Engineering construction activity in Western Australia is expected to take a breather over the next two years as activity nationwide is tipped to fall 6 per cent in 2010-11, an economic forecaster says.
In its latest report, Engineering Construction in Australia 2009-10 to 2023-24, BIS Shrapnel said a fall in work done will be apparent across most civil segments, with fewer projects taking the place of current projects, which will soon be completed.
"While civil construction will remain at very high levels, a setback in work done will be hard to avoid in 2010-11," BIS senior manager for the infrastructure and mining unit, Adrian Hart said.
"Even given a ramping up of work on various projects, there will still be negative growth for the sector.
"The decline can be attributed to a double-whammy of a general decline in commencements which occurred through much of 2009, with the notable exception of the Gorgon LNG project, and a likely easing in public sector infrastructure stimulus projects."
In WA, BIS has forecast civil construction activity to surge 12 per cent this financial year, driven mainly by mining and energy projects.
"An improved outlook for the global economy has seen the prospects for Western Australian civil work improve markedly over the past six months, but a pause in work done is still expected over 2010-11 and 2011-12 as activity shifts to the next round of projects," BIS said.
Nationally, BIS has forecast activity to slow to around 9 per cent this financial year before declining 6 per cent in 2010-11.
BIS is then tipping an upswing to kick in the following year with this cycle expected to be strong, lasting for several years and peaking in the second half of the decade.
However, Mr Hart cautions against calling the next cycle a "boom".
"It is unlikely that growth in engineering construction activity over the next decade will be anywhere near as strong as the last five years, which saw work done more than double," he said.
"The 2000s boom absorbed a lot of excess capacity and, despite the GFC, the constraints created by this boom have not really left.
"Skills shortages are likely to affect plans for major expansions in mining, rail and marine work, where specialist skills are required.
"Rising construction costs through the middle of the decade are also expected to have a dampening impact on activity."
