The Civil Contractors Federation (CCF) is calling for targeted, practical support to help manage the impact of rising fuel prices on infrastructure delivery across Australia.

Civil construction is one of the largest users of diesel in the economy, with CCF members consuming around one billion litres annually to deliver vital infrastructure. With fuel accounting for up to 12 per cent of project input costs, recent price increases are already placing significant pressure on project delivery.

Early analysis indicates additional fuel costs of over $100 million across the civil construction industry in the first month alone, with further impacts expected as volatility continues.

At the same time, many contractors are operating under contracts that do not include rise and fall provisions, limiting their ability to share cost increases across the supply chain. As a result, some contractors are now exposed to delivering projects at a loss.

Without support from Commonwealth, State and Local Governments, these pressures risk flowing through the industry, with smaller contractors particularly vulnerable. There are growing concerns that sustained cost increases could lead to insolvencies and a loss of delivery capacity, particularly in regional areas. 

CCF is calling for governments to engage constructively with industry, including consideration of this issue through National Cabinet, to ensure infrastructure delivery remains sustainable.

CCF National CEO, Nicholas Proud, said practical, measured responses are needed to keep projects moving.

“Civil contractors are absorbing significant cost increases in real time, and that is not sustainable without adjustment,” Mr Proud said.

“This is about maintaining the delivery of essential infrastructure and ensuring the industry remains in a position to deliver for communities.”

Infrastructure numbers

• Construction requires 3.4b litres of diesel per year of which around 60% is used by civil infrastructure plant and equipment.
• Construction is the most reliant Australian industry on diesel with 79% of its energy coming from diesel.
• Like agriculture, construction uses around 10% of total diesel usage today.
• Construction contracts are largely fixed price and with government – with low margins of around 1% for $1b plus jobs and there is not a huge amount of room for additional costs.
• • Our fuel calculation indicates that fuel is roughly 7.5% of the cost of a project.
  • In this respect the increase since the conflict started has added around $50m to the price of a $1b project.
• To today, analysis indicates additional fuel costs of over $100 million across the civil construction industry in the first month alone, with further impacts expected as volatility continues.