Abstract:
This paper investigates the relationship between the procurement methods used on building and
construction projects, the opportunities for innovation and innovative solutions to client requirements,
and the competitiveness of the Australian industry. The economic theory of innovation suggests that
returns to innovators from research and development (R&D) and positive externalities drive the
process. The argument is made that traditional tendering and procurement methods used by building
industry clients works against these drivers of innovation in several important respects. This paper
reviews trends in R&D in the Australian building and construction industry, and assesses the
importance of these trends for the international competitiveness of the industry in the context of
alternative procurement methods and a changing regulatory environment. The analysis of the
implications of these trends in deregulation and procurement for the international competitiveness of
the Australian industry finds that they will determine the competitiveness of Australian building and
construction. The links between R&D and competitiveness is also discussed. The paper concludes
that the ability of the Australian industry to lift R&D investment will be an important determinant of
competitiveness over the coming decade, which will see significant structural change in both the
domestic and international building and construction industry.
