As productivity slows, the digital revolution in engineering and construction has long been promised. So what’s holding it back, and how do we find a way forward?
Over the last three decades, labour productivity in the Australian construction industry has barely budged, according to the Australian Bureau of Statistics and the Productivity Commission. Meanwhile, general market-sector industries have seen productivity increase by 64 per cent over 30 years, and manufacturing by 58 per cent, construction has languished at just 17 per cent growth.
For Martin Loosemore, a Distinguished Professor of Construction Management in the Faculty of Design and Society at the University of Technology Sydney, much of this lack of productivity growth comes down to the sector’s “relative lack of investment in technology”.
Studies by the American Construction Industry Institute, Loosemore said, reported that greater technology use could increase construction productivity by 30-40 per cent. Similarly, in Malaysia researchers say productivity differences between large and small construction firms were due to differences in capital intensity, or machines for labour substitution, rather than labour productivity.
And so it shouldn’t be surprising that “an analysis of labour productivity in the Australian construction industry also identified technology-utilisation deficiency and a low capital-labour ratio as the main influencing factors”, Loosemore said.
Eric Bugeja CPEng, Chair of buildingSMART Australasia, told create that both a cause and an outcome of this lack of digitalisation is a highly fragmented, paper-based sector that regularly suffers costly rework issues and project delays.
“There is no shortage of digital tools and new technologies that promise to improve every stage of project delivery, but they’re not being employed,” he said.
A reluctance to introduce technology is something Bugeja has witnessed over decades. As a graduate mechanical engineer, he worked in a two-person design business whose owner was keen to employ the latest technology to drive efficiencies and performance.
“Most graduates went into a big company and were told, ‘This is the way we do things’, but I had an opportunity to explore what was available, including 3D engineering design software. I used it to improve the way we designed things,” he said.
“When I joined a larger engineering consultancy, I was asked to do a particular design. I opened up their 2D CAD software and thought it was ridiculous. CAD was made for drafting and not necessarily as an engineering design tool. And so I grabbed some advanced 3D software I’d used in the past and had that design done within 24 hours.
“Of course, the business said it couldn’t submit that to the client because they’d allowed two weeks to do the work.”
Trickle-down technology
Bugeja’s tale describes a microcosm of the construction and engineering space, one in which much more could be achieved in significantly less time and by using far fewer resources. It’s a productivity problem with a solution that has long been hiding in plain sight, and engineers that buy into that solution have a lot to gain.
“If we look at the future of AI, I think that will divide the market,” Sandra Lang, Director of Digital Engineering at Systra, told create. “There are companies that are investing, and they will clearly set themselves apart from those that are not investing.”
The current top-down digital leadership being demonstrated in Australia by organisations such as Transport for NSW, is a promising sign, Lang said.
“I think Australia is near the forefront when it comes to clients mandating digital requirements in their contracts. Some countries in Europe are also quite strong.
“This digital transformation has to start with government clients. The construction industry is so focused on managing risk, and digitalisation is currently considered a risk factor. The industry is so conservative, and if it doesn’t have to change, it won’t change.”
Another challenge for the sector’s technological transformation comes from the supply chain, Lang said. It’s all well and good for large players to have their own focus on digital transformation, but if the smaller subcontractors aren’t on board, the change is not going to stick.
David Murphy, Director of Transformation and Innovation at the Victorian Infrastructure Delivery Authority (VIDA), said when the bigger organisations build their own IP in the technology space for their own competitive advantage, it often works against them.
“You can’t get the scale that way,” he said. “Individual company pipelines and available capital funds are rarely large enough to facilitate the investment and necessary development and support. The App Store model is a more scalable one. I think sometimes we’re tying ourselves in knots to force people to work within a particular organisation’s ecosystem.”
For subcontractors working on different sites, Murphy said, it’s the equivalent of them having to carry, and be familiar with, the operating systems of an iPhone, a Motorola phone, a Samsung phone and a Google phone, while jumping between the Telstra, Vodafone and Optus networks, just to receive phone calls.
“It’s causing massive inefficiency for the supply chains and subcontractors. It’s very hard to know everything about every platform in a low-margin sector.
“Success in the future will revolve around how well the best players in the ecosystem can bring interfaces together.”
Overseas comparison
The State of Digital Adoption in the Construction Industry 2025 report, published by Deloitte Access Economics and Autodesk, puts Australian construction businesses in the middle ground for digital adoption, when compared globally.
The report said Australian construction businesses use an average of 6.9 types of technology, such as:
- Construction management cloud software
- Mobile apps
- Data analytics
- BIM
- Smart sensors
- Construction wearables
This compares to India with 8.6 technologies, Singapore with 7.3, Malaysia and Hong Kong both with 6.3 and Japan with 2.7.
The top three benefits for construction businesses utilising technology in Australia, the report said, are:
- Improved efficiency
- Uncovering of new insights and ideas
- Increased revenue
The report said that, as an example, the company Built is currently piloting a digital project delivery tool, developed in partnership with Autodesk, to “facilitate data sharing between all stakeholders, create digital-first designs and provide real time results of potential risks and feasibility of projects”.
“The pilot has led to 50 per cent faster starts onsite with 50 per cent fewer defects in the finished structures,” the report said.
