BuildSkills says demand certainty is critical to industrialised construction

Australia’s transition to industrialised construction may depend less on developing new workforce skills than on whether governments are prepared to use their purchasing power to establish a viable market for it. (main image: Visitors tour Green Timber Technology’s advanced manufacturing facility in Orange, NSW, during an open day. Credit image: Carlos Garcia, Homag Weinmann.)

Robert Sobyra, Head of Research at BuildSkills Australia, argues that while workforce capability remains important, the more immediate challenge for modern methods of construction (MMC) is generating sufficient demand to allow manufacturers to invest, expand and achieve economies of scale.

In the second part of an interview with Built Offsite publisher Michael Dolphin, Sobyra places government procurement at the centre of that transition, questioning whether existing policy settings go far enough in encouraging the adoption of industrialised building systems.

“Clearly, the project pipeline is critical. Workforce capability is important, but it is not the most pressing challenge to MMC’s development. The more fundamental issue is demand, because without a sustained pipeline of projects, the industry cannot achieve the scale needed to mature.”

He observes that publicly funded social housing, hospitals, schools and other government building programs have become important early markets for more industrialised building systems.

However, such expenditure needs to do more than generate individual projects. It should help establish the conditions in which industrialised construction can become commercially competitive.

Why market forces alone may not be enough
Sobyra challenges the assumption that industrialised construction will naturally displace conventional building methods once its advantages become sufficiently apparent.

Australia’s established construction model operates within a regulatory, financial and commercial environment developed around conventional building practices. Manufacturing-led approaches must compete within that same environment, often before achieving the production volumes necessary to reduce costs.

“Industrialised construction is unlikely to achieve the scale necessary to compete with conventional building methods through market forces alone,” Sobyra says.

He argues that public-sector demand can provide an initial market in which industrialised construction develops sufficient scale and commercial maturity to compete in the wider private sector.

Sobyra points to the historical role of governments in supporting industrial development, where early public investment helped establish manufacturing capabilities and technologies that subsequently expanded into commercial markets.

“Assuming the private market will drive the adoption of industrialised construction on its own overlooks the fundamental role governments play in supporting industrial transformation,” he says.

Making procurement a lever for productivity
For Sobyra, the opportunity lies in expanding the objectives already embedded in government procurement.

Government procurement already incorporates objectives relating to apprenticeships, workforce participation, Indigenous employment and local content. Sobyra questions why innovation and productivity should not receive similar consideration.

“I’ve long argued that government procurement should be used to drive innovation, and that principle is particularly relevant to accelerating the adoption of industrialised construction,” Sobyra says.

“Government procurement should also be used to encourage innovation and deliver measurable productivity improvements across the construction industry.”

The discussion also examined the absence of explicit MMC considerations in some government housing procurement opportunities, including defence housing, despite the potential suitability of industrialised building systems.

Asked whether such requirements should form part of public investment criteria, Sobyra responded:

“There is a strong case for using government procurement and investment criteria to encourage innovation and productivity in construction, particularly for publicly funded housing projects.”

His broader argument is not simply that governments should purchase more prefabricated buildings. Rather, procurement frameworks should encourage greater adoption of manufacturing-led construction methods while supporting productivity improvements across the industry.

Beyond individual manufacturing investments
Sobyra questions whether direct financial support for individual manufacturers can deliver the same long-term industry benefits as systematic procurement reform.

He cites the National Reconstruction Fund’s $120 million investment in Built Living, the Built–Wesfarmers joint venture developing an advanced manufacturing facility at Neerabup in Western Australia, as an example of targeted government support for industrialised construction. While recognising the role of such investments, he argues that it needs to be complemented by procurement policies that help create the sustained demand required to make that capacity commercially viable..

“Using government procurement to drive broad-based innovation is likely to deliver more sustainable, long-term benefits,” Sobyra says.

“A coordinated approach would create the sustained demand manufacturers need to invest, expand production and support the broader transition to industrialised construction.”

The distinction matters for manufacturers contemplating substantial expenditure on production facilities, automation, equipment and workforce development.

Investment decisions depend not only on whether government assistance is available, but whether sufficient projects will materialise to sustain manufacturing operations over time.

A reliable procurement pipeline could provide that confidence while allowing multiple manufacturers and building systems to participate.

Regulation remains part of the challenge
The procurement question also sits alongside an evolving regulatory environment.

Sobyra notes that NSW and Victoria have been developing separate approaches to regulating MMC building elements, while the Australian Building Codes Board is undertaking related work.

Regulators face legitimate compliance challenges, particularly where completed building elements conceal work traditionally inspected on site. However, Sobyra expresses concern about the differences emerging between jurisdictions.

The result, he suggests, risks becoming a patchwork of regulatory arrangements that manufacturers must navigate.

For businesses seeking to supply projects across state boundaries, inconsistent approaches to certification, inspection and compliance could undermine the efficiencies that industrialised construction is intended to deliver.

Manufacturers therefore need both a reliable project pipeline and regulatory conditions that allow their products and systems to operate across jurisdictions.

Ultimately, Sobyra’s argument moves beyond whether Australia’s construction industry possesses the technology or workforce to industrialise.

The more fundamental question is whether governments are prepared to align procurement, investment and regulatory policy to establish the conditions for that transition.

For manufacturers weighing long-term investment in industrialised construction, a dependable pipeline of work may prove more influential than another round of individual funding announcements.

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