Construction industry

Customer demand, government investment and economic conditions strongly influence the industry. Success often depends on managing projects, costs and compliance.

How businesses operate

Most businesses in this industry work on distinct projects. Some have regular clients, while others win work through tenders or contracts.

Businesses often need to manage:

• multiple worksites or projects
• subcontractors and suppliers
• changing schedules and deadlines
• upfront costs before the client pays.

Demand and competition

Demand can vary by location, project type and funding source, including public or private work. Competition can be strong, especially for contracts and skilled workers.

Demand is often influenced by:

• housing and infrastructure investment
• government projects and approvals
• interest rates and financing conditions
• population growth.

Digital tools

Many construction businesses use digital tools to manage projects, finances and compliance. Digital tools can save time, but they can also introduce new risks like cyber threats.

Businesses commonly use digital tools for:

• project planning and scheduling
• estimating, quoting and invoicing
• document management and reporting
• communication with clients and subcontractors.

Risks and challenges

Construction businesses can face risks that affect cash flow, safety and project delivery.

Common challenges include:

• rising material and labour costs
• delays because of weather or supply issues
• safety risks on worksites
• payment delays or disputes.

Knowing which business risks affect you can help you plan and manage your business more effectively.

Industry statistics

Data can help you understand how businesses in this industry perform and how your business compares.

You can:

• explore annual estimates of industry income, costs, profit and capital expenditure at the Australian Bureau of Statistics
• compare your business's performance against similar ones using the Australian Taxation Office's small business benchmarks
• get the latest job market trends and insights at Jobs and Skills Australia.

These are some of the main laws:

• Competition and fair trading laws are set out in the Competition and Consumer Act 2010.
• Rules about pricing, contracts and consumer protections are set out in the Australian Consumer Law (ACL).
• The design and construction of buildings, structures, plumbing and drainage systems must follow the National Construction Code.
• Certain buildings must have access for people with disability as set out in the Premises Standards.
• Where construction work could harm protected plants, animals, habitats or places, businesses must follow the Environment Protection and Biodiversity Conservation Act 1999.
• Some construction projects need to consider Aboriginal and Torres Strait Islander heritage and native title rights.

The laws that apply to your business depend on the type of work you do and where you operate.

State, territory and local governments set the rules for construction licences and permits.

You may need a licence or permit for:

• building and trade work, such as a ‘white card’ for site access and licences for plumbing, gas fitting or electrical work
• land use and development, such as planning and zoning permits or using public land
• machinery, equipment and vehicles, including licences for heavy vehicles, cranes or forklifts
• high risk activities, such as using explosives, removing asbestos, or working with hazardous chemicals
• utilities, such as water use or connecting to sewers and drains
• environment and heritage controls, such as waste disposal, removing trees or wildlife, and heritage-listed sites.

Some construction work attracts a training levy. This fee helps fund training and skills development for workers in the industry.

The levy is payable to the state or territory where you do the work, not where your business is registered.

Contact the relevant state or territory authority to see if you need to pay a levy:

• Australian Capital Territory – Building and Construction Industry Training Fund Authority
• Queensland – Construction Skills Queensland
• South Australia – Construction Industry Training Board
• Tasmania – Keystone Tasmania
• Western Australia – Construction Training Fund (CTF)

No training levy applies in New South Wales, Victoria or the Northern Territory.

All businesses have a duty of care under work health and safety (WHS) laws and must take reasonable steps to keep workers, customers and the public safe.

Safe Work Australia has information about WHS duties and managing risks in the construction industry.

Builders may need WHS Accreditation Scheme approval before they can sign contracts for some construction projects funded by the Australian Government.

Construction work can involve long hours, job pressures and changing work conditions, which can affect mental health and wellbeing.

Training and early support can help reduce risks, support workers, and strengthen safety on worksites.

MATES offers suicide prevention training and support to people in the construction industry. Contact them if you or your staff need advice or someone to talk to.

Work in this industry has higher risks, including site damage, defects and delays. The insurance you need can change with each construction job.

Insurance types common in this industry:

• contract or construction works insurance covers damage to buildings or materials while work is underway
• professional indemnity insurance covers claims against your business for design or advice work
• domestic building or home warranty insurance protects customers if you can't finish work or fix defects
• plant, tools and equipment insurance covers theft or damage to tools, machinery and equipment.

If you’re unsure what insurance you need, talk to a licensed insurance broker, insurer or business adviser.

Your tax obligations depend on your business structure, the work you do and how you get paid.

Common industry tax tasks:

• Charge goods and services tax (GST) on your sales.
• Report personal services income (PSI) if you earn money mainly from your labour or skills, such as an independent contractor.
• Lodge a taxable payments annual report (TPAR) to declare any payments you make to contractors.

Understanding how tax rules apply to construction work can help you avoid common mistakes.

The construction industry has a large workforce that includes tradespeople, labourers and professional staff.

Many businesses hire:

• subcontractors
• casual workers
• skilled tradespeople with licensing requirements
• apprentices and trainees.

Make sure you understand your workplace obligations before hiring workers or engaging contractors.

Some workers qualify for long service leave based on service in the industry, rather than with just one employer. Check the portable long service leave rules in your state or territory.

Construction businesses often complete work in stages, with payment tied to project milestones rather than full payment at the end of a job.

Payment disputes can happen because of:

• large upfront project costs
• delayed or incomplete payments
• cost overruns
• contract disputes.

Each state and territory has security of payment laws for construction work. They set timeframes for payments, explain how to make a progress claim and give steps to help resolve payment disputes. Use the Australian Small Business and Family Enterprise Ombudsman's dispute support tool to find the rules in your state or territory.

Construction work can affect land, water and surrounding communities. Thinking about this early can help you plan work and manage costs.

Common environmental impacts include:

• waste disposal, including construction and demolition waste
• land clearing, site preparation and soil disturbance
• building in bushfire or flood-prone areas
• erosion, sediment and runoff entering stormwater drains or waterways
• construction noise and vibration
• working near waterways, protected areas or sensitive sites.

Check if any environmental laws apply to your site and project before you start work.

Energy use and costs

Day‑to‑day business choices, such as the tools, vehicles and materials you use, can affect your business' energy costs and environmental impacts.

The Department of Climate Change, Energy, the Environment and Water (DCCEEW) has tips for reducing energy costs in the construction industry.

Some projects may also need to meet energy ratings for residential or commercial buildings. These ratings can influence building design and ongoing energy costs.