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    Posted March 17, 2014 by
    Austin, Texas

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    Australia: The Cost of Costly Construction

    Western Australia is currently swamped with a construction crisis due to a myriad of different problems. The 2014 Major Resources Project report by Queensland Major Contracts Association (QMCA) and Construction Skills Queensland predicts the state will experience weak growth over the next few years and lose an estimated 8000 jobs. The percentage of the job losses may have been expected, with three liquefied natural gas projects on Curtis Island off Gladstone winding down.

    Regardless of these project closures, the country has been struggling with skyrocketing cost of construction for some time. Rising product costs, decreased workplace productivity, a lack of on-site safety, and skilled labor shortages are just some of the reasons for this unfortunate drop in productivity. There are currently swarms of mining companies that are starting in Western Australia, and construction will be needed at a reasonable price. This growth represents a $150 billion market; obviously, shelving this production due to exorbitant construction costs would materially affect the Australian economy.

    On any construction site, a common problem is there is an overwhelming lack of organization and efficiency. There are countless materials used: pipe, columns, pumps, cranes, electrical items, etc. In order to simply find these products on site, it is not uncommon for construction firms to contract an entire team of personnel that will maintain the plethora of items. Think of it as a mega store, where it is often hard to find items simply because there are so many. This role becomes even more challenging when projects are highly specialized and require unusual parts and services to be completed.

    If a construction manager can’t find an item on the site, days can pass and the project could be delayed. To put it in perspective, cranes can cost $5K a day. The crane is ready to go, but no one can find a specific piece of pipe that must be used. The firm could then suffer considerable delay penalties, which can be up to $100K a day. If the project is delayed, the share price can go down. Once they finish the project, if the company finds the pipe, they will have to pay to dispose of it. This may seem impractical, but such scenes of organizational chaos and confusion are not uncommon in Western Australia. Following this chain of thought, one pipe could cost a company millions of dollars.

    One solution to this problem that has emerged with the advent of technology is tracking construction parts with barcodes. Once the products come one site, construction workers are able to locate, track, manage, and control with much less of a dent in the project contract due to hiring on people for this role. Saleem Technologies is one firm that offers these services, and they take it to a whole new level by combining three technologies in a very unique way. They use a patented system that involves GPS, barcode, and radio frequency identification tags (RFID) technologies. Companies like these are taking advantage of the crisis by helping the construction industry where it needs it most.

    These firms have the opportunity to strike in the emerging mining industry by specifically designing for technologies that enable resource hunters. Australian companies have potential to do vastly more than what they are currently doing. When these tech firms assist in streamlining the construction process, they have the opportunity to simultaneously contribute to society and enjoy great profits. If more projects finish on time, share prices will rise, more jobs will be created, and the country as a whole will be positively affected.
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