 7.0 2,900.0
Transport for Victoria 4.3 1,764.0
Roads 3.4 1,396.2
Acciona Energy 3.0 1,245.0
Acciona Construction Holdings Pty Ltd 2.5 1,047.1
John Holland 2.5 1,037.0
Department of Transport and Main Roads QLD 1.7 698.1
Fulton Hogan 1.5 622.0
Boral 0.8 349.0
Main Roads Western Australia 0.8 349.0
BMD Holdings Pty Limited N/A N/A
You can view and download company details on my.ibisworld.com.
53
Transport for NSW

Company Details
Department of Transport
Registered Name
NSW
Industry Revenue (2024) $4.7bn
Industry Market Share

11.3%
(2024)
Description
Transport for NSW, trading as TfNSW, is an agency of the New South Wales Government and part of the
Department of Transport. The organisation, founded in 2011, has an annual budget of almost $30.0 billion
and over 28,000 employees. TfNSW manages a road network exceeding 18,000 kilometres, or
approximately 10% of the total road kilometres in the state, with the local government sector responsible
for 90% of the road network by length.
Brands and Trading Names
 Sydney Trains
 Sydney Ferry
 Roads and Maritime Services (RMS)
 NSW Trains
 State Transit Authority
 TfNSW
Other Industries
 Public Transport in Australia

 Urban Bus and Tramway Transport in Australia
 Road Maintenance in Australia
 Toll Road Operators in Australia
 Rail Passenger Transport in Australia
Company’s Industry Revenue, Market Share, and Profit Margin Over Time
54
Year Industry Revenue ($ million) Market Share (%)
2012-13 2310 8.7
2013-14 2140 10.1
2014-15 2230 11.2
2015-16 2620 12.4
2016-17 3100 12.7
2017-18 3480 11.7
2018-19 3750 13.3
2019-20 3810 13.8
2020-21 3810 13.9
2021-22 4150 12.8
2022-23 4700 11.5
2023-24 4700 11.3
What's impacting Transport for NSW's performance?
TfNSW is Australia's largest public sector road authority
 TfNSW directly constructs and maintains some roads within its network, but most construction is
outsourced to private contractors, with TfNSW retaining project design and management activities.
 TfNSW-sponsored projects have included the public-private partnership-funded WestConnex
project, along with the publicly funded Pacific and Princes Highway upgrades, including the Coffs
Harbour Bypass.
 TfNSW's planning, design and management involvement in urban and regional highway projects
includes the Western Harbour Tunnel, The Northern Road, the Warringah Freeway Upgrade, the
Beaches Link and Sydney Gateway.
55
CIMIC
Company Details
Registered Name CIMIC Group Limited
Industry Market Share (2024) 7.0%
Description
CIMIC Group Limited was founded in 1949 and is headquartered in North Sydney. CIMIC Group is
Australia's largest building and infrastructure contractor, and operates internationally. The company is a
subsidiary of the German construction company Hochtief AG, which fully acquired CIMIC Group and
delisted it from the ASX in May 2022. Hochtief AG is owned by the Spanish firm Grupo ACS. CIMIC Group
owns CPB Contractors, UGL Limited and Pacific Partnerships, and has a stake in Ventia.
 Thiess
 Ventia
 UGL
 Services
 CPB Contractors
 UGL Pty Limited
 UGL Limited
 Visionstream
 Sedgman
 Broadspectrum
 Pacific Partnerships
 MACA
Other Industries
 Heavy Industry and Other Non-Building Construction in Australia

 Site Preparation Services in Australia
 Rail Maintenance in Australia
 Contract Mining Services in Australia
56
 Water and Waste Services Infrastructure Construction in Australia

