AI hype meets reality as Australia’s construction sector faces pressing challenges
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According to the 2025 State of Design & Make report, many in the local Design and Make industries – spanning architecture, engineering, construction and operations (AECO), design and manufacturing (D&M), and media and entertainment (M&E) – are grappling with persistent challenges such as cost control, talent shortages, and sustainability targets.
The study, which surveyed 5,600 global business leaders including 460 from Australia, paints a sobering picture of the landscape amid rising living costs, high interest rates, and geopolitical uncertainty. For 40% of Australian respondents, cost control remains the top concern, reflecting the economic headwinds faced throughout 2024.
AI dominated Australia’s tech discourse in 2024, but enthusiasm appears to be cooling. Only 68% of Australian leaders now believe AI will enhance their industry—a 9% drop from last year.
This shift aligns with global trends, which show a 12% decline in AI optimism overall. Meanwhile, concerns about AI disruption remain steady, with 55% of Australian respondents saying AI could destabilise their sector—well above the global average of 48%.
Andy Cunningham, Autodesk’s Senior Regional Director for Australia and New Zealand, suggests the dip in optimism follows the familiar arc of the tech hype cycle.
“We were surprised by the AI enthusiasm last year,” he says. “But as organisations begin implementing AI, they’re discovering the real-world challenges—from skills shortages to technological limits.”
As uncertainty looms, digital transformation is emerging as a key differentiator.
The report shows that digitally mature organisations—those well advanced in their digital journey—are better equipped to handle disruption. In Australia, 79% of digitally mature companies say they feel well prepared for change, compared to just 45% of those still in early or mid-transformation stages.
Digitally mature companies also outperform in key areas:
• 40% use internal data to gain competitive advantages (vs 25% of less mature peers).
• 39% use data to accelerate product development or project completion (vs 28%).
• 78% are entering new markets, compared to 59% of less digitally mature companies.
“Digitalisation builds confidence,” says Cunningham. “Organisations with stronger data infrastructure are not only more resilient but also better positioned for long-term growth and innovation.”
Despite high awareness, Australian businesses trail behind global counterparts in leveraging AI for sustainability. While 94% report taking steps toward environmental responsibility, only 30% use AI to support these efforts—lower than the Asia-Pacific average of 39%.
Globally, AI has emerged as a vital sustainability enabler for the second year running, particularly in the D&M sector where early-stage design decisions determine up to 80% of a product’s environmental impact.
“Australia’s slower pace could impact progress on sustainability goals,” Cunningham says. “AI is a critical ally in making sustainable design and manufacturing choices from the outset.”
One of the most persistent challenges across the Design and Make sectors is the skills gap. In Australia, 61% of leaders say the lack of skilled talent is stalling their growth. Globally, the concern is growing, with 58% citing talent shortages as a barrier—up 15% from last year.
Digitally mature firms are again ahead of the curve. Worldwide, 77% plan to invest in digital skills training, versus just 59% of their less advanced counterparts. Additionally, 74% of digitally mature companies are implementing continuous learning programs, compared to 55% among less mature firms.
While economic and technological headwinds remain strong, the 2025 State of Design & Make report underscores that Australian businesses aren’t standing still. Investment intent is still robust—67% of local leaders expect to increase spending going forward, despite the current downturn.
What’s clear is that digital maturity, a thoughtful approach to AI, and a commitment to upskilling are becoming the pillars of resilience.
“In a world where uncertainty is the new normal, the most adaptable and digitally prepared organisations will lead the way,” Cunningham says.
Source: Architecture & Design Magazine
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