Trends in Procurement and Implications for Innovation and Competitiveness of Australian Building Congress

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.