 Electrical Services in Australia
 Railway Track Construction in Australia
 Institutional Building Construction in Australia
 Infrastructure Maintenance Services in Australia
 Wireless Tower Construction in Australia
 Oil and Gas Field Services in Australia
 Construction in Australia
2012-13 1350 5.1
2013-14 1420 6.7
2014-15 1200 6.0
2015-16 1820 8.6
2016-17 1990 8.1
2017-18 2110 7.1
2018-19 2220 7.9
2019-20 1890 6.9
2020-21 1740 6.3
2021-22 2080 6.4
2022-23 2700 6.6
2023-24 2900 7.0
What's impacting CIMIC's performance?
CPB Contractors' strong project portfolio puts it in the box seat to win significant projects
 CIMIC Group primarily operates in the industry through CPB Contractors, which has led consortiums
and joint ventures in constructing some of Australia's most significant road projects. The company's
extensive portfolio puts it in pole position to win further projects.
 CPB has worked on projects in various states including the WestConnex project in New South Wales,
the CityLink and Monash freeways in Victoria, the Gateway WA project in Western Australia, and the
57
Torrens Road to River Torrens project in South Australia.
Construction delays and legal issues have plagued the WestGate Tunnel project
 CPB Contractors has been involved in a joint venture with John Holland on the PPP-funded
WestGate Tunnel project in Victoria, led by Transurban. The project has encountered significant
delays and cost blowouts associated with disputes over treating contaminated soil.
 CPB Contractors' industry-specific revenue is expected to rise despite WestGate Tunnel delays
wreaking havoc on revenue and profitability during 2020 and 2021.
 The company's performance has rebounded in recent years as work progressed on Melbourne's
North East Link and Sydney's M6 Motorway while the WestGate Tunnel Project proceeds at an
accelerated pace.
58
Transport for Victoria

Company Details
Department of Transport and

Registered Name
Planning Victoria
Industry Revenue
$1.8bn
(2024)
Industry Market
4.3%
Share (2024)
Description
The Department of Transport and Planning Victoria took responsibility for the VicRoads (Roads
Corporation) road management functions in January 2020, including planning, designing and maintaining
the state’s road transport network. VicRoads is also responsible for vehicle registration, driver licensing,
road safety, traffic management, maintenance programs and emergency road repairs. VicRoads increasingly
outsources construction and maintenance activity to private contractors. Major Road Projects Victoria (Big
Build) is responsible for delivering new roads, road widening, new bridges and significant freeway upgrades.
 VicRoads
Other Industries
 Road Maintenance in Australia
2022-23 1743 4.2
2023-24 1764 4.3
59
What's impacting Transport for Victoria's performance?
The body oversees the state’s landmark road developments
 VicRoads and Major Road Projects Victoria oversee the planning, design and construction of major
road projects, including the M80 Western and Metropolitan Ring Road widening, the widening of
the CityLink Tullamarine and Monash freeways and the development of the $375.0 million
Mordialloc Freeway.
 VicRoads has been responsible for developing several PPP-funded road projects, including the West
Gate Tunnel Project built by Transurban and the $15.8 billion North East Link project spanning
2020-21 and 2028-29.
60
Roads
Company Details
Registered Name Roads Corporation
Industry Market Share (2024) 3.4%
Description
Roads Corporation, trading as VicRoads, is responsible for planning, designing and maintaining roads and
bridges in Victoria. The company has management responsibility for all Victorian roads other than local
roads, which are the responsibility of Victoria's 79 municipal councils. VicRoads is also responsible for
vehicle registration, driver licensing, road safety, traffic management, maintenance programs and
emergency repairs for roads and bridges. VicRoads is increasingly outsourcing construction activity to
private contractors.
2022-23 1396 3.4
2023-24 1396 3.4
What's impacting Roads's performance?
VicRoads oversees landmark road developments across Victoria
 VicRoads has overseen the construction of several major road projects, including the M80 Western
and Metropolitan Ring Road widening, the CityLink Tulla Widening project and the Monash Freeway
Upgrade Stage 1 and Stage 2.
 VicRoads is also responsible for significant publicly funded developments, like the $110.0 million
Chandler Highway bridge project over the Eastern Freeway and the $375 million Mordialloc Freeway.
 VicRoads has been responsible for developing several PPP-funded road projects, including the West
Gate Tunnel Project built by Transurban and the $15.8 billion North East Link project spanning
between 2020-21 and 2028-29.
61
Acciona Energy
Company Details
Acciona Energy Oceania

