Published in the July 2008 Australia’s Mining Monthly

In the construction sector, it is often a feast or famine as the industry grapples with the peaks and troughs in demand.

Right now it is a feast, a veritable banquet the likes of which this country has never seen before. Australia’s infrastructure construction giants have never been busier.

With hundreds of port, rail, mining, energy and civil infrastructure projects in the pipeline around the nation, the feasting could continue for years.

John Holland Structural Mechanical Process general manager Brendan Petersen confirmed demand had never been greater.

“I’d be part of a large chorus of people who would state they have never seen the industry having such a high demand for construction skills and engineering skills,” he said.

“That represents quite a risk for construction companies. The key to success of sustainable performance through this market is about being focused, being selective, knowing what you’re good at and sticking to that.”

Petersen said one of the great risks in boom times was biting off more than you can chew. “You must remember, in this industry you’re only as good as your last job,” he said.

John Holland SMP, part of Leighton Holdings, is heavily involved in coal infrastructure upgrades in Queensland and New South Wales to ease bottlenecks in the supply chain.

Its expansion of the Dalrymple Bay coal terminal south of Mackay is about 70% complete. Farther north at Bowen, John Holland is the preferred contractor for the Abbot Point X50 upgrade. A new wharf and berth is due to be finished late in 2010.

In NSW, work on the upgrade to the Port Waratah stockyards in Newcastle is about 50% complete. Handover is due early next year. John Holland also has contracts at Wollongong and Port Kembla.

“Coal probably is the major sector we are busy in,” Petersen said. “Mining infrastructure and marine infrastructure in the coal industry are very big areas for us.”

Petersen told that John Holland’s expertise in marine infrastructure had been developed over a long period. It enabled the company to deliver fast-tracked construction solutions in a sector where lengthy lead times often were the norm.

“Marine projects need a lot of forward planning,” he said. “You can’t mobilise people and plant at short notice.

“The biggest risk on these projects is safety and weather-type delays. Our strategy with SMP is to be very selective and focused with our clients and in the projects we want. What that allows us to do is to get involved very early with planning.

“The team that I run has a long history in building marine projects. They’re very specialised types of work … you need key skills. We control all the work.”

John Holland’s immediate goal is to lift its profile in Western Australia. Petersen said a major focus was on port projects in the Pilbara and at Geraldton.

“What we are looking to do is increase our presence in Western Australia,” he said. “Historically, we just have not had the representation in WA that we would have liked.”

John Holland recently was awarded a contract by BHP Billiton to build iron ore stockyards at Newman.

The Worsley alumina processing plant at Boddington and port projects for BHP and Rio Tinto in the Pilbara have been identified as key targets.

The proposed Oakajee deep water port near Geraldton, which would service several mining operations in WA’s mineral-rich Mid West, is another high priority.

Petersen said John Holland had the expertise and ability to deliver a “whole of project” solution at Oakajee.

One of the company’s biggest strengths was its diversity. Its collaborative business model, which allowed different units to work seamlessly to provide a total solution, set John Holland apart.

Despite a lengthy list of projects likely to keep construction companies busy for at least five years, the road ahead is not completely pothole-free.

The shortage of skilled labour continues to be major obstacle, often resulting in delayed start-ups or projects running longer than scheduled.

Petersen said all companies were introducing retention programs to hold on to key staff. Many were recruiting overseas to fill specialist positions.

Soaring costs, particularly energy, was now a major issue. Big jumps in the prices of raw materials, such as steel, combined with wages pressure, were driving up costs. Shortly, the industry also would have to contend with the added burden of carbon trading.

“Most major and successful constructors are realising that it’s a very volatile cost market at the moment,” he said.

“Being right on top of it, negotiating sensible terms and sharing risk issues with clients is the way to go.

“I don’t think any owner wants to see a constructor take a bath and not be able to deliver. On the other hand, owners want to know that constructors know where they are at, and that they can communicate sensibly where the costs are and how to manage escalation risks.”

Petersen identified the proposed pulp mill in northern Tasmania and BHP’s massive Olympic Dam project in South Australia as other primary targets for John Holland.

He said the resources sector in SA had huge potential although he was unsure if the timetable for infrastructure development was realistic.

To unlock the state’s mineral wealth, private rail, road, port and energy infrastructure projects worth more than $25 billion need to be completed.