As we approach the end of 2024, the construction industry finds itself at a complex crossroads. While the sector has long been characterised by its cyclical nature, often described as a 'feast or famine' environment, recent trends have highlighted the profound impacts on the industry.

I’m hearing that people are again feeling like they are still living through ‘The Great Exhaustion’. This environment has left many in the industry feeling exhausted, yet there are positive shifts on the horizon that could rejuvenate the sector in 2025. Is it too much, and where is the hope for 2025?

The Impact of Elections on Economic Activity

With the recent Queensland election and change of premier from Labor’s Steven Miles to LNP’s David Crisafulli prompting a slowdown in economic activity, along with the ongoing repercussions of the US presidential election on global markets, many companies are reassessing their project timelines and strategies.

The phenomenon of elections slowing down economic activity is not new, but it has become increasingly pronounced in recent years. In Queensland, the recent state election has led to a palpable pause in construction projects as companies adopt a wait-and-see approach. This hesitance stems from uncertainty surrounding policy changes, funding allocations, and regulatory adjustments that often accompany new governments. Similar patterns have been observed after US elections, where uncertainty regarding what changes Trump will make to trade policies, infrastructure spending, and regulatory changes can ripple across global markets, impacting Australian companies and our industry that rely heavily on imports and trade agreements with the US.

As businesses navigate these uncertainties as we are coming up to end of year, many are choosing to postpone or scale back projects, contributing to a sense of stagnation in the sector. This trend is exacerbated by the broader global economic climate, with inflationary pressures continuing to challenge the construction landscape.

The 5 Major Tolls of a Demanding 2024 Revealed

The construction industry has always been subject to cycles of boom and bust, but the past year has taken a toll on those working within it. After a series of intense projects, many in the industry feel exhausted, having worked tirelessly to meet deadlines and client demands and some with delayed projects where they are having to find things for their staff to do to tide them over until the new year. Factors contributing to this fatigue include:

1. Client Expectations and Employee Fatigue: Today’s clients demand exceptional quality, service, and speed, creating intense pressure on organisations and their teams. In a competitive, information-rich market, mediocrity no longer satisfies; clients now expect full value for every dollar spent. Gone are the days when getting the job done was enough - especially after COVID’s impact. Now clients are increasingly unwilling to compromise, especially when costs are high -they want every cent’s worth of value.
   Failing to meet these expectations risks both business loss and diminished trust, while also straining employees who feel they’re chasing shifting goals without sufficient support. To navigate this, organisations must provide resources that empower teams to not only meet but exceed client expectations. When staff are well-supported, they’re more engaged and equipped to deliver, setting a sustainable benchmark for service that benefits both clients and the company.
   
   
2. Economic Uncertainty: Rising inflation, political shifts, and global events have fuelled heightened concerns about job security and project viability. The Covid fallout exposed vulnerabilities across our industry, making people more risk-averse and inclined to prioritise stability over high-risk, high-return ventures. This shift affects both employee engagement and project funding, as workers and investors now scrutinise spending and potential risks more closely. Companies are under pressure to offer stability and reassurance to attract and retain talent whilst trying to put the brake on spending, highlighting the critical need for adaptability and strategic decision-making amid unpredictable economic conditions.
   Amid these uncertainties, employees increasingly seek workplaces that offer stability and support. Organisations that invest in their workforce -through career development, upskilling, and mental health resources- are better positioned to retain engaged talent. When employees feel secure and valued, they’re more likely to adapt and perform well, even in volatile times. Prioritising employee well-being strengthens internal culture, enhances reputation, and helps attract skilled talent, fostering resilience through economic shifts.
   
   
3. Skill Shortages and Long Hours: Persistent skill shortages are stretching staff thin, resulting in heavier workloads and a stressful environment. With high demand and tight deadlines, teams often scramble to meet project timelines, leading to extended hours and frequent overtime. This relentless pace is driving burnout and eroding morale as employees feel worn down by the constant demands.
   For employers, balancing client expectations with team well-being is challenging. Clients expect seamless delivery, making it crucial for organisations to invest in sustainable practices that support both performance and employee retention. Strategies like task automation, resource reallocation, or engaging temporary talent can alleviate pressure on full-time staff. By prioritising employee health, employers strengthen team morale, enhance client satisfaction, and build loyalty - laying the foundation for long-term success.
   
   
4. Mental Health Concerns: Employers are facing significant pressure to keep teams productive and engaged, making retention a critical issue. This pressure takes a toll on mental well-being, as employees juggle heavy workloads and tight deadlines. To prevent burnout, companies must implement effective support systems, such as upskilling, workload restructuring, and automation, to create a more sustainable approach to projects. Addressing mental health proactively not only boosts productivity but also fosters a culture that values employee well-being.
   For employees, the demands of a competitive job market are overwhelming, with many feeling unsupported and isolated due to inadequate mental health resources. To stay engaged and manage stress, employees need sustainable workloads, accessible mental health support, and opportunities for professional growth. When employers visibly support staff well-being, trust and morale improve, leading to better performance and long-term retention.
   