Registered Name
Pty Ltd
Industry Market Share

3.0%
(2024)
Description
Acciona Energy Oceania Pty Ltd (Acciona) is headquartered in Melbourne and is a wholly owned subsidiary
of the Spanish firm Acciona Energia S.A.. The company strengthened its position in the Australian market
after it acquired much of Lendlease's engineering construction business in 2019. The Lendlease acquisition
covered eight major infrastructure projects, including the level crossing removal project in Melbourne, the
Ballarat Line Upgrade in Victoria, the Western Sydney International Airport earthworks and several major
road construction projects.
 Acciona
Other Industries
 Heavy Industry and Other Non-Building Construction in Australia
2022-23 1047 2.6
2023-24 1245 3.0
62
What's impacting Acciona Energy's performance?
The acquisition of Lendlease's projects has boosted Acciona's portfolio
 Acciona has taken a role in joint ventures working on large-scale road projects, including
participating in the PPP-funded construction of the Toowoomba Second Range Crossing in
Queensland, stages of the Pacific Highway upgrade in New South Wales and the Northern Road &
Bringelly Road Upgrade Stage 2 and Stage 3 in Western Sydney.
 Acciona significantly strengthened its industry presence by acquiring much of Lendlease's
engineering business, including a role in the WestConnex 3A, Northern Road Upgrade and the
Pacific Highway W2B projects in New South Wales and several stages of the Level Crossing Removal
Project in Victoria.
63
External
Environment
Understand the demographic,
economic and regulatory factors
positively and negatively affecting the
industry.
64
8. External Environment
https://my.ibisworld.com/au/en/industry/E3101/external-environment
Highlights
Regulation & Policy Assistance

