The Case for Technology Adoption in Construction
Australia’s construction industry is one of the nation’s most important economic engines. It contributes nearly 9% of GDP and employs around 1.3 million workers[1]. Yet behind this scale lies a reality the industry can no longer ignore, productivity has stagnated, margins are razor thin, and the sector faces some of the steepest workforce and cost challenges in its history.
The Current State: Mounting Pressures on Construction Firms
Today’s construction leaders are navigating a perfect storm of challenges:
- Productivity at historic lows: Since 1990, productivity growth in construction has been in steady decline[2].
- Workforce attrition: 41% of the workforce is nearing retirement, and for everyone new worker joining the industry, five are leaving. The loss of institutional knowledge will only deepen the gap[3].
- Margin pressures: Small and medium sized firms are especially vulnerable as rising material costs, global supply chain instability, and inflation erode already thin margins.
- Technology underinvestment: With most firms spending less than 1% of revenue on IT, construction lags behind nearly every other sector in digital adoption.
Each of these challenges compounds the others: a shrinking workforce exacerbates productivity issues; manual, paper-based processes magnify the cost of rework; and underinvestment in technology leaves firms without the tools to adapt.
Why Productivity Still Lags Behind Other Industries
With a declining productivity growth rate since 1990 and a near impossible target set by the federal government to build 1.2 million homes by mid – 2029[4], adopting new emerging technologies and finding efficiencies in back-office operations has become more critical than ever before. Finding productivity efficiencies starts with:
- Identifying bottlenecks in core business capabilities (e.g. engaging with customers for approvals on building alterations before execution)
- Establishing your business’ level of digital maturity is important to identify technology inefficiencies and sunken costs in technology platforms that are end of life and/or unsupported
- Identifying where and how data flows through your business and identifying whether it is optimised for agile decision making.
These activities can help structure the way you think about optimising your technology costs and where modern platforms can enable your onsite and offsite workers to be more productive and help your business grow and scale.
Fragmented Systems & Manual Processes – The Hidden Cost
Many construction firms still attempt to juggle fragmented systems, paper-based processes & spreadsheets. What does this do to your business? Creates data siloes, duplicates data entry into legacy technologies and creates costly rework.
With firms spending less than 1% of revenue on IT, far below other industries, it is no surprise that rework and poor integration between systems creates a hidden cost that can no longer be ignored. The lack of investment in technology in the sector has led to many businesses ‘putting up’ with legacy technology and spending money either internally or with external providers to continue doing manual work to keep work progressing. As demand grows, businesses finding themselves putting pressure on internal staff to keep up or paying additional costs to scale up external teams.
The case for digital in construction is clear, and businesses gaining a competitive edge are connecting teams through unified platforms, automating routine back office tasks and eliminating paper-based processes. These systems reduce errors and rework, eliminate fragmented systems and reduce reliance on internal and external teams, ultimately saving time and money.
Digital Transformation that drives real business value
Construction has long been burdened by low productivity and thin margins. But investment in digital isn’t a cost — it’s the lever that drives efficiency:
- Reduced rework and errors through automation of repeatable processes, improved data quality and better communication.
- Faster, more predictable delivery enabled by real-time project visibility and improved project forecasting.
- Safer worksites through digital compliance, reporting, and monitoring tools.
- Higher margins per project by cutting waste, improving utilisation, and aligning resources more effectively.
In an industry where the workforce is the highest it has ever been, but productivity is continuously declining[5], technology investment is more critical than ever in order to begin to bridge the gap & improve margins on projects.
[1] The nuts and bolts of the Australian Construction industry | Australian Bureau of Statistics
[2] The Construction Productivity Challenge in Australia | Oxford Economics
[3] Workforce-Blueprint_Final-1.pdf
[4] Delivering the National Housing Accord | Treasury.gov.au