National builders John Holland and Probuild are embracing new strategies to enhance their standing in the WA construction market.
Two major national building companies are embracing new strategies to enhance their standing in the WA construction market.
The slowdown in Perth’s construction sector is challenging the business orthodoxy of the big builders, with the fall-off in government works and glut of empty office space resulting in some lean pickings.
However, while the local market may be sluggish, it remains highly competitive.
Instead of seeking more buoyant conditions in other states, national builders John Holland and Probuild are sharpening their focus on the Western Australian market, rolling out new strategies to bolster their books.
At John Holland, the change is partly due to new ownership and in part a response to the tough prevailing conditions.
John Holland regional general manager Fraser Ramsay said there had been some significant structural changes at the builder in the past 12 months, following last April’s takeover by CCCC International Holding Limited, a subsidiary of China Communications Construction Company.
Mr Ramsay said CCCI brought a new model of delivery to John Holland, with the biggest change being the establishment of a development and investment arm.
“That’s given us a capability to invest in projects, or be a project generator rather than being a total market responder,” Mr Ramsay told Business News.
“We’re a cyclical industry, if we can generate our own projects when those troughs come, it’s going to give us a much more stable base.
“Our primary focus in that development and investment area is in the property market and the infrastructure market, while we’ve also been a player in PPPs, so we’ll look to strengthen our involvement in that area.
“When you are bringing funding to projects, that provides you greater opportunity to be the designer and the constructor as well.
“That’s one part of it, but the other part of it fits into the broader strategy of the business, which is to be more vertically integrated.”
Despite its recent establishment, Mr Ramsay said John Holland’s development team had been increasingly busy, to the point it had to apply filters to the opportunities it had received.
While John Holland has yet to launch a WA project through its development arm, it is contributing funding to and constructing the $300 million Calvalry Hospital in South Australia, as well as a $700 million light rail project, Canberra Metro.
“There are a lot of opportunities coming across the desks; filtering those out and pursuing the ones that make the most sense for the business has been the biggest challenge, which is not really what can be the case when you’re actually looking for work,” Mr Ramsay said.
The other big challenge for John Holland had been dealing with widely reported issues at the $1.2 billion Perth Children’s Hospital, he said.
For the past 12 months, John Holland has been in the headlines for all the wrong reasons at the new hospital, which is nearly a year behind schedule and has been plagued by issues around the quality of materials used in its construction.
Mr Ramsay said the commentary around the project had damaged the John Holland brand and was difficult to respond to, but he remained confident the facility to be delivered in Nedlands would set new standards for child health care in WA.
“Our history in the market and our brand in the market has been strong, and will remain strong, but from time to time there is some negativity that gets put out about any business,” he said.
“What we’re producing and what the public will see is a world-class facility that will ultimately save the lives of children in Perth and in greater WA.
“There are facilities there, which there are only one or two or three of them available in the world, and some of the functionality down there is one-off in Australia.”
Lifting off
For Probuild, the strategy is to use flagship projects as a launching pad for more work in WA.
Probuild recently won one of the state’s most hotly contested building jobs – the circa $500 million Ritz Carlton & The Towers development at Elizabeth Quay by Far East Consortium.
It was considered to be a major coup for Probuild, which entered the Perth market in 2006 when it was appointed to build the office, retail and hospitality complex 140 William.
Probuild WA managing director Sam Delmenico said there was a lengthy bid phase for the Ritz Carlton project, which would ultimately showcase the builder’s capabilities to the WA market.
“Ritz Carlton is a very exciting opportunity; it has been a long-term target for Probuild,” Mr Delmenico told Business News.
“It’s been a very tough 12 months in the local market and there has been less opportinity.
“But we’ve really tried to identify key target opportunities and go after those and we’ve got a really strong workbook now, which is a strong foundation for us to grow from.
“What’s exciting for us is that developers as big as Far East are in Perth and confident about Perth in the long term.
“That’s really exciting and paves the way for other developers to follow in their footsteps.”
Mr Delmenico said the Ritz-Carlton project’s proximity to the river, coupled with the requirement for a three-level basement, made it one of the most complex jobs on offer in Perth.
“The three-level basement right on the Swan River does present a number of challenges,” he said. “We’ve come up with a robust alternative design to mitigate the in-ground risk.”
The alternative design utilises a top-down construction technique, where retention walls and columns are installed to allow for a basement slab to be poured, which then allows construction to continue both above ground and underground.
Other projects in Perth using the top-down method include BGC Development’s Westin Perth luxury hotel at 480 Hay Street, and Dradgin Pte Ltd’s Subi XO, at 500 Hay Street in Subiaco.
“We’ve been working with both the incumbent consultant team and a number of third-party engineers towards the solution that we’ve ultimately come up with, and we’re very confident that it will be delivered successfully and really set the project up for success,” Mr Delmenico said.
“The top-down methodology really takes the high-risk in-ground works off the critical path.
“The solution does have some capital cost, but that’s offset by the savings in time – we can get a time saving of up to six months.”
With work expected to start on the Ritz-Carlton job in coming weeks, Mr Delmenico said Probuild would shift its focus to bolstering its books.
Probuild was recently awarded its second project for apartments specialist Blackburne – the Oracle apartments in Northbridge – while Mr Delmenico said retail would also be a big focus going forward.
Shopping centre opportunities in Perth are numerous, with most major retail centre owners planning expansions.
AMP Capital last week announced Brookfield Multiplex as its construction partner for its $600 million Karrinyup Shopping Centre expansion, however builders have not yet been lined up for significant redevelopments at Garden City Booragoon, Westfield Carousel, Westfield Innaloo, and Morley Galleria Shopping Centre.
Other big retail jobs include Vicinity Centres' new Direct Factory Outlet mall proposed to be built near Perth Airport, and ISPT’s $100 million revamp of Forrest Chase in Perth CBD.
“Retail is a significant strength of Probuild’s nationally,” Mr Delmenico said.
“We’re building a 370,000 square metres of retail across the country at the moment, so we’d really like to be able to showcase our abilities in the retail space in Perth going forward. There’s no question that we’re confident about the future, we’re committed to WA; we’ve got a strong workbook over the next couple of years and we’ll look to replenish that and grow with that.”
