Innovation in Construction
Building up Ideas and Constructing Results
The resource boom in Australia has had far-reaching impacts on other industries, including the construction sector. As a direct result of the boom, there was an enormous inflow of international capital, foreign investments, skilled migrant labour – as well as its associated expertise – and new materials and applications. All factors have had a role in shaping Australia’s growth and development.
By 2060, the population of Australia is expected to reach upwards of fifteen million people, an increase of seventy per cent. This population growth will be accompanied by substantial congestion and significant associated costs (which will run in the billions each year). The increased movement of people and goods will require a significant public and private investment in infrastructure over the next several decades in order to sustain this growth.
Australia’s Organisation for Economic Co-operation and Development (OECD) ranking is fourth for average household disposable income, fifth per capita in terms of GDP and seventh highest for employment rate. The country is dealing with weakened public finances as the country, since 2008, is a net borrower and not a lender. Simultaneously, it is plagued by falling commodity and export prices, a decade of flat productivity, high production costs (one of the highest in the world), soft jobs growth and an aging population.
Australia is a high wage economy with a robust social safety net but requires strong government policies and support to ensure it remains globally competitive. It has signed free trade agreements (FTAs) with trading partners in Japan, South Korea and China, which, moving forward, will contribute to the productivity of those economies.
As global trading is shifting to the emerging markets of South America and Asia, the rising middle class there has created new sources of demand. These new markets have also introduced new sources of highly innovative business with which Australia and other developed nations will have to compete.
The government is committed to strengthening competitiveness in Australia, viewing innovation as key to future prosperity. It has been increasing investments in infrastructure and changing legislation and processes for environmental approvals. By lowering the costs to do business, deregulating and encouraging policy that fosters innovation and entrepreneurship, the government intends to find new sources of economic growth.
The construction sector is a significant part of the Australian economy, employing over one million people and accounting for eight per cent of the country’s GDP – a sector of great economic importance.
Many people have been critical of government interference in the industry, believing that the industry has faltered without an effective regulator, since the abolishment of the Australian Building and Construction Commission (ABCC) in 2012.
The government has since introduced the Building and Construction Industry Bill of 2013 which re-established ABCC. The organisation has government and industry support to increase competitiveness, simultaneously increasing productivity, maintaining better manager/employee relations and protection of trade unions while encouraging innovation to strengthen the industry.
Each construction project has unique conditions including weather, environmental, geographic and geologic variables. These require the teams, working on each construction project, to make daily adaptations to their processes and materials to fit the conditions with which they are faced.
Innovation in construction is not a straightforward concept as it entails improvement in not only the processes, but also the products, materials and services the industry offers. The industry is constantly generating new ideas, incorporating these new ideas, and solving the needs of clients while increasing the ability to compete in ever-changing global economy.
Companies must maximise innovation by applying ideas and incorporating them into the company’s standardised management practices and processes. In doing so, innovative ideas can be managed, measured, controlled and adopted at every level of a business’s operations, with the economic benefits contributing not only to the industry, but ultimately the national economy.
The challenge is to identify potential opportunities to innovate. After assessing those opportunities and developing innovative solutions to meet the needs that arise at the construction site, it is critical to be able to transfer these innovations to additional projects and sites under variable conditions.
In order to adopt innovation as standard practice within the construction industry, a company must undergo a process to standardise the innovation. Standardisation ensures that the benefits to the enterprise will be ongoing.
Just as the population is aging, so too is the employment base. There is a struggle to satisfy the current demand for skilled workers and to increase the number of apprenticeships undertaken each year. There is also a disconnection between the old school of thought, which was based on experience and hard work, and the new school of thought, that has an emphasis on education and new technologies.
The industry will have to reconcile the two schools of thought in order to support the increasing public and private investments in infrastructure. Projects, including roads, rails, ports, airports, energy, water and communications networks, are all essential to the country’s competitiveness.
Most of Australia’s jobs growth has occurred in government funded areas, with little assistance to accommodate the fading resource sector, which will have a ripple effect on other important industries, like construction.
As the construction industry activity is a primary indicator of national economic performance, industry innovation requires government support through a strong intellectual property rights regime. In a knowledge-based economy where innovation flourishes, talent is attracted, trained and employed and creativity is encouraged, seizing opportunities over competitors and gaining a comparative advantage.
Government initiatives are initially needed to help foster innovation by attracting and retaining the best and brightest to Australia and ensuring the proper training and education exists.
The government will maintain focus on project selection, funding, finance, delivery and use to maximise efficiency and outcomes and will look to the most innovative companies to do so. By consulting with industry and researchers, the government can better focus its $9.2 billion a year investment in research and development to maximise commercial return.
Future economic growth and competitiveness depend on the capacity for research investment to result in commercial outcomes, by using innovation to boost productivity, exports and economic returns. Cornell University has ranked Australia 81 out of 143 countries for the ability to commercially apply ideas.
Many factors contribute to the ability to be globally competitive, including currency value, productivity levels, spending on research and development and strong trading partners, and Australia fares relatively well in all these areas. Innovation helps to create new sources of growth and new sources of demand, as well as more environmentally friendly ways of doing business.
The benefits of innovation can be seen at every level of an organisation: helping to better integrate processes; creating strategies that increase competitiveness; and maximise output by fully employing an organisation’s experience, knowledge, tools and resources for optimal production.
In the construction industry, it is important to understand innovation as more than a reoccurring concept that is present on the construction site day to day. It is a crucial component of how the nation will develop and move forward as the global market shifts to emerging Asian and South American economies. Addressing the infrastructure needs of a growing population is vital since providing for that growth is likely to strain Australia’s resources and capacities without innovative solutions.