Canada’s Construction Industry Embraces Technology Amid Urgent Challenges
As Canada’s construction industry faces mounting pressures from labor shortages, project backlogs, and an urgent need for infrastructure improvements, the call for digital transformation has never been louder. The 2025 KPMG-CCA digital maturity report highlights significant shifts in how construction firms are approaching technology adoption, revealing both challenges and opportunities for the sector.
Rising Pressure and Demand
Historically, Canada’s construction industry recorded a modest productivity gain of just 0.4% per year leading up to 2023. However, demand for housing, infrastructure, and public works is increasing at an unprecedented rate, placing an enormous strain on the sector. The report, which surveyed 265 construction firms across the nation—ranging from general contractors to engineering firms—revealed a stark reality: 78% of respondents reported skilled labor shortages. While this figure marks a slight decline from the 90% reported in 2023, it remains alarmingly high and has nearly paralyzed the ability of many companies to bid on new projects or meet deadlines on existing ones.
Moreover, the outlook for the next five to ten years appears grim; 73% of surveyed firms expect that demand for skilled labor will become even harder to meet as retirements continue to outpace recruitment.
Technological Adoption Gains Momentum
Amid these challenges, the report uncovers a silver lining: a growing willingness among contractors to leverage technology as a means of survival and advancement. A noteworthy 90% of construction leaders now believe that technologies like artificial intelligence (AI), analytics, Building Information Modeling (BIM), and digital twins can significantly enhance efficiency and workforce effectiveness—up from 86% in 2023. Furthermore, 81% of respondents reported that their recent investments in technology have notably improved labor productivity and overall operational efficiency.
When asked about their technological priorities, over half of the participants (56%) emphasized the need for technologies that support a demand-driven supply chain. This reflects pressing concerns about material availability and supply delays. Other prioritized technologies include prefabrication and modular construction (53%), as well as AI and AI-driven software (53%). Emerging technologies such as robotics, drones, and exoskeletons to enhance on-site productivity gains appeal to about 40% of firms.
These advancements promise to transform project management by streamlining supply chains, extending labor capacity, and mitigating reliance on a strained workforce.
Evolving Procurement Practices and Client Demands
The shift towards technology is not occurring in a vacuum; 78% of respondents acknowledged that procurement processes are beginning to change, becoming more supportive of innovation and digital practices. In fact, 43% indicated that client demands—be it from project owners, institutional clients, or public agencies—are highly influential in their decisions to adopt new technologies.
Historically, the focus on the lowest bid in procurement has inhibited significant investment in technological advancements. With this shift, firms might finally feel empowered to embrace innovation without fear.
Why This Transition Matters for Contractors
For contractors grappling with a dwindling pool of skilled labor, technology is transforming from a beneficial tool into a critical requirement for survival. Prefabrication, modularization, AI-driven planning, and advanced supply-chain analytics are not merely enhancements but essential strategies for meeting deadlines, reducing material waste, and addressing workforce challenges.
As clients demand more value beyond just the lowest bid, early adopters of technology stand to gain a competitive edge. Investments made now in digital solutions could yield substantial returns in terms of labor efficiency, enhanced project delivery, and reduced operational rework.
Navigating the Path Ahead
The findings of the 2025 KPMG-CCA digital maturity report indicate a seismic shift in mindset among Canadian construction firms concerning digital adoption. As the industry navigates unprecedented labor shortages, rising infrastructure demands, and an evolving procurement landscape, the embrace of technology is more critical than ever.
However, challenges remain. The uneven pace of adoption and the necessity for disciplined integration, ongoing training, and a cultural shift toward technology use will require concerted efforts from all levels of a company. For those firms ready to take the plunge, the opportunity to invest in digital maturity—from AI to modular construction—is ripe for the picking.
For a more detailed analysis and insights, you can download the full report here. You can also access On-Site’s on-demand webinar featuring industry leaders by clicking here.
As Canada’s construction industry pivots toward a more technologically integrated future, it stands on the brink of significant transformation—one that holds promise for efficiency, innovation, and sustainable growth.
