Surge in health infrastructure an opportunity for WA construction firms

The WA government’s health infrastructure pipeline now totals approximately A$4.7 billion (approx. US$3.078bn) over the next four years, the largest in the state’s history. This investment is spread across metropolitan and regional projects, with a strong focus on improving emergency care, mental health services, and cancer treatment facilities.

Key funding initiatives include the A$1.8bn New Women’s and Babies Hospital, awarded to international contractor WeBuild in May 2025, the A$1.5nn ‘Building Hospitals Fund’ announced in November 2025, A$839 million for health infrastructure, A$1.2bn for public hospital services, A$260 million for mental health and addiction services and A$200 million for digital infrastructure in the 2024–25 budget and an additional A$500 million boost, announced in September 2025, to accelerate priority projects and cover escalating costs across metropolitan and regional hospitals.

These funding initiatives will support transformational projects, such as the Royal Perth Hospital Emergency Department redevelopment, the state government’s planned acquisition and upgrades of St John of God Mt Lawley Hospital, the Bunbury Regional Hospital redevelopment and the Geraldton Health Campus redevelopment.

This health infrastructure boom is reshaping the state’s construction landscape, marking a moment of significant opportunity if industry participants can navigate cost pressures, workforce constraints and evolving delivery models.

Cost escalations have been felt across the industry, with the WA government currently facing a A$400 million cost blowout for the Peel Health Campus redevelopment and a significant cost increase in a new eight-bed hospital in the regional town of Laverton. 
The issues on projects underscore the volatility in WA’s construction market, driven by labour shortages, remote logistics and material price spikes. The government’s response includes early contractor involvement and risk-sharing procurement models, but labour shortages can impact delivery schedules and increase costs.

National forecasts predict that demand for specialist trades will significantly increase over the next year, creating intense competition for skilled labour. For the construction industry, this will require workforce development strategies, partnerships with training providers and innovative labour sourcing models. Those that can implement strategies to train, retain and recruit skilled and specialist labour will be well positioned to make the most of WA’s health infrastructure boom.

The WA state government has been progressive in its use of alternative contracting models such as alliances and NEC4 in the last few years, including on major METRONET packages. It remains to be seen whether that attitude will prevail given the cost issues on various projects across the state and whether stricter, fixed price models might be coming back into vogue for this pipeline of health projects. If fixed price models are pursued, it could potentially lead to disputes akin to the well-known challenges associated with the Perth Children’s Hospital project.

Delivering major projects in a capacity constrained market such as Western Australia, particularly remote Western Australia, is not easy. Contracting models that call for collaboration between contractors and stakeholders, rather than pitting them against each other, will drive better results.

Combined with the ‘packaging’ of major projects into more manageable chunks, and use of early contractor involvement models, this will also drive greater competition amongst contractors - and accordingly better value for money for the state.

To fast-track delivery and manage costs, WA is adopting modular designs for rural hospitals such as Meekatharra Hospital and the Albany Health Campus upgrades. This represents a significant opportunity for contractors specialising in prefabrication and off-site assembly.

To strategically position themselves to respond to the potential challenges in delivering health infrastructure projects, construction industry participants and firms might consider investing in modular construction capabilities, strengthen supply chain resilience, explore collaborations in health technology integration and develop workforce pipelines to meet demand for specialist trades.

Digital infrastructure investment, such as the A$200 million committed by the government for electronic medical records and information communications technology in the health sector, signal growing demand for tech-enabled construction solutions, including smart hospital designs, integrated digital infrastructure and cybersecurity considerations in building systems.

The surge in health infrastructure spending reflects WA’s commitment to modernising healthcare access and capacity, and the construction industry should expect significant increases in tender opportunities across metropolitan and regional WA as a result.

To make the most of these opportunities, firms should prepare for innovative delivery models, such as modular builds and early contractor involvement, and explore partnerships in digital health infrastructure and biomedical precinct development.

Challenges aside, WA’s health infrastructure boom presents as a moment of significant opportunity for the construction industry in WA, provided they can navigate cost pressures, workforce constraints, and evolving delivery models. Those who adapt quickly will be well-positioned to capitalise on the largest health infrastructure program in WA’s history.

Co-written by Thomas Coleman of Pinsent Masons.