Rising costs are the biggest headache on the horizon for Australian construction companies.

Most of the 314 Australian construction leaders surveyed by Procore in March said raw materials and equipment costs were the biggest challenges they faced in the year ahead.

This outstripped managing staff, winning work or keeping pace with regulation.

Procore's How We Build Now benchmark report shares insights from 1,138 construction leaders across APAC. Views were also canvassed in Malaysia, New Zealand, Philippines and Singapore.

By and large, the industry is optimistic. But scratch below the surface, and the story is less rosy – especially for Australian construction companies.

Tom Karemacher, Procore’s Vice President for Asia Pacific, says Australia’s construction industry is "battening down the hatches to survive a perfect storm".

Rising commodity prices, materials shortages, labour squeezes, interest rate rises and other supply chain risks are hurting bottom lines. Double-digit price spikes have squeezed construction profits.

Construction costs are rising at rates not seen since the global financial crisis.

Australia faces several unique cost pressures. Timber has been in short supply for two years. Bushfires, floods and record-levels of housing construction have all put pressure on supply.

In September Master Builders Victoria sounded the alarm. MBV’s report, Australia's timber framing cliff, estimated a timber deficit of 250,000 house frames by 2035. This was before the invasion of Ukraine put further pressure on prices.

Labour shortages have followed a two-year pause on skilled migration. One recent report from NAB found tradespeople account for 35% of Australia's total workforce shortages.

Australia must also manage the tyranny of distance. The costs to ship a 40-foot container from Shanghai to Sydney more than doubled in 2021, for example.

How can construction companies respond?

Australian construction leaders are embracing a range of strategies to boost productivity and profit – and these will be revealed when Procore’s report is launched.

Despite ongoing efforts to digitise, there is still a significant amount of work being completed on paper, Karemacher adds.

“Our goal is to spark new conversations and to drive construction up the digital curve.”

Procore will launch How We Build Now on Tuesday 31 May. A live stream panel discussion will include SafeWork NSW & NSW Department of Fair Trading’s Matthew Press and Meriton’s national director of construction David Cremona.

The event will deep dive into the report findings to understand current obstacles and future opportunities. What are the top five headaches on the horizon? How are leaders using technology to transform construction? And what tools are best to reduce errors and rework? Register for How We Build Now today to answer these questions and more.