Co
INVEST News
Edition 1
2023
FOR EMPLOYERS IN THE VICTORIAN CONSTRUCTION INDUSTRY
Here For Members In Times of Need
Welcome to CoINVEST News!
We are almost exactly one year on from the beginning of the economic pressures which saw the Reserve Bank of Australia (RBA) decide to raise cash rates for the first time since November 2010. Surplus consumer cash in the economy and bottlenecks on supply chains created a tinder box environment, primed to ignite if given enough agitation. Few could’ve predicted Russia’s invasion of Ukraine in early 2022, but this proved to be a pivotal moment, nudging global economies out of their holding patterns and into an inflationary spiral.
The construction sector had previously signalled an early warning to the rest of the Australian economy well before this, bearing the brunt of the initial Covid supply chain shocks and workforce shortages. Today’s high-interest rate and high-risk conditions have further exacerbated pressures on industries working on tight margins.
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The recent collapse of home-builder Porter Davis, and voluntary administration of Victorian construction firm Lloyd Group, have put construction and housing at the centre of Australia’s economic focus once again. With the RBA’s recent pause in raising the cash rate, it is no indication that there will be no further rate rises. The effect of these rate rises will not be fully known for at least 12 months meaning we are likely to see further hardship in our industry.
We recognise that employers may be experiencing various degrees of financial pressures. Employers who are finding it difficult to meet their long service leave obligations at this time should contact CoINVEST to discuss how we can assist.
Likewise, we know that many workers are dealing with uncertainty around cost-of-living demands, which can take a heavy toll on physical, mental, and financial wellbeing. Workers are encouraged to utilise their long service leave entitlement proactively. Taking a well-earned break helps you to reset, rejuvenate, and come back to work revitalised with the financial security of being paid for this time off.
Our members will be pleased to hear that, despite the current volatility in financial markets, the Fund remains in a healthy position with a funding ratio of 129% (assets over accrued liabilities). The financial-year-to-date investment return of the Fund was 5.34% at 28th February 2023, with $1.93B in the Fund.
Portable Long Service Leave is a vital mechanism for investing in the future of the construction industry by looking after the wellbeing and vitality of our fellow workers. One of the most visible ways that our industry is investing in its future is by diversifying the workforce and increasing the representation of women in construction roles. We celebrate International Women’s Day on 8th March 2023. It was great to see so many businesses in the construction sector embrace equity and celebrate the influence and impact of women in our industry.
Recent modelling and reports have suggested women could account for up to 20% of construction roles by 2040, with an estimated 26,000 vacancies to be filled. Celebrating the contributions of women and elevating their representation in the industry will continue to attract more women into construction roles, helping to build a stronger and more inclusive workforce which benefits the entire community. We are excited to see where the future of the construction industry will take our women, and where they will in turn take the future of the industry.
Craig Bell
Chief Executive Officer,
CoINVEST Limited
Co
INVEST Updates
Let’s take a look at some of the key messages and current talking points from CoINVEST.
Countdown to launch...
You may have heard the rumours around the industry already… CoINVEST will be rebranding and will launch with a new name, logo, and brand identity from July 2023.
You will be hearing lots about the rebrand in the run up to the launch, so keep your eyes out for some very special emails in the coming weeks and months that will keep you up to date with the changes! Make sure you have added our member email channel to your contacts or safe list so you don’t miss out on any exciting announcements:
Workers Days and Wages due 14 April
The January to March 2023 Workers Days and Wages (WDW) submission is now available for employers to complete on the CoINVEST Portal.
The due date for submission is 14 April 2023.
As the industry regulator and Trustee of the Construction Industry Long Service Leave Act 1997, CoINVEST applies strict legal and financial consequences for non-compliance relating to worker registration and return submission.
All employers should familiarise themselves with the requirements as an employer under the Act and the consequences of non-compliance at our Employer Obligations webpage.
If you require assistance or are unable to submit your WDW before the due date, please call our Member Assist team on 03 9664 7677 or 1300 COINVEST.
Industry Focus
The Female Future Of Construction In Victoria
Incolink recently partnered with The Insights Centre, commissioning a report into the future of labour force requirements for the construction industry, titled Building the Future: Why Women are Key to Victoria’s Next Building Boom.
Hundreds of women in different construction roles were surveyed to gain insights into perspectives on career opportunities, current working conditions, and perceptions in the industry. Women typically account for around 2.5% of on-site construction and trade roles. While there have been various attempts to increase female representation, levels have not significantly increased in the last 30 to 40 years. However, this metric alone does not tell the full story, as changing attitudes are starting to give us a better idea about where female representation may go from here.
In the Incolink survey, 87% of women said they want to remain in the industry long-term, 73% would recommend a job in construction to their female peers, and 71% believe that the industry is improving in terms of support and opportunities for women. This clearly shows there is an appetite for women to thrive in construction roles, which may not have been the case in previous decades despite numerous initiatives to elevate representation. Women could account for almost one in five construction workers by 2040. This increase will be essential to fill the 26,000 estimated vacancies.
