The country has grand ambitions for its infrastructure, readying itself for growing housing and transportation demands while overseeing an economy-wide shift to a net-zero energy mix.
The predicted value of major public infrastructure projects in the pipeline for the half decade beginning in the 2024–25 financial year was $242 billion. Approximately $1.14 trillion worth of construction activity is being undertaken across the country right now.
As Chief Executive of Infrastructure Australia, Adam Copp oversees the independent statutory body tasked with advising governments at all levels how to best finance, deliver and operate the vast economic engine that is Australia’s infrastructure network.
The potential from all activity is immense, but delivering on it is not without its challenges. Infrastructure Australia’s 2025 Infrastructure Market Capacity Report identifies critical risks that include labour shortages (particularly in regional areas), low productivity, and structural workforce issues including a lack of diversity and a heavy reliance on subcontracting.
“The simple fact of the matter is we need to do more with less,” Copp told create. “Infrastructure Australia predicts that the industry currently has 204,000 workers to deliver this pipeline of work, but is short by 141,000. By 2027, this shortage could balloon out to 300,000.
“This will include shortages of engineers, architects and scientists as well as project management professionals.”
That shortage of workers means project budgets and timelines will be strained, Copp said, all while public investment in some regional areas in NSW, Tasmania and Queensland in particular is forecast to at least double.
“Without the workers, we simply cannot deliver everything that is needed without the risk of delivery costing more or taking more time,” he said.
“In their absence, we need to deliver on the demand in the pipeline. The spotlight falls very directly on the construction sector’s productivity as the means to achieve this higher level of demand. Unfortunately, though, construction sector productivity is a hurdle in and of itself.
“For the past 30 years, productivity growth has been incredibly sluggish. It has barely moved since the days of dial-up internet and fax machines, while other industries like transport and manufacturing have advanced dramatically.”
By the numbers: The latest Australian construction activity data
Shared challenges
Australia is not alone in facing these challenges, however. That’s why Infrastructure Australia is looking to initiatives other countries are undertaking to help the construction sector embrace data and digital technology, along with offsite and modular construction.
“One of our key recommendations in our 2025 Infrastructure Market Capacity Report is for governments to incentivise the market to trial productivity-enhancing innovations such as modern methods of construction, which can then be scaled – just like the UK, the US and Singapore have done,” Copp said.
“We’re also recommending the development of consistent nationwide training programs to upskill workers in these innovations. This can only be made possible if we start investing more into projects.
“What this will take is governments willing to put more money in the front end of a project, to give the market the shot in the arm it needs to find the solutions that can work best for project delivery. Of course, this will mean governments need to deviate from trying to deliver infrastructure at the lowest possible cost.”
Copp also points to a slow innovation uptake across the infrastructure sector as a key barrier to productivity enhancement. According to the 2025 report, although multifactor productivity rose by 2 per cent in the 2023-24 financial year, that follows a decline for the previous year and a flat long-term trend far below mid-1990s levels.
“While engineering and design firms are increasing their investment in digitalisation, adoption across the broader construction ecosystem remains limited.
“Entrenched delivery models, fragmented procurement practices and low appetite for risk sharing continue to hold back initiatives such as modern methods of construction and other productivity-enhancing technologies. High upfront costs and uncertainty in project pipelines only compound the challenge.”
READ: Australian construction has a productivity problem
Stabilising the future
These challenges are real and significant, but the outlook isn’t all grim. Copp is positive about a number of initiatives that are seeing increases in innovation and productivity, and a smoother passage for projects through the infrastructure pipeline.
He points to the Federation Funding Agreement Schedule (FFAS) as a development already having a stabilising effect on the industry.
The most recent FFAS, implemented in 2024, is an agreement between the Federal Government and the states and territories that consolidates current funding arrangements for specified initiatives in the infrastructure sector, along with providing a framework for facilitating future funding initiatives.
“From our perspective, the FFAS is helping turn the pipeline from a wish list into a more deliverable, long-term program – and that’s exactly what the sector needs, to manage capacity and keep costs under control.
“For the first time, governments are required to bring forward 10-year infrastructure plans, follow a two-pass investment process and report transparently on performance. What that’s done is lift the quality of project planning and force more rigorous due diligence before projects enter the pipeline.”
The result: projects are being sequenced more realistically, and investments align better with national priorities like housing and the energy transition.
“That means fewer speculative projects, better-timed ones and far greater confidence for industry about what’s coming.”
Copp also praised models such as the nation’s cooperative research centres, which he said show that collaborative hubs can overcome the “valley of death” separating research and commercialisation.
“Governments and industry are increasingly recognising that innovation won’t scale unless solutions are developed, proven and deployed in a coordinated way.
“But critically, the next step is embedding proven innovations into everyday practice – and Australia’s public infrastructure program offers a powerful platform for doing exactly that.”
READ: Inside South Australia’s biggest road infrastructure project
Cultural transformation
While such structural reforms are paying off, Copp also points to cultural shifts that can help deliver projects more effectively and productively. The construction industry’s Culture Standard is a framework that seeks to address the traditional long hours, low flexibility and limited diversity that has historically characterised the sector and continues to drive high turnover and skill shortages.
According to Copp, where the standard has been piloted, it has demonstrated that cultural improvement and project performance go hand in hand. He cited the Brunt Road Level Crossing Removal Project in Victoria, which adopted a five-day work week as part of the Culture Standard pilot (without additional weekend or shift work).
In doing so, Copp said, the project reduced total workdays by 21 days a year, met all time and budget milestones, and improved mental health, retention and gender diversity onsite.
“Leaders on the project have said the shift transformed engagement and wellbeing without compromising delivery. This demonstrates what’s possible when innovation, capability and culture are improved.”
Procurement is an effective way for governments to encourage companies to adopt the standard and lift productivity.
“Procurement is one of the most powerful tools governments have to drive cultural, environmental and productivity improvements at scale – because it directly shapes the behaviours, materials and methods used across the sector.
“One of our key recommendations through our 2025 Infrastructure Market Capacity Report is for governments to use their purchasing power to stimulate demand for innovation. By incentivising trials and early adoption on major projects, governments can help the market cover the initial upfront costs, build capability and accelerate the shift to more productive delivery models.”
Ideally, the outcome is for innovation, capability and culture to be improved in tandem.
“A rested, supported workforce is a happier and more productive workforce – key attributes for a sustainable workplace culture that people want to be a part of and stay in for the long-term.
“If governments incentivise innovation, scale training in emerging skills and embrace the Culture Standard through procurement, Australia can lift productivity while creating a more modern infrastructure sector.”
This story was originally published in the May 2026 edition of create with the headline ‘The power behind the pipeline’.
WATCH: How the Culture Standard can help improve culture in construction
