The Impact of Materials Costs on Construction Projects
The construction industry across Australia and New Zealand continues to face significant cost pressures. Rising prices for essential materials from concrete and steel to timber and glass, are reshaping how projects are budgeted, staffed and delivered.
According to the latest Altus Group report, construction costs in Australia are forecast to rise by around 5.3% in 2025, driven by materials, labour and logistics challenges.
While some material categories have stabilised, others particularly concrete, plasterboard and bricks, continue to climb due to energy, freight and supply-chain pressures.
The Housing Industry Association (HIA) noted that building material prices rose 1.6% year-on-year in 2024–25, but broader construction costs remain elevated due to tight labour markets and delays.
For project leaders, franchise operators and hiring managers, that means material cost volatility directly impacts workforce planning, recruitment and project success.
How Rising Materials Costs Affect Projects (and Staffing)
1. Budget Squeeze → Reduced Labour Flexibility
When materials costs exceed forecasts, there’s often less room to manoeuvre on staffing. Labour budgets get trimmed, forcing teams to do more with less. As a result, hiring decisions focus on multi-skilled, adaptable professionals who can add value across multiple project phases.
2. Extended Timelines and Scheduling Risks
Higher material prices often coincide with supply delays. Longer lead times stretch project durations, which in turn extend labour needs or lead to turnover if staff move to shorter, more stable projects. Proactive workforce planning becomes essential to maintain momentum.
3. Skill Mix and Productivity Pressures
With thinner margins, productivity matters more than ever. Employers increasingly seek tradespeople and supervisors with expertise in lean construction, modular techniques and digital tools (BIM) to reduce waste and accelerate delivery. Recruitment now prioritises efficiency and innovation as much as technical ability.
4. Increased Recruitment Competition
As construction activity rebounds, competition for skilled workers intensifies. Sectors affected by high material costs often experience parallel wage pressure, as employers compete for experienced trades, site managers and project coordinators who can deliver under tighter budgets.
Strategies to Reduce the Impact of Material Cost Escalation
1. Forecast Early and Revisit Often
Incorporate a materials escalation allowance (5–6%) into your project budgets and refresh your numbers quarterly. Use real market data from Altus Group or HIA to stay informed.
2. Build a Flexible Workforce Strategy
Cost pressures mean project timelines can shift quickly. Partner with recruiters who can provide both permanent and temporary skilled labour, allowing you to scale up or down without compromising delivery.
3. Invest in Productivity-Focused Talent
Hiring supervisors and tradespeople with prefabrication, modular and lean construction experience can offset cost increases by improving efficiency and reducing wastage.
4. Hire for Supply-Chain Awareness
Today’s construction professionals must understand procurement and logistics. A site manager who can plan around material delays or substitutions adds direct project value.
5. Prioritise Critical Roles
Identify which positions have the greatest impact on project cost and delivery (e.g., quantity surveyors, project engineers, key trades). Allocate resources strategically rather than spreading budgets thinly across all roles.
6. Partner with Construction Recruitment Specialists
Specialist recruiters like Frontline Construction understand how to source talent that thrives in a cost-constrained market, professionals who are adaptable, commercially minded and focused on project outcomes.
What This Means for the ANZ Construction Industry
While 2025 is showing early signs of price stabilisation, volatility remains. For employers, this means smarter budgeting, faster hiring decisions, and a stronger focus on retaining high-performing staff.
Firms that align their workforce strategy with real-time cost insights are best positioned to protect margins and deliver value even in a challenging materials market.
Final Thoughts
Materials cost escalation is not just a procurement challenge; it’s a people challenge. Every fluctuation impact hiring, retention, and productivity.
By forecasting effectively, hiring strategically, and partnering with a recruitment specialist who understands the nuances of the construction sector, businesses across Australia and New Zealand can stay competitive even when costs rise.