The top three barriers to digital adoption, on the other hand, are:
- Lack of digital skills
- Cost and uncertainty around required skills
- Limited technology budgets
More regular training, the report said, is vital in Australia as only 25 per cent of Australian construction businesses offer regular digital skills training.
Best-practice baseline
At Laing O’Rourke, a good deal of time was previously spent up front on each project deciding on the best technological and digital approaches, said Tom Mullens FIEAust CPEng EngExec, Director – Technical and Health & Safety.
More recently, Mullens and his team brought together this knowledge to develop Digital Minimum Standards for all Laing O’Rourke projects in Australia, setting “a new baseline for
best practice”.
“We want to push the boundaries of what’s possible, but we also want to deliver certainty,” he said. “And if you’re constantly innovating, there’s a high chance you’ll miss something.
“We’re working in regulated industries with defined outcomes on our projects, bringing together groups of specialists and working with various design partners and supply chain partners. Our approach now is to bring together all of that experience to set a baseline.
“We’re not saying we don’t want innovation or improvement. But we do want to control the starting point, which allows us to manage innovation and ensure there are no unintended consequences.”
Laing O’Rourke’s Digital Minimum Standards outline how designers are asked to develop digital models and assign required data. It also covers processes for digital design and constructability reviews, virtual build planning and the use of site technology, including how teams plan access, ensure safety and report on site activities.
“What we present outwardly gets broken down so supply chain partners only get what they need and what’s relevant to their scope,” Mullens said.
“One of the key conversations is the one with our designers. The model they produce has so many benefits. We use it across the physical build, but we also use it for costing our quantity take-off, our material ordering and our quality assurance. We can use it with stakeholder and community engagement and more. If it’s done in a certain way, it brings significant value to a project and a client.”
Integrating technology
Clearly, working well with technology involves a lot more than just downloading a new app and attending a few courses.
Loosemore said that, as an increasing number of construction and engineering businesses begin to experiment with existing and emerging technologies, including BIM, augmented and virtual reality, the Internet of Things, drone data and mobile sensing, they will fail to fully capitalise on them.
That’s because they will focus on the technology itself as opposed to the changes within the organisation – across knowledge, engagement and culture – needed to integrate the technology effectively.
“Technology is just a small part of the story,” Loosemore said. “Recent research into successful technology implantation offers business leaders a number of important lessons.”
These lessons include:
- Stay rational. Technology is a means to an end, so don’t chase shiny tools.
- Collaboration is essential. If the supply chain isn’t on board, you fail.
- There will be resistance. People, structures, systems and cultures will need to be change-managed.
- Focus on strategy. Look for strategic game-changers that can provide competitive advantage.
- Move incrementally. Build on existing initiatives instead of trying to do everything at once.
Technology requires an integration strategy. Without a vision, plan and strategy, tools can become overwhelming.
Bugeja said it’s important that systems are designed in such a way that they produce data in a format that is openly accessible across platforms, organisations and sectors.
“This is where the digital engineering BIM-based workflow comes in,” he said. “It’s all about getting all the people who are going to be involved with the project, including operating the building or the rail, or whatever it is, involved at the start.
“This allows the data backbone to be set up in a way that as the data is collected along the life cycle of a project, it simply plugs in and is not rebuilt at each handover stage.”
New superpowers
When data is produced during a project then handed over on paper, or in a format that doesn’t readily integrate, it remains equal to the sum of its parts. That is to say, the data is only as useful as it was decades ago.
However, Lang said, when data is collected and provided in a structured way, and combined with other tools such as sensors providing live data, its value is far greater than the sum of its parts. It offers superpowers that are not likely understood until the data comes together.
“A lot of operators still don’t even understand what assets they have when a project is handed over,” Lang said. “An army of people is required to fill their maintenance management system.
“But when you know what assets you have, as well as how they’re operating in real time, you can start to analyse what’s going on and you can do entirely new things.”
Transport for NSW, for example, has real-time data from sensors being shared via its Open Data Hub for use by customers, developers, network managers and operators. This enables apps to be developed, curated collections of data to be made available for transport-related interest groups, partnerships to be created and data stories to be told, to inform future developments.
The Open Data Hub currently has more than 53,000 active users. Prior to the databank being developed, those 53,000 users had no such opportunity to innovate.
Similarly, Victoria’s Big Build, with the assistance and guidance of VIDA, is capturing vast amounts of data from various infrastructure assets, including intelligent 3D models. The VIDA Digital Engineering Process Guide, which ensures the right access to the right type of data in the centralised databank, is intended to help Victorian transport project stakeholders collaborate with the help of live, digital models, into the future.
The shift from PDF drawings to intelligent digital models has supercharged Victoria’s planning capabilities, but it would not be possible without a common, shared databank.
“Many companies, in these difficult times, focus on traditional KPIs,” Lang said. “When this happens, a focus on technology is one of the first things they remove from their plans, because it costs money.
“But if you look at AI and how fast things are moving, to pause innovation and digital transformation now is not the right decision. It’s short-sighted if we go back to the basics and have data silos. It simply means operators spend more time looking for data.
“But if an asset owner knows their assets, they are properly maintained and managed and a lot of other offerings are built around that. The benefit goes to the end customer and the taxpayer, and that should be the goal of all engineers.”
This article was originally published in the November 2025 edition of create with the headline “Productivity gains”.
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