Western Australian civil contractors caught between fixed price contracts and major costs increases on state and local government infrastructure projects are seeking urgent relief.

Civil Contractors Federation WA CEO Andy Graham said a recent survey of local civil contractors showed more than 90% were on fixed price contracts, which forced them to bear the brunt of recent diesel and construction materials cost increases.

“Many of those contractors are working for government, which is our industry’s biggest client,” Mr Graham said. “We’re asking government to step in to assist where its contract terms have left contractors exposed to this unprecedented escalation.

“Our survey suggests civil construction costs have typically increased by 10 to 15 per cent since the start of this crisis. With average profit margins in our industry around 5 or 6 per cent, it’s clear that contractors are hurting and can’t continue without help.

“Concerningly, around 60% of survey respondents said that without some sort of relief, they’ll be forced to stand down staff and subcontractors in the near future.”

Mr Graham welcomed recent diesel price reductions while noting a significant contributor had been fuel excise cuts which did not benefit operators of excavators, loaders and other off-road mobile plant.

“It’s certainly a relief to see diesel trending down, but the reality is it’s still around two-thirds higher than before this crisis,” he said. “And direct diesel costs are just one problem for civil contractors. Pretty much everything else has gone up too, including sand and other quarry products, bitumen and asphalt, PVC and HDPE pipe, concrete, waste disposal – the list goes on and on.

"As our recent report demonstrated, civil construction is more exposed to diesel-related price shocks than any other sector."

Mr Graham said local companies delivering government projects on fixed price contracts were now preparing April payment claims that wouldn't cover their costs for the month.

“Most have already taken a hit in March, and April will be worse,” he said. “The question is, how many can keep holding out without help? We would rather not find out, and have urged the State Government to act now so that contractors, subcontractors and suppliers on its projects can breathe easier.

“We understand local government authorities are waiting on guidance from the State Government before they can consider assistance.

"CCF WA also urges private sector clients to help their contractors to navigate this crisis, and we've been pleased to hear that many are stepping up to do so."