State of Digital Adoption in the Construction Industry 2024: Challenges and opportunities for Australia identified

The “State of Digital Adoption in the Construction Industry 2024” report published by Autodesk and Deloitte has highlighted significant trends and challenges faced by the construction industry across Asia-Pacific. They are predicting that the Australian economy will grow by 1.3% in 2024, marking the weakest growth since the early 1990s recession, excluding the pandemic period. Real household income per capita has declined due to inflation spikes in 2022 and 2023.

According to the report, the Australian construction industry, employing over 1.3 million people, has been notably disrupted by supply chain issues, resulting in material shortages and soaring prices. Despite these hurdles, Australian businesses reported average revenues of AUD $142 million in FY23, with an optimistic forecast of a 10% increase in the coming year.

Tech Adoption and Benefits
Australian businesses fall in the middle range for digital adoption, utilising an average of 5.0 technologies, increasing to 6.1 for medium and large enterprises. However, they plan to implement fewer new technologies compared to other countries, with an average of 4.3, lower than all other countries except Japan. Notably, businesses that do adopt new technologies see significant benefits, with nearly 80% of these technologies being successful. For instance, Coates, an equipment rental company, utilises its cloud-based ‘Coates Connect’ platform to provide real-time information on equipment, enhancing utilisation rates and productivity.

Overcoming Barriers to Technology Adoption
The report also highlights that the primary barriers to technology adoption in the Australian construction industry are cost and skill gaps. High inflation and cost pressures within the supply chain exacerbate these challenges. Moreover, 76% of businesses report technical skill shortages, although this is the lowest level across Asia-Pacific. Only 23% of Australian businesses have a defined technology strategy, compared to 30% in the region.

AI and Future Prospects
The report also finds that 30% of Australian companies are currently trialling or using Artificial Intelligence (AI) software to address issues such as labour shortages, high material costs, and global supply chain disruptions. Additionally, 61% of Australian construction companies believe AI will help reduce costs, especially as more construction firms enter external administration.

“Disruptive new technologies combined with a challenging business outlook means that construction and engineering leaders in Australia and across Asia-Pacific are having to seriously rethink their tools, workforce skill needs and how they interact with clients and contractors,” said Sumit Oberoi, Senior Manager, Construction Strategy & Partnerships, Asia-Pacific at Autodesk. He added, “Generative AI has exploded onto the agenda for senior leaders with the rapid adoption of tools like ChatGPT, Midjourney and GitHub Copilot.”

A further 33% of Australian construction companies plan to use AI in the future, making it the most common technology they aim to integrate. “If all companies with plans to adopt AI do so, AI will have a similar level of prevalence in the construction industry as data analytics or mobile apps,” noted David Rumbens, Partner at Deloitte Access Economics.

The report underscores the need for construction companies to start small by piloting projects, selecting a ‘digital champion’, and building a digital ecosystem. “The first step to successfully implementing AI is data standardisation and having an operational common data environment for teams,” Oberoi added.

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