Construction work might drop for law firms in some areas since activity in the sector has stayed below the no-change level for the eighth consecutive month, a new survey revealed.

Australian Industry Group's performance of construction index (Australian PCI)'s sample survey interviewed approximately 120 companies. It revealed that the October 2008 index had dropped to 36.4 points, which is about 27% lower than the critical 50 point no-change mark.

Construction clients blame the on-going financial crisis and deteriorating economic sentiment for causing fewer tenders, scaled down new projects and continued delays in development.

Carter Newell partner Patrick Mead agreed that there have been instances where developments were delayed, pointing to major city high-rise projects that could be postponed indefinitely.

He noted that there has been less activity in residential and civil construction, while civil construction appears to have grown between September and October this year.

However, firms may be able to counter the downturn by focusing more on dispute resolution. "We have been very, very busy with disputes arising...I noticed a marked increase in our dispute workflow, to the point where we are recruiting senior professional staff to bolster our construction group," he said.

He also said some state governments appear to have responded to the slowdown by bolstering growth in civil construction. "There seems to be a determination from the Queensland state government to try to stimulate growth...this should work since there are financing constraints that are impacting," he added.

Source: Australian PCI, October 2008