   
5. Cash is King: Inflation has significantly increased material costs, tightening profit margins and putting pressure on project budgets. In response, companies are becoming more cautious in recruitment, procurement, and budgeting, often making tough decisions about project scope, timelines, and staffing. Adding to these pressures, slow payment practices are resurfacing as businesses delay payments to suppliers and subcontractors to conserve cash. While this strategy may benefit companies in the short term, it strains smaller businesses that rely on timely payments to cover rising expenses, leading to project delays, strained partnerships, and a heightened risk of insolvency.
   For subcontractors and suppliers, rising costs and delayed payments create significant operational challenges. These businesses struggle to manage escalating expenses, including wages and materials, which disrupt cash flow and hinder their ability to meet deadlines. Smaller, less financially resilient companies are particularly vulnerable, facing the risk of insolvency and project disruptions.



Staying Positive Amidst Challenges

In the recent Queensland election, the newly elected government made key commitments to revitalise the construction industry, including a record $89 billion, four-year capital works program aimed at enhancing public infrastructure and supporting economic recovery. The program will prioritise health, education, and transport projects, driving job creation and addressing the sector’s skills shortage.

The government also plans to streamline building approvals and planning processes, aiming to reduce delays in the residential sector and boost confidence among builders and investors. Recognising challenges like rising material costs and labour shortages, the administration is committed to strategies that address these issues, fostering a resilient construction environment adaptable to economic changes.

What’s On The Horizon for 2025 – Your Action List?

Looking ahead to 2025, there are several positive changes on the horizon for the Australian construction industry. While the Australian construction industry faces several challenges as we move into 2025, there are also numerous opportunities for growth and rejuvenation. Below I’ve set out suggestions in how to positively address the above dilemmas: -

1. Client Expectations

Actions:

• Upskill Staff for High-Quality Service: Invest in training programs that focus on both technical skills and customer service excellence to ensure employees can effectively meet client demands and expectations.
• Foster Proactivity and Solutions-Based Mindset: Build a culture where employees are encouraged to anticipate client needs and address issues before they escalate. Use team meetings to brainstorm ideas for exceeding client expectations.
• Enhance Client Communication and Transparency: Set up regular updates with clients, clearly outlining project timelines, progress, and any changes in scope. Use project management tools to provide clients with real-time access to progress.
• Quality Assurance Investment: Implement robust quality control processes, including client involvement in pre-delivery inspections to exceed expectations. Consider hiring quality assurance specialists to oversee deliverables.

2. Economic Uncertainty

Actions:

• Enhance Communication on Stability and Company Vision: Reassure staff about the company's financial health and future direction through regular briefings, helping to alleviate concerns about job security.
• Flexible Workforce Planning: Balance full-time staff with contract or temporary workers to ensure adaptability and manage financial risk. Labour hire can be used to support demand spikes without long-term commitment.
• Diversify Client Base and Services: Expand into new markets and offer a broader range of services to reduce dependency on specific sectors, building resilience to economic fluctuations.
• Financial Training for Managers: Equip managers with skills in budgeting and resource management to optimise project costs and avoid overextending during uncertain periods.

3. Skill Shortages and Long Hours

Actions:

• Outsource Non-Core Tasks: Use external support for administrative and repetitive tasks to allow core staff to focus on higher-priority, strategic work. Consider virtual assistants or part-time staff to reduce the load.
• Invest in Cross-Training and Internal Mobility: Create opportunities for skill-sharing across departments and encourage internal mobility to reduce reliance on specialised roles and increase team versatility.
• Create a Balanced Workload Policy: Set clear limits for overtime, establish maximum work hours, and foster efficient time management to prevent staff from being overextended. Implement rotational shifts to distribute workloads more evenly.
• Foster a Supportive Workplace Culture: Regularly check in with staff to address workload concerns, provide wellness programs, and organise team-building activities to alleviate stress and combat burnout.

4. Mental Health Concerns

Actions:

• Introduce Mental Health Days and Flexible Schedules: Allow employees to take mental health days when needed and offer flexible working hours to support a healthy work-life balance without compromising project deadlines.
• Mental Health Training and Support Systems: Train managers to recognise signs of burnout and mental health challenges. Partner with mental health professionals to offer workshops or provide individual support services.
• Promote Team-Based Project Allocation: Distribute projects in smaller, manageable chunks and encourage collaborative work to prevent overloading individuals.
• Recognise and Reward Achievements: Build a culture of appreciation with regular recognition for outstanding contributions, fostering employee morale and ensuring team members feel valued.

5. Cash is King

Actions:

• Strengthen Cash Flow with Efficient Payment Terms: Negotiate favourable payment terms with clients and suppliers to ensure a steady cash flow. Implement early payment incentives and reminders for clients to help avoid late payments.
• Regular Financial Audits and Budget Tracking: Conduct regular financial reviews and track expenses using financial software to ensure budgets stay on track and prompt decisions are made to optimise resources.
• Focus on High-Margin Projects: Prioritise high-margin projects that align with available resources, ensuring profitability is maximised. Regularly assess the project pipeline to strategically allocate resources.
• Encourage Transparent Supplier Relations: Foster open communication with suppliers and subcontractors regarding payment schedules and explore rolling credit options to ease cash flow concerns without straining relationships.

These actions can help create a strong, adaptable approach in 2025, ensuring resilience, enhanced client trust, and a supportive culture that retains talent and meets market demands.

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Chantal Penny is the Director with Superpowers of SiteForce Recruitment. A thought leader in the industry, Chantal, based on her expertise and industry perspective, offers unique guidance, inspiration, and influence in the industry. Chantal Penny is also a thought leader in the industry with her Podcast, Talent Instinct, which is available at:
https://talentinstinctpodcast.libsyn.com/site

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