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One of the factors which had traditionally differentiated the role of women and men in the workplace was the impact of child rearing responsibilities and parenting dynamics. Of the women in the survey who reported they were planning to leave the industry, the top two reasons they provided were balancing work and family responsibilities (67%) and inflexible rostering or inflexible hours (44%). It is vital to gain these kinds of insights so that industries and businesses can devise solutions which allow women to sustain their careers in their chosen field.
Industries such as construction which have experienced a rise in demand and a shortage of workers in the post-lockdown economy have had to adapt and find innovate solutions to deliver projects. Some of these adaptive solutions have involved rethinking traditionally inflexible variables such as working-hours and shift schedules to enable under-employed groups such as working mothers to bolster the workforce.
The Workplace Gender Equality Agency released data in 2022 showing that Australia’s gender pay gap could be reduced by one-third (from 23.3 per cent to 15.6 per cent) if a gender split of 40 per cent men, 40 per cent women and 20 per cent any gender could be implemented across all industries. This means more women entering sectors currently dominated by men. As Victoria continues its Covid recovery and more insights become available into women’s perspectives and experiences in construction, we may yet see further innovations to elevate and strengthen female representation in this typically under-represented industry.
Incolink’s recently released report is a key component in amplifying the voices of women and helping to inform how the future of our industry will look. You can explore Incolink’s full report at the below link:
Building the Future: Why Women are Key to Victoria’s Next Building Boom
RMIT Insights
Lessons In Risk Governance From Past Procurement Failures
CoINVEST is partnering with RMIT University to deliver articles and insights from around the construction industry. In this issue of CoINVEST News, we look at lessons that can be learned from past procurement failures with Prof Jan Hayes, Assoc Prof Rita Zhang and Dr Yen Pham, from School of Property, Construction and Project Management, RMIT University and Dr Nader Naderpajouh from University of Sydney.
Public and private sector procurement failures are unfortunately common and also very costly. The cost of replacing off-specification cladding on buildings in Victoria is estimated to be up to $1.6 billion. In addition to financial impacts, procurement failures were a significant part of the Grenfell Tower disaster in the UK in 2017 which resulted in 72 deaths. Procurement failures occur across all sectors although details are not necessarily widely known.
Under the auspices of the Future Fuels Cooperative Research Centre (FFCRC), RMIT has recently reviewed past procurement failures across a range of sectors (such as built environment, infrastructure, chemicals and aviation) to formulate lessons that can be learned for better risk governance in procurement.
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Improved management of procurement risk has the potential to save money and lives in both the project and operational phases of major infrastructure and industrial facilities. Drawing on public domain materials regarding 19 procurement failures, the top five lessons for risk governance are:
Ensure that a selected contractor or supplier has the technical capability to do the work:
There are many past cases where projects failed due to errors by a supplier or contractor who should not have been selected to perform work because they did not have the necessary skills and experience. In some cases, owners/operators deliberately chose a cheap but marginally qualified supplier and noted that extra inspection would be required to ensure a good outcome but then failed to perform such inspection/supervision. Falling into this trap can be avoided by pre-qualifying suppliers and contractors, and only inviting bids from groups who are competent to do the work.
Clearly define responsibilities and supervision:
Ill-defined responsibilities and lack of effective supervision are a significant causal factor. Interfaces are a known location for errors to arise in organisations, so clear responsibilities for all parties and effective supervision up and down the supply chain are important to ensure any problems are identified early and addressed. This also reduces conflict and misunderstandings. Linked to this is the need for a high level of project team experience and effective project oversight.
Value quality assurance and make it independent:
Procurement goes wrong when the work of suppliers and contractors is not independently checked or inspected. Problems can arise due to fraudulent test certificates, etc., but not all testing issues are the result of malicious intent on the part of suppliers. Genuine misunderstandings regarding requirements and/or technical errors occur and are most likely to be identified by a competent, independent inspection focusing on key risk activities. Problems identified must also be acted on in the short-term because making changes is usually more difficult as time goes on.
Embed operational requirements into procurement decision making:
Procurement failures occur when operational requirements are not adequately considered in procurement decisions. This can be avoided by the preparation of specifications that ensure the right operational inputs and outputs are included.
Establish common organisational goals:
The failure record shows that problems arise when a power balance between client and suppliers/ contractors is not achieved, and one side becomes highly dominant. An extremely dominating client does not necessarily get the best outcome, particularly when significant technical expertise resides with the supplier. For complex projects, ‘partnering’ style contracts are preferred to align goals and share risk and reward.
CoINVEST Limited
GPO Box 4368, Melbourne, VIC 3001
T 03 9664 7677
T 1300 COINVEST
info@coinvest.com.au
Office hours 9:00am – 5:00pm
CoINVEST Limited (ABN 35 078 004 985)
as Trustee for the Construction Industry Long Service Leave Fund
