The Civil Contractors Federation (CCF) has released a major new economic report by leading economist Saul Eslake, confirming that the civil construction sector is the most exposed to the current global fuel shock and faces significant risks to project delivery and business viability.

CCF National Chief Executive Officer Nicholas Proud said the report, The Impact of the Middle East Fuel Crisis on Australia’s Civil Construction Sector, was a rigorous, independent assessment from one of Australia’s most respected economists, and its findings were clear.

“Civil construction is the most diesel-exposed sector in the Australian economy and is being hit hardest by this fuel shock,” Mr Proud said.

“Diesel underpins every aspect of civil construction. When prices spike at this scale, the impacts are immediate, systemic and unavoidable.”

CCF Western Australia CEO Andy Graham said civil construction projects were usually delivered under fixed price contracts, with no rise and fall clause to shield contractors from the full impact of fuel and materials cost increase.

“As the report shows, our exposure to diesel price shocks is massive, “ Mr Graham said. “For civil earthworks projects, diesel can be anywhere up to 20% of total costs.

“On top of that, civil contractors are being hit with big price rises of all key materials including sand, aggregates, concrete, asphalt, and pipe.

“Our contractors were hit hard in March but April looks much worse. Margins are evaporating and businesses and jobs are under threat.

“The support of our clients in the public and private sectors is crucial, and we thank those clients that are stepping up to help contractors work through this crisis.

“CCF WA is urging the State Government to lead the way by immediately inserting appropriate Rise & Fall clauses in existing and new civil works contracts.”

Download the report here.