↓ High ↓ Increasing ↓ Low Steady
Key Takeaways
 Constructing roads on new residential subdivisions is a core source of revenue for many
small-scale contractors. A recent hike in mortgage interest rates and the end of the HomeBuilder
stimulus will drive down road construction for new subdivisions.
 Much of the work on public road projects requires contractors to hold ISO international
certification. These include Quality Management Systems, Occupational Health & Safety
Management and Environmental Management certificates.
 Two-thirds of the funding for road and bridge construction comes from federal, state and
territory governments. Comprehensive public transport policies directly drive the industry's
performance.
External Drivers
What demographic and macroeconomic factors impact the industry?
65
Capital expenditure by the public sector includes grants to fund road construction and maintenance
programs. Increased private equity participation in public road projects has released public sector funding
for arterial road extensions and maintenance. Public capital expenditure surged during the COVID-19
pandemic as governments invested in significant road projects to stimulate the economy. The expected rise
in public capital expenditure during 2023-24 provides an opportunity for some contractors.
Private non-residential construction capital expenditure indicates investment trends in infrastructure and
non-residential buildings. Deteriorating investment in private non-residential construction since the
COVID-19 outbreak has threatened the industry's performance. Investment fluctuates with the start-up and
completion of significant stages of development. Private non-residential capital expenditure is expected to
climb during 2023-24, supported by public-private partnership (PPP) funding of landmark road projects.
66
Growth in new house construction drives the requirement for road construction in new residential
subdivisions, local roads and pedestrian infrastructure. House construction surged to a peak in 2021-22,
supported by the Federal Government's HomeBuilder stimulus and historically low mortgage interest rates.
The recent hike in mortgage interest rates and removal of COVID-19 stimulus are expected to reduce new
house construction during 2023-24, posing a threat to construction contractors.
The 10-year bond rate indicates prevailing and expected interest rates in the economy and reflects
government fundraising policies. The 10-year bond rate fell to record lows during the early stages of the
COVID-19 pandemic but is expected to rise during 2023-24 following the RBA raising the official cash rate
to contain inflation. The upward trend in long-term interest rates discourages investment in new
construction projects.
67
Regulation & Policy
High Increasing
What regulations impact the industry?
Civil Contractors Federation (CCF) prequalification
The Civil Contractors Federation (CCF) developed a national prequalification program to enable contractors
of all sizes to meet a minimum set of standards, including quality management, occupational health and
safety, environmental management, training and work capabilities to compete on a tender. The CCF
recognises that the costs of implementing requirements for the complete ISO quality assurance standards
are beyond many small to medium-size civil contractors and has developed the national prequalification
program based on the Civil Construction Management Code.
ISO Certification
Much of the work done on public infrastructure for public and private sector clients requires construction
contractors to hold internationally accredited standards certification implemented by the International
Organization for Standardization (ISO). Basic accreditation standards include ISO 9001 Quality Management
Systems, ISO 45001 Occupational Health & Safety Management and ISO 14001 Environmental
Management.
Australian product standards
Several standards issued by Standards Australia govern requirements for materials used to construct road
surfaces. These include AS 1160 Australian Standard for Bitumen Emulsions for the Construction and
Maintenance of Pavements, AS 2008 Australian Standard for Residual Bitumen for Pavements, AS 2150
Australian Standard for Hot Mixed Asphalt and AS 2758 Australian Standard for Aggregates and Rock for
Engineering Purposes. Austroads publishes a guide to road construction.
Work Health and Safety Act (WHS)
Safe Work Australia oversees the Commonwealth's Work Health and Safety Act 2011 (WHS). The
occupational health and safety regulations protect workers and the public by requiring wearing protective
clothing and helmets on site and providing safe working conditions like scaffolding, harnesses and
ventilation. Standards Australia sets out AS/NZS 4801:2001 Occupational Health & Safety Management
systems for organisations. State and territory inspectors enforce workplace safety regulations and can
impose on-the-spot fines.
68
State-based environmental regulations
The pressure for ecological accountability drives regulatory changes influencing the industry. Environmental
regulations are an essential aspect of road planning, construction and maintenance. Local and state
authorities oversee regulations governing noise emissions, effluence, ecological impacts and road
pavement specifications. These regulations can substantially add to construction costs and weigh a project's
profitability.
Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 paved the way for the abolition of
the Australian Building and Construction Commission (ABCC). Under the Act, construction companies and
workers are regulated under the Fair Work Ombudsman (FWO). The Act established the National
Construction Industry Forum to advise on industrial relations.
Modern Slavery Act 2018
The Road and Bridge Construction industry mainly comprises small-scale contractors with annual revenue
below the $100 million threshold required to submit reports under the Modern Slavery Act 2018. The
largest road construction corporations, including CIMIC Group, Acciona, CCCI Australia and Fulton Hogan,
have submitted reports in compliance with the Act. The multi-tiered supply chain of the Construction
division makes it difficult for contractors to validate the recruitment and employment practices of
machinery and raw material suppliers and subcontractors.
69
Assistance
Low Steady
What assistance is available to this industry?
Commonwealth Government - Infrastructure Investment Program
Commonwealth Government funds land transport infrastructure through the Infrastructure Investment
Program, which commits a 10-year $120 billion pipeline for road and rail projects of national importance.
Government investment in road infrastructure projects, like upgrading the Pacific Motorway in Northern
NSW, directly stimulates work for industry contractors. Commonwealth Government independent agency
Infrastructure Australia determines the priority of projects for consideration by the Commonwealth and
other tiers of government.
State, territory and local government funding of road infrastructure
State, territory and local government road agencies, like Main Roads WA and VicRoads, are the principal
source of public funding for road and bridge construction and ongoing maintenance. Funding comes
through own-source revenue through motor vehicle registrations and from tied Commonwealth grants.
State and territory governments increasingly promote private participation in public road projects under
public-private-partnership (PPP) arrangements.
Industry associations
Industry associations representing road and bridge construction contractors include Roads Australia, the
Civil Contractors Federation (CCF), the Australian Constructors Association (ACA) and the Australian Asphalt
Pavement Association (AfPA). Roads Australia is the national peak body of road transport stakeholders. The
CCF, ACA and AfPA represent members' interests in government, industry and community forums for
training, industry standards and accreditation.
70
Financial
Benchmarks
Understand average costs for industry
operators and compare financial data
against key ratios and financial
benchmarks broken down by
business size.
71
9. Financial Benchmarks
https://my.ibisworld.com/au/en/industry/E3101/financial-benchmarks
Highlights
Profit Margin Average Wage Largest Cost
3.7 % $166k Purchases

