Want to lift productivity in construction? Try digitalisation

Despite being one of Australia’s largest economic sectors, construction continues to grapple with persistent productivity decline and operational inefficiencies.

In New South Wales, the construction industry represents a major employer and contributes significantly to economic activity, accounting for an estimated 7–10 per cent of the state’s GDP (Australian Bureau of Statistics).

However, according to the Building and Construction Industry Quarterly Data Report, economic growth and productivity performance have lagged behind other industries over multiple decades. Experts say that reversing this trend will be essential to maintaining affordability, delivering major infrastructure, and transitioning to a more sustainable built environment.

A productivity problem rooted in analogue practices

Multiple analyses, including the NSW Building Commission’s Digitalisation of Construction report (2021), show the construction sector remains one of the least digitalised parts of the economy, heavily dependent on manual processes and fragmented supply chains. Low adoption of technology limits accuracy and collaboration, slows approvals, and drives avoidable cost overruns and contractual disputes.

Key indicators of analogue practices include:

• over 70 per cent of documentation is submitted as PDFs instead of structured, data-rich formats
• minimal digital training, with only 8 per cent of organisations offering structured programs and up to one-third offering none
• low innovation investment, with 15 per cent investing nothing in R&D and many investing less than 1 per cent of turnover
• heavy reliance on outsourced or minimal IT support

Despite this, digital tools, such as BIM, digital twins, and AI-enabled analytics, offer significant potential to improve productivity, quality, and workforce capability across the sector.

Progress remains slow, particularly among micro and SME firms, which account for over 95 per cent of the industry. Structural barriers include limited investment capacity, legacy systems, lack of standards, skills gaps, high implementation costs, and poor interoperability. These challenges disproportionately affect smaller firms and hinder industry-wide transformation.

Policy efforts are underway, but gaps remain

Government reforms have increasingly acknowledged the role of digitalisation in lifting productivity. Legislation and strategies such as the Design and Building Practitioners Act 2020, Smart Infrastructure Policy, NSW Innovation Blueprint 2035, and the NSW Infrastructure Digitalisation and Data Policy 2025 have contributed to raising expectations around technology use in major projects.

However, these measures are not yet comprehensive and have limitations, such as:

• focusing largely on regulatory controls rather than performance uplift
• insufficient support for integrating digital capabilities at scale
• limited assistance tailored to micro- and small-to-medium contractors
• inadequate alignment of data, systems, and skills requirements

As can be seen below, while Australia has established various frameworks and standards for digitalisation of construction, significant gaps remain compared with global best practices.

Comparative overview of global best practices and gaps/opportunities for Australia in construction digitalisation

Dimensions of Comparison	Global Best Practices	Australia – Current State	Gaps/Opportunities for Australia
National coordination	UK’s Centre for Digital Built Britain, Singapore BCA	No central authority; state-led frameworks	Establish national body (e.g., Digital Built Australia)
Standards & interoperability	Mandated in UK, Denmark, Singapore	ISO 19650 adopted but voluntary	Mandate open BIM & common data environment
Procurement & contracts	UK’s Construction Playbook, Finland’s BIM-linked payments	Legacy 2D deliverables dominate	Embed BIM/digital deliverables in contracts
Skills & training	Singapore CPD, UK CITB programs	Patchy, no national program	Fund national training academies & certifications
Lifecycle integration	UK Digital Twin, Singapore IDD	Focus on design/construction	Extend mandates to operations & maintenance
R&D support	EU Horizon, UK Innovation Hubs	Limited	Create innovation grants/tax incentives

The construction sector needs clearer direction, coordinated action and mechanisms that incentivise transformation across all tiers of the supply chain.

A path forward: DigiCon policy directions framework

To address this gap, a research team from the Centre for Smart Modern Construction, Western Sydney University, has developed the DigiCon Policy Directions Framework (above) with a set of recommendations informed by extensive industry interviews, surveys and benchmarking.

The framework consists of six key components:

1. Vision and mission – setting the overarching purpose and long-term aspirations
2. Digital pillars (03) – the core areas that underpin digital transformation.
3. Strategic objectives (-8) and Strategic Directions (20) – defining key goals and practical steps for implementation
4. Performance indicators – the measures to track progress and assess impact
5. Governance levels and responsibilities – outlining the roles of various levels of governance bodies in driving digitalisation
6. Stakeholder roles and engagement – identifying key stakeholders and their contributions

Its recommendations are to:

• Strengthen leadership and governance

Establish a national coordinating body to drive collaboration, align standards and monitor progress using a Digital Maturity Model

• Enable open standards and interoperability

Mandate adoption of common data environments and globally recognised standards (for example ISO 19650) to ensure seamless information exchange

• Embed digital requirements in procurement

Integrate BIM, digital twins and other digital deliverables into contracts to ensure technology adoption becomes standard practice

• Build workforce capability and support SMEs

Expand digital skills training, certification and incentives to empower workers and reduce capability gaps across the supply chain.

• Extend digitalisation across the full asset lifecycle

Ensure continuity of data and digital processes from planning through operations to improve asset performance and sustainability

• Stimulate innovation through incentives and R&D

Provide financial support and policy levers to accelerate emerging technologies and foster industry–academia collaboration

The report concludes that digitalisation presents a critical opportunity to revitalise construction productivity, mitigate cost escalation and ensure NSW remains competitive and sustainable into the future.

Sector response and launch event

The DigiCon Policy Directions Framework and accompanying Policy Insights Papers were launched in December last year at Western Sydney University, bringing together around 100 participants from the public sector, construction industry, professional bodies and academia.

A highlight of the event was an excellent panel discussion on “Digitalisation of construction as a way to modernise the construction sector.”

The session opened with the observation that “construction often has high turnover but low profit margins, and digitalisation offers a pathway to improve productivity and outcomes.”

Paul Bateman, director, digital strategy, investment & assurance, NSW Department of Customer Service, reinforced this view, noting that “digitalisation can be identified as a solution for productivity-related challenges across many industries, including construction.”

Panel members also discussed barriers to adoption and sector-wide challenges. Atsushi Yamamoto, director, infrastructure digitalisation, Infrastructure NSW, highlighted the importance of improving productivity in public projects, observing that “industry professionals estimate up to 18 per cent of their time is spent looking for information,” while Matt Press, Assistant Building Commissioner, NSW Building Commission, emphasised that “the challenge is not finding the technology… but the lack of ongoing training and professional development, particularly for small businesses.”

Peter Colacino, project strategy & delivery market leader NSW, Mott MacDonald, added that “another important point is leadership in a heavily fragmented sector—we need strong leaders to make the case for change, and that’s why work from universities is so important, because it positions researchers in that leadership role.”

Additional insights from Liam Bennett, director, planning & housing, NSW Cabinet Office, and Jordan Ward, senior manager, head of economic policy, Australian Public Policy Institute (APPI), further emphasised the importance of leadership, capability building, and coordinated policy approaches to enable meaningful digital transformation across the construction sector.

Where to access the framework

The full DigiCon Policy Directions Framework and associated Policy Insights Paper are now publicly available.

• DigiCon Policy Directions Framework Detailed Report
• Policy opportunities to strengthen digitalisation of the New South Wales construction sector

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