If you are planning to work in Australia’s construction industry, it is important you understand the three different tiers of Contractors.
Australia’s construction industry operates a hierarchical system of contractors organized into distinct tiers. The three tiers are crucial in defining the scope, expertise, and responsibilities of each contractor involved in delivering a construction project.
In the following blog, we will explain the main differences between the three tiers of contractors and also help you understand the advantages of working at different tier levels.
Why contractors are divided into different tiers
Australia’s construction industry is a complex sector involving various stakeholders. A three-tier system that categorises construction companies has been adopted to ensure efficient project delivery while maintaining quality standards.
Tiering ensures that contractors are appropriately matched with projects of varying sizes and complexities, preventing overcommitment or underutilization of resources.
Construction projects in Australia carry inherent risks, such as unforeseen site conditions or weather-related challenges. Tier 1 contractors often have the financial capacity and experience to manage these risks effectively, while Tier 2 and Tier 3 contractors may focus on specific aspects of the project with lower associated risks.
Compliance with Australian building codes, safety regulations, and environmental standards is paramount. Different tiers may have distinct compliance requirements, ensuring that all aspects of a project meet Australian standards.
Tiering enhances project efficiency by breaking down complex projects into manageable components. This streamlines budgeting, scheduling, and overall project delivery, which is crucial for completing projects on time and within budget in the Australian construction landscape.
To sum up, tier systems help establish clear roles and responsibilities, set performance expectations, and promote accountability, ultimately contributing to successful project delivery, cost savings, and quality control. They offer a practical solution to the challenges posed by large-scale construction projects, allowing for efficient management and optimal use of resources.
Tier 1 Contractors
Tier 1 contractors are large contractors capable of delivering mega-projects worth billions of dollars. They self-perform most of the required work on a project with their own employees and equipment.
Also known as ‘general’ or ‘prime’ contractors, Tier 1 contractors are the top dogs in the construction hierarchy. They are the principal contractors responsible for managing and executing major construction projects from start to finish. They manage all aspects of the project, from planning and design to procurement, construction, and handover.
Tier 1 contractors manage budgets, schedules, and the coordination of subcontractors. They may hire Tier 2 and Tier 3 subcontractors to perform specialized tasks.
Tier 1 Contractors generally divide their teams into disciplines and areas, for example, a paving team, an earthworks team, a traffic team, structures etc.
They carry a significant portion of the project risk and often have the financial resources and expertise to handle unexpected challenges. Tier 1 Contractors often partner up with Tier 2 Contractors forming joint ventures (JV) which allows them to carry the financial risk and responsibility together, and offer a more specialised service.
Some examples of JVs in Australia include ACCIONA Samsung Bouygues Joint Venture (ASBJV) delivering one of the final major components of WestConnex in Sydney and CPB Contractors in a 50:50 joint venture with Downer building Stage 1 of the Parramatta Light Rail project.
Tier 1 contractors act as the main point of contact throughout the project’s lifecycle and ensure that all work complies with local regulations and standards, including safety, quality, and environmental requirements.
They have extensive experience and expertise in managing large-scale projects and are skilled at coordinating the work of multiple contractors and suppliers. Some tier 1 contractors across Australia include:
- Laing O’Rourke
- CPB Contractors (owned by CIMIC)
- John Holland (owned by China Communications Construction Company)
- McConnell Dowell (owned by Aveng Limited)
- Clough (owned by Webuild)
Interestingly, more than 90% of Australia’s largest public infrastructure projects are currently being delivered by foreign-owned multinationals . This is causing an ongoing controversy with different stakeholders having varying perspectives on the balance between economic benefits, technological transfer, and national control over major projects.
Critics argue that major projects awarded to foreign-owned companies may result in a significant outflow of funds from the Australian economy. They also argue that foreign companies may employ a portion of their workforce from abroad, potentially limiting employment opportunities for Australians.
Working for a Tier 1 Contractor in Australia
Tier 1 contractors are typically involved in larger, more complex projects and often take on a broader set of responsibilities. They often provide extensive training and development opportunities and you get exposure to a wide network of industry professionals, including architects, engineers, subcontractors, and clients. Building these connections can open doors to future career opportunities.
Tier 1 contractors are often financially stable and have a strong presence in the industry. This can provide job security and peace of mind, knowing that the company is well-positioned even in economic downturns. They often offer competitive salary packages, including health insurance, retirement plans, and other benefits.
