Singapore’s construction industry set to accelerate digital transformation, with AI viewed as an essential growth driver: Report

Singapore construction companies are planning to expand their use of digital technologies and are investing more than 20% of their expenditure into these digitalisation efforts, according to the recently launched ‘State of Digital Adoption in the Construction Industry 2024’ report by Autodesk. While local industry players are currently utilising an average of five different technologies, respondents shared their aim of increasing this to an average of seven additional technologies – a higher number than any other country included in the study.

Jointly conducted with Deloitte, this is the second edition of the annual survey that explores digital adoption trends in the construction sector and is based on insights from 933 construction firms across six markets including Singapore, Australia, Japan, India, Malaysia and Hong Kong.

The pace of digital transformation among Singapore construction companies is likely to have been accelerated by complementary government policies. These include Singapore’s Built Environment Industry Transformation Map which prioritises the adoption of common data standards and building information modelling (BIM) technology. This has likely contributed to BIM technologies and data analytics ranking among the top three technologies adopted by Singapore construction companies, used by 40% and 36% of respondents respectively. Nearly four in 10 (39%) are also using construction management cloud software, and prefabrication and modular construction technologies.

“With the challenges facing Singapore’s construction industry, AI and technology adoption has become integral for businesses to succeed and to help reduce the costs of construction,” said Sumit Oberoi, senior industry strategist for Asia Pacific at Autodesk. “Disruptive new technologies combined with a challenging business outlook means that construction and engineering leaders in Singapore and the rest of the Asia Pacific region will need to seriously rethink their tools, workforce skill needs and how they interact with clients and contractors.”

Artificial intelligence (AI) also ranked among the technologies that Singapore construction companies are most keen to adopt, with nearly all (98%) considering the technology to be important to their business growth – the highest share of any country surveyed. The report finds that 30% of construction companies in Singapore surveyed are currently trialling or using AI or machine learning (ML) software. Findings indicate that the main benefits arising from AI adoption among Singapore industry players include improved efficiencies (61%), better margins (59%), with nearly six in 10 (57%) citing increased competitive advantages, new ideas and insights, as well as enhanced relationships with clients.

More than half (56%) also mentioned the potential of AI to reduce costs, a key advantage that comes at a time when construction costs in Singapore are increasing. According to data from Singapore’s Building Construction Authority (BCA), tender prices for construction projects across the country increased by more than 4% year-on year in 2023. With factors such as manpower constraints and global inflation poised to create upward pressure on costs in 2024, the ability to manage costs will be especially important amid a strong pipeline of construction projects forecast in Singapore for the year ahead. In line with this, nearly half (45%) of Singapore construction companies surveyed expressed plans to use AI in future.

“Generative AI has exploded onto the agenda for senior leaders with the rapid adoption of tools like ChatCPT, Midjourney and Github Copilot. No industry is immune from the transformative potential of this technology,” added Mr Oberoi. “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.”

David Rumbens, partner at Deloitte Access Economics, said, “If all companies with plans to adopt AI do so, AI will have a similar level of prevalence in the construction industry as data analytics or mobile apps.”

However, integrating technologies like these into business operations will be no small feat. The report identified the lack of digital skills as a key barrier to technology adoption, registered among more than a third (34%) of Singapore respondents. Findings also indicate that Singapore construction companies were the most likely out of all countries surveyed to find actions aimed at reducing skill gaps ineffective. For instance, while 79% of construction companies in Singapore had hired new workers, 32% found this to be ineffective in addressing the skills gap, a figure well above the regional average of 16%.

“Priority areas for construction businesses to improve digital adoption include starting small by piloting projects, selecting a digital champion, tracking a range of success measures, building a digital ecosystem, and assessing whether your business has the right processes and talent in place to support technology implementation at scale. For instance, the first step to successfully implementing AI is data standardisation and having an operational common data environment for teams. From a talent perspective, construction companies in Singapore may leverage relevant government-led initiatives such as the SkillsFuture programme. This is aimed at promoting skills mastery and lifelong learning for industries inclusive of construction, paving the way for a future-ready digital workforce,” concluded Mr Oberoi.

Additional key findings from the report across Asia Pacific include:

  • 30% of regional construction companies are trialling or currently use AI in their operations, with a further 39% planning to use the technology in the future.

  • Over 80% believed they received strong business returns or a positive return on investment from implementing AI and other technologies including data analytics, mobile apps, robotics, prefab and modular construction, and construction management software.

  • The critical role of technology in supporting business growth is increasingly being recognised. There was an increase in companies seeing new technology as assisting with new project work (up from 38% to 45%) and technology in improving internal processes (up from 37% to 43%).

  • Foundational technologies are the most commonly used, with data analytics (47%), construction management software (43%) and mobile apps (40%) providing the backbone of construction operations.

  • Generative AI is expected to become as pervasive in the construction and engineering industry as these foundational technologies, with 94% of regional companies now having plans to integrate AI and machine learning into their businesses.

Image: Deloitte