Asia Pacific Construction Industry Sees Rapid Rise of AI

The construction industry is at a critical tipping point, and if you check out any of the recent news reports about the industry it’s clear why.

Increased labour shortages, higher material costs, and global supply chain disruptions are just some of the challenges facing construction businesses across the region.

This means that leaders in the construction and engineering industries are having to seriously rethink their tools, workforce skill needs and how they engage with clients and contractors across their projects.

There is a clear solution though – and smart firms are snapping it up.

Businesses are taking up technology – including AI – in greater numbers than ever before, and they’re doing it to stay competitive in the current environment.

The second edition of our joint annual report with Deloitte, State of Digital Adoption in the Construction Industry 2024, is now out and it highlights some interesting findings.

The insights in the report are informed through a survey of 933 businesses from six markets – Japan, Singapore, Australia, India, Malaysia, and Hong Kong – and conversations with industry leaders.

The explosion of AI onto the agenda

Generative AI has exploded onto the agenda of senior leaders with the rapid adoption of tools like ChatGPT, Midjourney and Github Copilot. No industry is immune from the transformative potential of this technology.

Generative AI means that a new project proposal doesn’t need to start from scratch, instead leveraging material and pricing based on projects completed by the company with similar specifications.

In fact, generative AI is expected to become as pervasive in the construction and engineering industry as foundational technologies such as data analytics and mobile apps, with 94% of businesses now having plans to integrate AI and machine learning into their business.

Businesses who tap into technology receive big rewards

The companies with high rates of digital adoption are seeing the impacts on project performance. Adopting one additional technology was found to lead to a 0.75% increase in the share of total projects delivered under budget, and a 0.5% increase in the share of projects delivered on time, according to findings in the report.

The benefits extend to financial performance, too – additional technology is associated with a 1% increase in profit growth and a 1.4% increase in revenue growth over the past year.

In a nutshell, this means that for a business with USD100 million in revenue and USD20 million in profit, adopting an additional technology is associated with an increase in revenue of USD1.4 million and USD increase in annual profit.

The rewards of tapping into technology speak for themselves.

Lack of digital skills a barrier

One of the biggest barriers for companies taking up technology is a lack of digital skills among employees, and this was cited by 42% of construction businesses surveyed across the region.

This was a key theme in the 2023 report as well, highlighting the persistence of this issue.

Other barriers to the take up of technology include the expense, particularly in a high inflationary environment, and a lack of budget allocated to technology – two closely related issues.

However, the critical role of technology in supporting business growth is being recognised more and more across the region. According to the report findings, there was an increase in both businesses seeing new technology as assisting with new project work (up year-on-year from 38% to 45%) and technology in improving internal processes (up from 37% to 43%).

Key actions to improve digital adoption

It’s clear that businesses both want – and need – to improve digital adoption so that they can benefit from AI and the established and new technologies that are hitting the scene.

Some of the key actions companies can take towards this important goal include:

  1. Start small and pilot projects

    Companies can start small by piloting projects and accounting for change management costs when scaling up to increase their chances of successful digital transformation. In fact, the first step to successfully implementing AI is data standardisation and having an operational common data environment (CDE) for teams.

    1. Choose your champions

    By selecting champions of tech transformation in the business, motivation will be kept high and the vision in clear sight when implementing a new solution.

    1. Track success

    There are a range of success measures that can be tracked when it comes to digital adoption. These can include things like employee use and satisfaction, as well as traditional metrics like efficiency and avoided costs.

    1. Build a digital ecosystem

    A digital ecosystem means having a group of collaborative partners and industry members as well as those within the company itself to support the digital journey and help to find the right solutions and best practice.

    1. Check for readiness

    Ask: is your business AI ready in terms of skills, data systems and architecture? Do you have a CDE in place that can provide a platform for technology expansion? This will give you a great roadmap to figure out where and how you can get started in the right direction towards digital transformation and receiving the huge benefits technology can bring.

    To find out more read the State of Digital Adoption in the Construction Industry 2024.

    Sumit Oberoi

    Sumit Oberoi is the Senior Manager, Industry Strategist APAC at Autodesk. In his role, he is a key contributor in defining and executing strategic construction priorities. Sumit previous role was National Director and Victorian Executive Director with the Air Conditioning and Mechanical Contractors’ Association (AMCA). Sumit was instrumental in the development of the BIM-MEP-AUS Initiative from its inception in 2010. Sumit is a passionate industry advocate who believes in helping industry deliver quality projects through construction innovation. Sumit formerly held directorships with Plumbing Joint Training Fund, Plumbing Industry Climate Action Centre, Air Conditioning, Refrigeration and Building Services Exhibition, and Australian Refrigeration Council. He also represented the AMCA at the Australian Construction Industry Forum and the Australian Chamber of Commerce and Industry.