↓ Lower than sector ↑ Higher than sector 53.4% of Revenue
Key Takeaways
 Profit margins have widened in response to record road, bridge and tunnel construction
activity. Still, escalating input costs from pandemic-related supply chain blockages have contained
profitability.
 Purchase costs have surged in recent years following pandemic-related supply chain
disruptions. Supply chain blockages have inflated the prices of construction materials and
consumables, like aggregate, cement, concrete, steel products and fuel.
72
Cost Structure
Chart displays current year only in the PDF version of this report. You can view and download chart
for all other years associated with this industry on my.ibisworld.com.
What trends impact industry costs?
Supply chain disruptions have pushed up purchase costs
 Purchase costs for construction materials, fuel and subcontracted labour have rapidly climbed as a
share of revenue through 2023-24 in response to rising material and fuel costs stemming from
supply chain blockages during the pandemic and following the outbreak of the Russia-Ukraine
conflict.
 The industry’s critical material inputs include pre-mixed concrete and cement, concrete traffic
barriers, precast concrete road components like culverts and tunnel lining, aggregate, asphalt, steel
reinforcement mesh, bitumen and diesel.
 The industry heavily relies on non-permanent subcontracted labour and professional consultants,
which provides flexibility. Payments to subcontractors include wet hiring skilled operators for
73
earthmoving, asphalt-paving and concreting machinery.
Skilled labour shortages have pushed up total wage costs
 The industry requires significant labour input for all stages of construction, which comes from direct
employment and non-permanent subcontracted labour. Direct wages paid to employees are
expected to rise as a share of revenue through 2023-24 in response to increasing unit wage rates.
 Increased staffing to design and manage road construction and upgrade projects has lifted direct
industry employment. Increased manual labour for road construction has included traffic control
personnel and unskilled labourers.
Robust growth in road construction has underpinned wider profit margins
 Near-record road, bridge and tunnel construction activity has supported the industry’s profit
performance by easing competitive pressures and allowing contractors to lift contract prices without
jeopardising their cashflow and profitability.
 Upwards pressure on input prices, across a range of materials and equipment, following pandemic-
related global supply chain disruptions has constrained the industry’s profitability.
Machinery rental costs have surged as construction activity heats up
 A record level of road and bridge construction in recent years has lifted rental expenses as a share of
revenue through 2023-24, principally driven by hiring earthmoving, levelling, lifting and paving
machinery.
 Renting heavy construction equipment without skilled operators (or dry hire) involves the prime
contractor taking responsibility for insurance and complying with occupational health and safety
requirements, including documenting the safe work method statement.
 Premises rental expenses are minor and mainly include equipment workshops and site yards for
storing capital equipment and construction materials. Most of the small-scale contractors operate
from a home base.
Rising import prices have lifted depreciation charges
 Contractors have raised their investment in new production capacity, like heavy earthmoving
vehicles and road-laying plants, to meet a rapid expansion in road construction services.
 Depreciation costs are likely to have risen as a share of industry revenue in response to greater
investment and the higher prices of imported capital equipment stemming from supply chain
blockages and a weaker Australian dollar.
 Capital expenses are typically higher for larger road construction companies, like CPB Contractors
and Fulton Hogan, that often optimise their efficiency by directly acquiring heavy earthmoving
machinery and relocatable buildings.
74
75
Key Ratios
Year Revenue per Revenue per Employees per Employees Average Wages/ Estab. per IVA/
Employee Enterprise Estab. per Ent. Wage Revenue Enterprise Revenue
($) ($ million) (Units) (Units) ($) (%) (Units) (%)
2007-08 610,765 13.0 19.9 21.3 136,350 22.3 1.1 29.5
2008-09 593,896 15.2 23.7 25.5 133,690 22.5 1.1 32.3
2009-10 580,003 13.0 20.9 22.4 126,926 21.9 1.1 35.5
2010-11 609,970 13.2 20.1 21.7 132,938 21.8 1.1 29.4
2011-12 551,685 14.2 24.0 25.8 147,210 26.7 1.1 30.2
2012-13 608,920 15.1 23.1 24.9 164,507 27.0 1.1 31.8
2013-14 711,831 11.5 15.1 16.2 168,409 23.7 1.1 30.0
2014-15 812,604 11.0 12.6 13.5 181,368 22.3 1.1 29.3
2015-16 736,285 11.9 15.0 16.1 183,931 25.0 1.1 30.5
2016-17 691,395 13.4 18.0 19.4 175,384 25.4 1.1 31.0
2017-18 730,999 16.0 20.4 21.9 169,106 23.1 1.1 28.4
2018-19 685,441 14.4 19.6 21.0 160,002 23.3 1.1 29.0
2019-20 705,775 13.9 18.3 19.6 175,602 24.9 1.1 29.8
2020-21 665,857 13.3 18.6 20.0 151,802 22.8 1.1 26.4
2021-22 675,635 14.3 19.7 21.2 148,144 21.9 1.1 26.7
2022-23 718,654 16.3 21.0 22.6 162,411 22.6 1.1 28.8
2023-24 710,237 15.9 20.8 22.4 166,492 23.4 1.1 29.6
2024-25 690,148 15.0 20.2 21.7 161,948 23.5 1.1 28.9
2025-26 667,256 14.0 19.6 21.0 157,457 23.6 1.1 28.1
2026-27 666,642 14.0 19.6 21.0 153,508 23.0 1.1 28.0
2027-28 669,636 14.1 19.6 21.1 154,264 23.0 1.1 28.1
2028-29 674,841 14.4 19.8 21.3 155,018 23.0 1.1 28.3
2029-30 668,891 14.1 19.6 21.1 155,815 23.3 1.1 28.1
2030-31 N/A N/A N/A N/A N/A N/A N/A N/A
76
Key Statistics
Discover 14 years of historical, current
and forward-looking industry
performance data in table format.
77
10. Key Statistics

