Construction sector finds renewed optimism

Despite signs of optimism re-emerging in the construction industry, a recent report highlights ongoing uncertainty, indicating that the sector still faces challenges ahead.

By Andy Cunningham, senior regional director for Australia and New Zealand at Autodesk.

For several years, Australian companies across design and make sectors have faced multi-faceted volatility, and in many cases, complete turmoil.

Today, optimism is returning to Australia’s architecture, engineering, construction and operations (AECO) industries, but as digitalisation and sustainability strategies advance, local companies are increasingly experiencing headaches with cost control, attracting talent and upskilling the workforce.

*Andy Cunningham, senior regional director for Australia and New Zealand at Autodesk.*

According to the global 2024 State of Design & Make Report, a study featuring 451 Australian respondents, including participants from AECO, 78 per cent of local leaders and experts believe their companies are prepared to handle unforeseen economic or geopolitical challenges. This is higher than the global average of 73 per cent, and a significant step up from 63 per cent in 2023.

The report also found respondents are confident in their companies’ market position: 94 per cent feel they are keeping up with the rate of change in their industry, and 86 per cent say their companies outperformed expectations in the previous year.

While these figures suggest that the sense of uncertainty stemming from the global pandemic, geopolitical turmoil and economic instability is easing, 63 per cent of respondents still perceive the global landscape as more uncertain now than it was three years ago.

While Australian companies are improving their positions and operations – with many planning new offerings, entering new markets, increasing agility and diversifying supply chains – the scope of challenges they face has shifted.

This year’s report – the second iteration – identified that cost control is currently the top challenge (experienced by 32 per cent), followed by attracting, training and retaining talent (30 per cent), and environmental sustainability (29 per cent).

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Attracting and retaining talent is a particular pain point. Leaders want to train and upskill their workforces – 71 per cent agree this is important – but not everyone knows how, and 46 per cent of organisations lack the expertise needed to design effective internal training programs. On a positive note, 71 per cent are implementing continuous learning, and 73 per cent are investing in digital skills training programs.

On the sustainability front, there has been a substantial shift in attitudes towards reducing negative environmental impact. In 2023, 53 per cent of leaders and experts said sustainability is good for short-term business – in this year’s report, that figure has risen to 82 per cent. Meanwhile, 77 per cent wish their company prioritised sustainability as much as profits, and 82 per cent believe their company’s sustainability initiatives are a key part of business growth strategy for the next three years.

The study also shows that digitalisation continues to be a centrepiece for driving new outcomes and broadening opportunities. Over the past year, since the previous iteration of this study, local organisations have enhanced their digital capabilities while maintaining a human-led design approach. They have relied on cloud technology to share data with clients, teams and subcontractors working in the field. These investments are resulting in increased efficiencies, stronger collaboration and improved visibility from design to delivery.

Looking at the numbers, a third (33 per cent) of Australian companies strongly increased investments in technology to deliver improved project outcomes. The predominant results from these digital investments include improved profitability (seen by 35 per cent), better reputation (30 per cent), enhanced productivity (29 per cent) and improved data exchange (29 per cent).

Artificial intelligence (AI) is also showing steady progress. Two thirds (67 per cent) of Australian respondents said they are approaching or have already achieved their goal of incorporating AI into their companies. Additionally, 79 per cent trust AI technologies for their industry, 77 per cent agree AI will enhance their industry and make it more creative, and 67 per cent agree AI will be essential across the board in two to three years.

This year’s State of Design & Make Report is indicative of the concerted transition from reactive to proactive positions within AECO, and is creating both resilience and certainty for the years ahead. With it, Australian companies are uncovering new avenues for growth and laying foundations for strong competitive advantage at a global scale.