Jamie Shelton is one of Australia’s most senior and experienced engineers who has twice been an Engineers Australia Top 100 Engineer.
Shelton is also a former chair of the National Engineering Registration Board and former president of Consult Australia. Today, he is CEO of Northrop, an award winning, multi-disciplinary engineering consultancy firm.
Inside Construction recently spoke to Shelton to get his forecast of the construction industry as a whole, as well as to highlight the challenges and opportunities facing the sector moving forward.
Why has the Australian construction sector remained slow to adopt emerging technologies? Australia is seen as a ‘leader’ in this space, yet recent global surveys show that the sector in general is at the bottom of the list of industries for technological adoption. Why is there such discrepancies?
We do see niche and small-scale innovation in the Australian construction industry, but there’s so much more opportunity than what is being taken up. There are several reasons why the Australian construction sector is slow to adopt emerging technologies.
Firstly, there’s very little investment into R&D by head contractors, who buy what they need on a job-by-job basis, rather than ‘own’ the downstream sub-contractors and suppliers. This ubiquitous business model by builders reduces the head contractor’s risk of carrying high capital and labour costs through fluctuating markets and perpetuates a short-term opportunistic approach by many subbies and suppliers. There’s little incentive for head contractors to innovate when the cost and/or time benefits are passed directly onto the client.
Industrial innovation starts with either small start-ups or large stable companies, both of which are dependent on a long-term strategy and investment, which is a challenge in the Australian construction market. Small start-ups need sustained favourable market conditions and cash to deliver returns that may take three to seven years to eventuate. There are too few large stable subcontractors in the Australian market, and their business model is responsive to the market’s short-medium-term fluctuations to best exploit their primary competitive advantage – their size – rather than the development of a long-term competitive advantage through innovation.
Secondly, the industry is driven by risk aversion, rather than better outcomes through innovation. Risk is crudely managed in the Australian construction industry in both public and private sectors. It absolutely starts with clients believing that shifting all possible risk to the builder somehow produces a better outcome for their project. This is an understandable, although naive, perspective that forces builders (and all who work for them) to focus primarily on risk rather than opportunity. Managing risk in construction leads to the adoption of tried-and-tested solutions, which provide the highest degree of certainty at the cost of benefits that may come from doing things differently. We need clients with vision, who believe in the benefits of innovation and are prepared to lead a collaborative process in which the risks and benefits of innovation are appropriately shared across the project stakeholders.
How far behind is the pre-fabrication sector compared to the other global markets? Does Australia even have a prefabrication industry? What will it take to create one?
Australia’s prefabrication industry is growing, utilising mixture of local and imported products. We’ve started to see local investment in pre-fabrication factories, and the market is showing a keen interest in these local initiatives, although capacity at this time is small.
What would really help our burgeoning pre-fab industry is for major clients to commit a project pipeline to pre-fabrication. This would create the market confidence that is needed to attract the R&D investment into pre-fab technologies. I believe we’d see a very positive response from the Australian construction industry should such clients come forward.
How can these projects be better managed? It appears the public-private partnership model doesn’t work on these major projects, which leads to a ‘race to the bottom’ for the numbers of contractors. What role does technology have to play, in terms of more transparency, on these major infrastructure projects?
There are three root causes to the high cost of public infrastructure in Australia, of which cost blowouts is a symptom. These are:
- Overly politicised intervention in project selection and timing;
- A lack of skilled technical professionals within the public sector; and
- An over-reliance on allocating risk to builders as a cost-control measure.
Together these three causes provide little opportunity for government infrastructure to benefit from innovation.
How does a city like Sydney cope with such massive residential growth? It’s one thing to build the ‘right infrastructure’ for developing areas, but what happens to more established suburbs like Rockdale and Kogarah, where the Princes Highway is the only thoroughfare? How can this development be better managed to ensure traffic can move smoothly?
Bringing the benefits of major new infrastructure into established suburbs requires committed political leadership. There’s no shortage of plans – we know the value this much needed infrastructure will bring – and the engineering solutions exist. Unfortunately, we lack the commitment of government. Bringing new infrastructure into developed areas is never easy; tough decisions need to be made and this is where leadership is needed.
We must act in areas where congestion on major roads is not only restricting the flow of through traffic, it’s also deteriorating the liveability of our suburbs. If we choose to perpetuate a high dependency on car transport then there are simply two solutions – put the traffic underground or overhead. Both solutions are common throughout major cities across the globe and both are expensive. Modern tunnelling technologies have improved the feasibility of tunnels, with the added benefit of reduced disruption during construction and minimal impact at street level.
Alternatively, we can continue the recent movement towards metro systems. These are a proven mass transport system for major cities. Importantly, the effectiveness of a metro system is entirely dependent on government commitment to continually build the system, such that it truly serves the population and becomes the most efficient way for most city dwellers to travel within their city. It’s the long-term government commitment that casts a shadow over Australia’s ability to build effective metro systems.
I think Sydney’s south-east light rail system is an example of a poorly conceived, poorly executed public transport system. The public, quite rightly, should expect something better for their money.
.JPG)
.png){kind=small}