https://my.ibisworld.com/au/en/industry/E3101/key-statistics
Industry Data
Values
Year Revenue IVA Establishments Enterprises Employment Wages
($ million) ($ million) (Units) (Units) (Units) ($ million)
2007-08 26,931 7,935 2,221 2,066 44,094 6,012
2008-09 32,586 10,531 2,311 2,150 54,868 7,335
2009-10 28,765 10,217 2,376 2,210 49,594 6,295
2010-11 30,322 8,907 2,468 2,296 49,710 6,608
2011-12 33,087 10,003 2,504 2,329 59,974 8,829
2012-13 34,458 10,965 2,448 2,277 56,588 9,309
2013-14 27,162 8,135 2,533 2,356 38,158 6,426
2014-15 25,742 7,545 2,513 2,338 31,679 5,746
2015-16 27,425 8,364 2,482 2,309 37,248 6,851
2016-17 30,560 9,460 2,451 2,280 44,201 7,752
2017-18 36,538 10,380 2,453 2,282 49,983 8,452
2018-19 33,411 9,689 2,491 2,317 48,744 7,799
2019-20 32,118 9,575 2,492 2,318 45,507 7,991
2020-21 31,161 8,222 2,519 2,343 46,799 7,104
2021-22 34,388 9,176 2,583 2,403 50,897 7,540
2022-23 42,218 12,156 2,792 2,597 58,746 9,541
2023-24 41,496 12,303 2,809 2,613 58,425 9,727
2024-25 36,932 10,679 2,646 2,461 53,513 8,666
2025-26 32,187 9,033 2,464 2,292 48,238 7,595
2026-27 32,058 8,989 2,459 2,287 48,088 7,382
2027-28 32,630 9,182 2,480 2,307 48,728 7,517
2028-29 33,673 9,534 2,520 2,344 49,898 7,735
78
2029-30 32,491 9,132 2,475 2,302 48,575 7,569
2030-31 N/A N/A N/A N/A N/A N/A
79
Annual Change
Year Revenue IVA Establishments Enterprises Employment Wages
% % % % % %
2007-08 N/A N/A N/A N/A N/A N/A
2008-09 21.0 32.7 4.1 4.1 24.4 22.0
2009-10 -11.7 -3.0 2.8 2.8 -9.6 -14.2
2010-11 5.4 -12.8 3.9 3.9 0.2 5.0
2011-12 9.1 12.3 1.5 1.4 20.6 33.6
2012-13 4.1 9.6 -2.2 -2.2 -5.6 5.4
2013-14 -21.2 -25.8 3.5 3.5 -32.6 -31.0
2014-15 -5.2 -7.3 -0.8 -0.8 -17.0 -10.6
2015-16 6.5 10.9 -1.2 -1.2 17.6 19.2
2016-17 11.4 13.1 -1.2 -1.3 18.7 13.2
2017-18 19.6 9.7 0.1 0.1 13.1 9.0
2018-19 -8.6 -6.7 1.5 1.5 -2.5 -7.7
2019-20 -3.9 -1.2 0.0 0.0 -6.6 2.5
2020-21 -3.0 -14.1 1.1 1.1 2.8 -11.1
2021-22 10.4 11.6 2.5 2.6 8.8 6.1
2022-23 22.8 32.5 8.1 8.1 15.4 26.5
2023-24 -1.7 1.2 0.6 0.6 -0.5 2.0
2024-25 -11.0 -13.2 -5.8 -5.8 -8.4 -10.9
2025-26 -12.8 -15.4 -6.9 -6.9 -9.9 -12.4
2026-27 -0.4 -0.5 -0.2 -0.2 -0.3 -2.8
2027-28 1.8 2.1 0.9 0.9 1.3 1.8
2028-29 3.2 3.8 1.6 1.6 2.4 2.9
2029-30 -3.5 -4.2 -1.8 -1.8 -2.7 -2.2
2030-31 N/A N/A N/A N/A N/A N/A
80
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IBISWorld | Road and Bridge Construction in Australia Dec 2023

