The Missing Decades: Why Construction Lags in Productivity

Executive Summary

• Why: For over three decades, Australia’s construction industry has been trapped in stagnation. Productivity has flatlined, insolvencies are rising, and the sector consistently fails to deliver on its most fundamental obligation — building enough homes for Australians. This is not just market failure; it is the direct result of decades of poor policy, poor governance, and short-termism at the highest levels.
• How: Transformation requires integrating leadership across the credit cycle, business cycle, and investment cycle with structured data, AI, and machine learning. Only by linking strategic foresight with operational execution can we break free from the status quo dysfunction.
• What: The future belongs to leaders who treat data as the new foundation, leverage machine intelligence to anticipate risk, and redesign the industry’s fragmented structures into scalable, resilient, whole-of-life systems. The construction industry cannot “reform at the margins” — it must be rebuilt at its core.
• Next Steps for Executives:
  1. Acknowledge the dysfunction: denial of systemic failure is no longer an option.
  2. Audit your organisational exposure: supply-side constraints, insolvency risk, and regulatory friction.
  3. Invest in structured data and AI-enabled decision-making as the multiplier for productivity.
  4. Engage with leaders who have lived the cycles and built the frameworks — and start the transformation conversation today.

Backdrop

To fully benefit from this article and the rest of this series, it is also important to consider ‘how we got here’ before we consider ‘a brighter future’. Whose familiar will remember the that the industry today, stands on the sholders, of the 1981-1983 recession, floating of the Australian Dollar in 1983, the Industrial Relations reforms of the Price and Income Accords I-VII, and transition to Enterprise agreements and collective bargining, coupled with decentralisation and deregulation of the undustry.

Further, the 1991 recession that we had to have, the Sydney Olympic Games aspirational bid (and then win) and the subsequent construction industry reformation.

The Australian Story: A Generation of Missteps

When I entered the industry in the 1990s, Australia was already falling behind. But what’s unfolded since then has been nothing short of catastrophic: a combination of poor government policy, shortsighted industry leadership, and fragmented execution has created an industry that is, by almost any measure, uninvestable and unexecutable.

1. Supply-Side Constraints (Capacity in Crisis)

• Labour Shortages: Across nearly every trade — electricians, plumbers, carpenters, engineers — we face shortages that drive up wages, delay projects, and compromise productivity.
• Rising Construction Costs: Inflation, global supply chain disruptions, and energy shocks have driven steel, concrete, and brick prices to historic highs. Fixed-price contracts turned toxic overnight, sinking firms and projects alike.
• Chronic Low Productivity: Unlike manufacturing or logistics, which doubled productivity in a generation, construction in Australia has been in decline. Too many small, fragmented firms, too little tech adoption, too many insolvencies, razor-thin margins, and no real investment in transformation.
• Financial Instability: The surge in insolvencies is not a blip — it’s a symptom. Companies locked into contracts that no longer cover costs collapse, leaving a trail of unfinished projects and eroded consumer confidence.
• Planning and Regulatory Delays: Local and state approvals frameworks add years of delay and millions in costs. In a housing crisis, every month lost in red tape is another family without a home.

2. Failure to Meet Housing Targets

• The 1.2 Million Home Target: Government projections are already slipping. At the current rate, Australia could fall hundreds of thousands of homes short by 2029.
• Collapse in Approvals: Apartment approvals — essential for urban density — have collapsed. High construction costs and low margins have drained investor appetite, precisely when we need scale the most.

The Root Cause: Policy, Governance, and Leadership Failures

The dysfunction is not an accident. It is the compound effect of three decades of systemic failure:

• Regulation Mismanaged: Deregulation and poor enforcement created uneven standards and weak accountability.
• Industrial Relations Bias: Decisions favoured short-term players and unions over society-wide outcomes, entrenching inefficiency.
• Governance Failures: Authorities approvals and controls are slow, opaque, and inconsistent — introducing execution risk into every project.
• Policy Drift to Short-Termism: Successive governments pursued political wins rather than whole-of-society outcomes, prioritising headlines over housing delivery.

The result is an industry crippled by authorities risk, capital risk, implementation risk, and inadequate returns on investment. Australia needs millions of homes to meet a basic societal need — and yet we have an industry incapable of delivering them.

How Transformation Happens (The Recipe)

The future of construction will not be unlocked by tinkering. It requires systemic re-architecture, built on three pillars:

1. Structured Data as a Strategic Asset
   • Move from fragmented spreadsheets to integrated, lifecycle-oriented data structures. Data must be treated as the “new concrete” — the foundation of resilience and foresight.
2. AI and Machine Learning for Predictive Foresight
   • Use ML to forecast cost overruns, labour bottlenecks, and safety incidents months before they materialise. This is standard in finance and healthcare; construction can no longer ignore it.
3. Leadership Across Cycles
   • Only leaders who understand the credit cycle, business cycle, and investment cycle can guide organisations to sustainable success. Operational leverage comes not from squeezing subcontractors but from orchestrating capital, technology, and human resources intelligently.

What Executives Must Do Now

If you’re responsible for capital projects, property development, or infrastructure delivery, the message is simple: the status quo is finished.

• Audit your exposure — where are supply chain shocks, labour shortages, and insolvency risks undermining your projects?
• Challenge your governance — where do regulatory processes add unnecessary drag and capital risk?
• Invest in intelligence — build the data foundation and AI-enabled foresight that will multiply your margins and resilience.
• Lead differently — no longer as a project manager, but as a systems integrator who aligns boardroom strategy with site execution.

Closing Thought

The missing decades are behind us — but they cannot be repeated. For too long, construction leaders accepted dysfunction as “normal.” That era is over.

We stand at an inflection point: either continue down the path of stagnation, insolvencies, and housing shortfalls, or choose transformation built on structured data, predictive foresight, and whole-of-cycle leadership.

I know this industry intimately — from site sheds to boardrooms, from credit cycles to capital markets. I have seen the dysfunction up close, and I have built the frameworks that can break it.

👉 Let’s start the conversation. If you’re ready to move beyond survival and lead the next decade of transformation, I’d welcome a one-on-one discussion to explore your organisation’s specific needs and opportunities.

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