Some Tier 1 contractors operate on a global scale, providing opportunities to work on international projects and gain international experience. Working for a well-known Tier 1 contractor can enhance your professional reputation and recognition within the construction industry.
Large contractors often invest in cutting-edge technology and construction methods. You can gain exposure to innovative practices and technologies that can advance your career and keep you at the forefront of the industry.
Tier 2 Contractors
Tier 2 contractors also known as mid-tier companies often work as subcontractors to Tier 1 contractors. They are hired to handle specific aspects of a project that require their expertise.
While they might take on smaller projects independently, their primary role is to collaborate with general contractors on larger or mid-sized projects. The key responsibility of a subcontractor is to ensure that their specialized area meets all safety standards and adheres to local regulations.
Examples of Tier 2 contractors in Australia :
- Seymour Whyte
- FKG Group
- Abergeldie Contractors
Working for a Tier 2 contractor in Australia
Tier 2 contractors often specialize in a specific trade or service, allowing you to become an expert in your chosen field. You can focus on honing your skills, which can be personally rewarding and make you highly sought after in your niche. As you gain experience and expertise, you may have the chance to take on more significant responsibilities, potentially leading to leadership roles or project management positions.
While Tier 2 contractors specialize in one area, they often work on a variety of projects within that specialization. This diversity can keep your work interesting and provide exposure to different types of projects and challenges.
As Tier 2 contractors frequently collaborate with other subcontractors and the general contractor on projects this can help you develop strong teamwork and communication skills.
Tier 3 Contractors
Also known as ‘suppliers’, tier 3 contractors are smaller, specialised firms that provide services to tier 1 and tier 2 contractors. They do not have direct contact with the project owner or user. They deal directly with Tier 1 and Tier 2 contractors, providing them with the necessary resources to complete a construction project.
Examples of Tier 3 contractors in Australia include:
- Shadforth Civil
- Shamrock Civil
- McIllwain Civil
- Doval Constructions
- Hazell Bros
- Seaforth Civil
- Civil Mining and Construction (CMC)
- Hall Contracting
- JF Hull
- Joe Wagner & Sons
- Robar Civil
Working for a Tier 3 Contractor in Australia
While Tier 3 contractors might be smaller in size, they provide an opportunity to take real ownership of the project you are working on. You might be able to take on more significant responsibilities earlier in your career and your achievements are more likely to be recognized and rewarded.
Working at this tier level also means being hands-on and you’ll know everyone on-site so this is ideal for people who want to build connections in the industry.
Tier 3’s smaller teams often foster close-knit, collaborative environments and may also offer more flexible work arrangements and a greater emphasis on work-life balance.
Finally, compared to Tier 1 contractors, smaller contractors have less red tape which means decisions are made quickly.
Career progression through the tiers
Moving from a Tier 3 construction company to a Tier 1 construction company can be a challenging but achievable career progression for many professionals in the construction industry. It’s important to understand that the process may require time, effort, and a strategic approach.
Positions at Tier 1 contractors are highly competitive and sometimes require candidates to take a step back in their career progression and apply for a more junior or entry-level role.
If you have recently arrived in Australia and you have no local experience, you should consider applying for a job with Tier 2 or Tier 3 Contractors to get your foot in the door. You will have increased chances of landing a job as there will be fewer applicants.
Source: RSM International
At ConsultANZ our Clients range from smaller, highly specialist companies to large, international contractors. Many of our clients go to great lengths to secure top talent, offering great pay, flexible working conditions, relocation packages and career progression options. We are confident these hiring trends will continue in the near future.
To make the most of the exceptional employment market, ask yourself the following questions:
✔️ What are my career goals for 2023/24?
✔️ Is my current job fulfilling?
✔️ Could another job help me advance my career?
✔️ Have I explored the opportunities that exist in the current employment market?
✔️ Could I earn more in the same role but with a different employer?
✔️ Am I ready for a change?
If you are ready to take your career to the next level, you can view our current vacancies here. Alternatively, contact our Recruiters on LinkedIn to schedule a confidential chat.
Please note that we receive a high number of applications from international Candidates. As a result, we are unable to provide feedback to each applicant. If you haven’t received a phone call from us within two weeks of submitting your CV, please accept your application was unsuccessful.