Australia’s construction industry has hit a wall that only innovation will bring down
Australia’s construction industry is risk-averse, there’s no two ways about it. Our new buildings and public infrastructure are reliant on construction technologies and work practices that haven’t changed for decades. But the costs of construction continue to rise.
I see developers struggling to deliver new homes at affordable prices and light rail that costs in excess of $200 million per kilometre. Australian society cannot afford such inefficiencies. We’re a small market in a big country and the large-scale adoption of innovation is clearly needed to reduce costs in the construction sector.
Building contractors, the industry’s leaders, are struggling to make profits in buoyant market conditions as they deal with increasing contractual risk and rising prices. And highly variable demand leads to a lack of confidence in the medium- to long-term, so builders are not investing in the very thing Australia needs in its construction sector - innovation.
We have the technology
There is no shortage of ideas in this country. I think the technologies in their infancy exist. What we need is investment in R&D, specific to the construction industry – bringing the various aspects of new science together into technological applications.
We also need forward-thinking clients in order to derive the real commercial value from these technologies. In my view, that’s what is stopping us building high-rise concrete structures with robots, or 3D printing light rail tracks.
Factories have used robotics for decades, however, we’re just starting to see robotics onsite in brick-laying and welding. Technologies that reduce onsite construction will reduce expensive site-based labour costs and construction times. Robotics can be either site- or factory-based, the benefits of which are speed, and reduced labour.
Likewise, 3D printing has the potential to be used onsite or offsite. It’s a diverse field with enormous potential and as we see further advancement in printed materials, the applications for 3D printing in construction will increase.
Value of innovation
We all know construction is a risky business. Every project in some way is a prototype - a one-off that presents unique problems and uncertainty of outcomes. Innovation ratchets up this uncertainty and introduces a whole new set of obstacles.
It increases project risk and unless the client is prepared to share this risk then the entire risk rests with the builder. A builder needs to see the rewards for taking increased risk, but such rewards are rarely worth it.
While builders are very good at assessing their risk, I think they could be better at selling the value of innovation. But, then there are clients that too readily accept tried and tested solutions without looking for the value that innovation can bring.
Right now, what the Australian construction industry needs is longer-term collaborative relationships between clients and builders. In this way, both can commit to innovation and share its benefits.
There are numerous benefits that innovation can bring, but they must all create real value in the eye of the client. In construction, the only way value is provided is through reducing the build cost, or increase the value of the completed asset.
If you can find a quicker way to build, it nearly always saves money. So, a key focus for innovation in construction is reducing build time. Reducing construction programs requires doing less of the work onsite as well as improving the efficiency of site-based work.
Benefits of downstream
On their own, builders have limited scope for innovation without heavy reliance on a third party unless they buy into the downstream industries upon which they rely. And we’re starting to see the early signs of builders doing just that - investing in the supply chain.
Major contractors like Strongbuild, Lend Lease, Laing O’Rourke and Hickory are taking ownership downstream and seeing direct benefits in investing in innovation. Laing O’Rourke owns an off-site precast concrete business, Lend Lease has built a plant to prefabricate floor and walls systems, and Hickory has developed a business that manufactures modular buildings in a factory - an industry which has enormous potential in Australia.
These builders strategically choose projects on the basis that they have a competitive advantage through their control of the downstream industries. When they take ownership over the trades and suppliers they lead, these builders can direct and manage innovation, choosing where it is best suited, and they reap the financial benefits.
Alternatively, building contractors can also own the supply chain in part or in full through joint ventures (typically for one-off projects) or through strategic partnerships where they team up to offer an integrated building solution.
The time is ripe for disruption, for real innovation in construction technologies and practices.
Article first written for Boutique Developer.