Road and Bridge

1. About............................................................................. 5 5. Geographic Breakdown........................................ 37

Definition...................................................................... 5 Key Takeaways......................................................... 37

Related Terms............................................................. 5 Business Locations..................................................38

What’s Included......................................................... 6 6. Competitive Forces................................................ 42

Related Industries......................................................6 Key Takeaways......................................................... 42

Additional Resources............................................... 7 Concentration...........................................................43

2. At a Glance...................................................................9 Barriers to Entry....................................................... 45

Key Takeaways............................................................9 Substitutes................................................................. 47

Products and Services........................................... 10 Buyer & Supplier Power....................................... 48

Major Players............................................................ 11 7. Companies.................................................................51

Key External Drivers............................................... 12 Key Takeaways......................................................... 51

Industry Structure................................................... 12 Market Share............................................................ 51

Executive Summary................................................ 13 8. External Environment............................................ 65

Highlights...................................................................16 Key Takeaways......................................................... 65

Key Takeaways......................................................... 16 External Drivers........................................................ 65

Executive Summary................................................ 17 Regulation & Policy............................................... 68

Performance Snapshot......................................... 18 Assistance.................................................................. 70

Volatility...................................................................... 24 9. Financial Benchmarks............................................ 72

Life Cycle.................................................................... 28 Key Takeaways......................................................... 72

4. Products and Markets........................................... 30 Cost Structure...........................................................73

Highlights...................................................................30 Key Ratios.................................................................. 76

Key Takeaways......................................................... 30 10. Key Statistics.......................................................... 78

Products and Services........................................... 31 Industry Data............................................................ 78

ANZSIC 2006 3101

PUBLIC-PRIVATE PARTNERSHIP (PPP)

The use of outside service providers to perform various non-core activities.

Industries in the Same Sector

o Site Preparation Services in Australia

o Concreting Services in Australia

o Landscaping Services in Australia

o Metal Cladding, Waterproofing and Scaffolding Services in Australia

Revenue Employees Businesses

$41.5bn 58,425 2,613

Profit Profit Margin Wages

$1.5bn 3.7% $9.7bn

Products and Services

Key External Drivers

Capital expenditure by the public sector Positive

Private non-residential construction capital expenditure Positive

Demand from house construction Positive

10-year bond rate Negative

Barriers To Entry Moderate Steady

Regulation and Policy High Increasing

Life Cycle Mature

Revenue Volatility High

Capital Intensity Low

Assistance Low Steady

Competition High Steady

Strengths Weaknesses Opportunities Threats

Revenue Employees Businesses

$41.5bn 58,425 2,613

Profit Profit Margin

↑ 2019-24 Revenue CAGR +4.4%

Employees Employees per Business Revenue per Employee

Businesses Employees per Business Revenue per Business

Total Profit Profit Margin Profit per Business

$1.5bn 3.7% $587.6k