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.

A total of 14 construction organisations completed the survey in 2023, with 72 per cent of participants reporting FY23 revenues of above $750 million.

Most construction companies surveyed have operations in commercial, industrial, and residential sub-sectors, with an increasing number of companies also having operations in government and build-to-rent (BTR) projects, compared to prior BDO surveys.

The survey participants in 2023 have an average of 324 full-time employees; however, the range of organisations surveyed varied from 15 employees to 742 employees.

The survey uncovers crucial insights on areas ranging from financial performance to environmental sustainability and workforce wellbeing.

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 wellbeing: The human element

The survey delves into the mental health and wellbeing of construction workers, uncovering essential insights.

It is evident that a five-day working week is widely favoured among those that work six 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.