ConstructionTech could be the sleeper in the Australian xTech market as a new report finds close to $100 million has been invested in ConstructionTech startups since 2016.
While FinTechs, RegTechs, BioTechs and AgTechs have attracted much of the spotlight in recent years, it appears that ConstructionTech is a sector where Australia is already a heavy hitter.
The report titled Digital Foundations: How technology is transforming Australia’s construction sector was released this week by StartupAus at the Construction Technology Summit 2017 in Melbourne. This report on was produced in collaboration with Aconex, Lendlease, EY and the Victorian Government.
The report found more than $98 million had been invested in ConstructionTech startups since the start of 2016 in Australia.
StartupAUS CEO Alex McCauley estimates there are more than 100 ConstructionTech startups on the rise in Australia and looking for business in the local construction sector, which contributed $134.2 billion to the economy (8.1 per cent of GDP) in 2015-16 and employs more than a million people.
“ConstructionTech is a thriving startup sector that has so far been flying under the radar,” Mr McCauley says.
Increased digitisation could help boost the value of the sector by $25 billion year on year by 2020.
Then there’s the export potential, with the more than US$8 trillion global construction sector forecast to grow to hit US$15.5 trillion by 2030.
Mr McCauley lists mapping technologies like Building Information Modelling (BIM), Virtual Reality (VR), project management technology, licensing and workplace safety software, and digital hardware like drones as ConstructionTech pathways for local startups to add value.
The report makes six recommendations to help turbocharge the development of a ConstructionTech opportunities in Australia, along with the necessary implementation times for the recommendations.
- Develop a consistent set of standards around technology adoption and use, with support from government. Very high priority – immediate action required.
- Federal and State governments to lead by proactively incorporating adoption of new technology for large infrastructure projects. High priority – set minimum requirements for government projects within six months.
- Ecosystem to establish a dedicated coworking space for ConstructionTech startups, alongside a ConstructionTech accelerator program. High priority – investigate implementation within six months.
- An independent review into the implementation of the universal adoption of BIM (building information modelling processes) in the UK, with a view towards adopting a similar mandate in Australia. High priority –action required within a year.
- Government and industry to support and expand events focused on identifying technology opportunities. Medium priority – networks to continue to be developed.
- Provide additional support for collaborative research initiatives focused on ConstructionTech. The CRC for Construction Innovation came to a close in December 2009 and – according to a 2012 Allens study of the program – contributed $7.5 billion to the Australian economy. Medium priority – development over the next year expected.
Getting ConstructionTech startups and the larger, established construction companies onto the same technical page was a high priority for the report recommendations.
“One of the big concerns that came through from both startups and the big construction companies we spoke to in our research for the report was that one piece of technology is not necessarily transmittable across multiple projects because there isn’t a standard set of APIs for access to things like workforce management tools, and people use different tools for the backbone of their infrastructure,” says Mr McCauley.
“APIs are one thing, but even agreement within the industry on doing procurement through technology would really help the flow around big construction companies.”
The report says the top 20 construction companies in Australia account for almost 60 per cent of revenues.
Mr McCauley says there is increasing desire and interest among the big players to open up the tech and process side of the construction game to startups. He points to attendance at this year’s Construction Technology Summit, which more than doubled to 470 attendees over last year’s event.
He says most of the attendees come from the big construction firms looking to engage with startups.
As for the dedicated ConstructionTech coworking space and accelerator program listed in the third report recommendation, Mr McCauley believes Victoria is the logical location, given Victorian government interest.
A leading Australian player in ConstructionTech is ASX-listed construction management software firm Aconex, which had a hand in the report.
Nick Peace, Aconex’s head of corporate development was at this week’s event. He says Aconex garners about 60 per cent of its revenue from offshore.
He says the global construction sector knows that it has to change over the next five to ten years.
“The issue is how do you get across all the technology given the space is moving so fast, what do I need to change and how will it affect my business?”
Australia would appear to be in a promising position in relation to ConstructionTech.
“I think the ConstructionTech ecosystem in Australia is a real hidden treasure,” says Mr Peace.
“We are keen to shine a light on the strength, depth and capability of the Australian sector, but also ask the question of what we can do as a community to accelerate it.”
Australian constructors are at the leading edge he says and implementing the recommendations in the report will help put local ConstructionTechs and the bigger players upstream in a globally competitive position.