Report: Canada’s Construction Industry Agrees on the Importance of Investing in Technology to Meet Housing Demand

July 24, 2025

Faced with growing pressure to build more, faster, nine in 10 leading Canadian construction companies agree the industry must quickly adopt new, cutting-edge technologies, with most saying digital tools are already starting to boost their productivity, according to a new report from KPMG in Canada on digital maturity in the construction industry.

“It’s good to see the industry investing in desperately needed technology to address persistently low productivity levels,” said Tom Rothfischer, Partner and National Leader, Building, Real Estate & Construction, KPMG in Canada. “These investments are poised to pay off and transform the way we build in Canada. But the current economic and business environment is squeezing the benefits, jeopardizing much-needed ongoing spending on technology—technology that is critical if we are to address this country’s chronic housing shortage and transform our economy through an ambitious period of major infrastructure projects nationwide.”

Clients, who develop and finance construction projects, can play a key role in encouraging the sector to modernize, the report says. Nearly 8 in 10 respondents (78%) say procurement processes are evolving to encourage innovation and digital adoption, and 43% say their clients have a “very influential” role in their decision to adopt technologies.

“It’s encouraging to see signs that procurement is starting to evolve, but we’re not there yet,” said Rodrigue Gilbert, president of the Canadian Construction Association. “Too often, the system prioritizes the lowest price over long-term value, which prohibits investment in innovation. If we want a modern and productive construction sector, governments must reform procurement to foster collaboration, ensure fair risk sharing, and create the confidence businesses need to invest and grow.”

The report highlights the need for increased investment in technology, as the industry’s labor shortage is expected to worsen due to an aging workforce and a projected increase in retirements over the next decade. Nearly three-quarters (73%) of leading construction companies expect it to become “increasingly difficult” to meet demand over the next five to ten years, particularly as the number of retirements outpaces the number of new hires.

“Pressure is mounting on the construction industry to do much more with less,” said Jordan Thomson, National Leader, Building and Construction, KPMG in Canada. “The industry is well aware of the workforce challenges; eight out of ten companies are currently facing a shortage of qualified personnel that is impacting their ability to undertake new work and complete current projects. While the situation has improved slightly compared to two years ago, it is still a serious concern.”

“The industry is also counting on the elimination of trade barriers between provinces,” he added. “The challenges of working under 14 different sets of provincial rules and regulations are another unnecessary barrier to productivity, and this problem must be addressed if the industry is to be able to manage the growing volume of projects in the pipeline.”

The report indicates that the industry is focusing on deploying a wide range of technologies to improve productivity and accelerate project completion, with 81% of construction companies saying their recent investments in technology are already making a difference.

Some of these technologies are driving advances in modular or prefabricated construction that streamline processes, reduce waste, and shorten lead times by enabling buildings to be constructed in a controlled factory environment and then transported to the construction site for assembly; robotics and automation. Other areas include robotic tinkering, which improves productivity and safety, or drones for site surveys; and building information modeling (BIM), which improves planning and collaboration among stakeholders by providing a complete digital view of the project, from architectural design to the required materials, systems, and infrastructure.

According to the report, investments in technologies to create a demand-driven supply chain that aligns supply with actual demand were ranked as the top priority by more than half (56%) of respondents surveyed.

“The industry has always faced supply chain challenges, whether it’s related to costs or material availability,” said Thomson. “But these issues have recently been exacerbated by, among other things, U.S. tariffs, the ongoing impacts of the pandemic, and other global macroeconomic events, prompting many companies to invest in supply chain innovation that utilizes digital tools, data analytics, and automation to enable real-time visibility into projects and material requirements.”

The report shows that industry players are prioritizing several new technologies in parallel; 56% are exploring demand-driven supply chain innovations, and 40% are exploring robotics, drones, and exoskeletons. More than half (53%) of respondents are prioritizing prefabrication, artificial intelligence (AI), and AI-driven software. Engineering firms and suppliers are focusing on deploying intelligent automation, institutional owners are investing in AI, and entrepreneurs are prioritizing cybersecurity technologies.

“We’re seeing much higher interest in technology adoption than we were two years ago. However, the industry still has a long way to go to increase productivity,” said Thomson. “The first step is committing to investing in technology. Achieving returns requires careful technology integration, which is only possible if you also invest in upskilling your employees so they can use it effectively.”

Key findings of the survey:

• 87% of the 265 leading construction companies agree that the industry will need to implement new cutting-edge technologies to meet housing demand.
• 90% believe that using more effective tools, such as AI, analytics, BDM and digital twins, can boost efficiency and workforce, up from 86% in 2023.
• 78% say procurement processes are evolving to drive innovation and digital adoption.
• 43% say their customers “greatly influence” their decision to adopt technology to meet project or contract requirements.
• 73% expect it to become “increasingly difficult” to meet demand over the next five to ten years, particularly as the number of retirements exceeds the number of new hires.
• 78% are currently experiencing a shortage of skilled workers, compared to 90% in 2023.
• 70% say the labor shortage is impacting their ability to bid on new projects or meet deadlines for their current projects, compared to 86% in 2023.
• 84% want trade barriers between provinces to be eliminated as quickly as possible.
• 81% say they have seen improvements in workforce productivity and efficiency as a result of their company’s recent investments in technology.
• 56% prioritize technologies that support a demand-driven supply chain.
• 53% consider prefabrication and modularization a top or high priority in their company, and 27% consider these elements a medium priority.
• 53% also prioritize AI and AI-driven software.

“The construction sector is the foundation of Canada’s nation-building ambitions. From housing to trade-enabling infrastructure to clean energy, nothing gets built without us,” said Gilbert. “It’s time for coordinated action. The government must modernize procurement, cut red tape, and provide the clear, consistent policy direction our sector needs to deliver. The time to act together is now.”

Read the full report.

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