Legal implications of innovation in the construction sector

One of the landmark technological changes in the construction industry over the past decade has been the digitisation of design and the sharing of design inputs through the use of Building Information Modelling (BIM). Its inception has enabled the creation of a virtual digital twin, capable of use throughout a project’s entire lifecycle design, tenant and user optimisation, future proofing, construction, operation, maintenance and subsequent refurbishment and re-purposing. 

In Australia, 40 per cent of construction businesses use BIM in their projects. Implementation in public procurement varies between states (for example, since 1 July 2019 the Queensland Government has mandated BIM usage in all projects above $50 million). 

In recent years, virtual reality and augmented reality modelling have become commonplace. These types of modelling raise legal issues about intellectual property, data and privacy management risks. Potential gaps in legal liability arise if there are not specific contractual arrangements regarding issues such as ownership of the content included in the digital model and the treatment of liability for errors or corrupt data incorporated by a contributing designer. Parties must also carefully manage cybersecurity, including considering cyber insurance policies to cover losses from possible data breaches and being mindful of the added obligations attaching to critical infrastructure (eg Security of Critical Infrastructure Act 2018 (Cth) and Cyber Security Act 2024 (Cth)).

There is an increasing transition from on-site construction to use of factory-based fabrication, followed by on-site installation of completed modules. Benefits include reducing the construction site footprint, shortening construction timelines by using parallel ‘swim lanes’, and faster and cheaper construction of projects in remote and regional areas with constrained building resources. The parallel performance of factory-based fabrication and on-site preparatory and civil works drives these accelerated project timelines. An example of this is the recently announced Cairns social housing project, the largest social and affordable housing project to be built in Queensland using an innovative off-site modular construction solution, in which Hall & Wilcox acted for the consortium led by Tetris Capital and Community Housing Limited.

According to the University of South Australia (2023), modular construction accounts for only 3 per cent of the $150 billion Australian Construction Industry, while Deloitte research (2024) found that 40 per cent of surveyed construction businesses had already adopted prefabrication and modular construction in their processes.

Prefabrication also requires changes to traditional construction supervision procedures, as it removes the crucial inspection and oversight conventionally undertaken by Principals and Superintendents on the site, potentially requiring remote third-party and even automated blockchain-type certification of the quality and progress of works undertaken interstate, or even outside Australia. 

These innovative changes in the delivery model mean the traditional and well-established construction contract suites used in Australia require significant amendments including to payment milestones and certification mechanisms, security bonding and release, insurance, quality control, transfer of title, priority interests, and transfer of risk. These amendments are needed to minimise project owner risk arising from new facets of this supply chain, including modular contractor or supplier insolvency, factory defects and transit damage. The significance of transport (cost, scheduling, risk and insurance) as a key component of the modular supply chain is frequently under-appreciated. A recent media release by the Commonwealth Bank regarding changes to its financing model to facilitate modular building is indicative of the changes being made in the sector to adopt modular construction.

A meeting of construction and modern technology, 3D printing allows for precise and efficient building through computer-aided designs (CAD). Technically known as ‘Additive Manufacturing’, the process generally involves a semi-mobile printer installed at the project site and programmed to inject concrete, steel, wood pulp or ceramics on a mapped-out track. 

As with many transformative inventions, the law must adapt to overlapping interests ranging from intellectual property in design and production methods to liability for defects and the costs of rectification works. 

From a legal perspective, 3D printing challenges traditional intellectual property concepts as it spans areas of patent, copyright, trademark, consumer and design law. Focusing on patent rights, these are best applied for 3D printing components, as well as for the processes and raw printing materials. On the other hand, copyright may confer protection of 3D printed constructions under the category of artistic works and through moral rights of attribution and integrity. 

In the event of defects in the 3D printed material, how is liability to be allocated between the software designer who builds the manufacturing process, the structural engineer who assesses integrity, the contractor who operates the printer and the supplier of the feedstock (concrete, steel, plastic)? What contractual and statutory warranties apply? Can these warranties capture machine driven printers as agents of their responsible designers? While answering these questions is beyond the scope of this article, they demonstrate the challenges of adapting traditional legal concepts to new construction methods.

3D printing enables computer-aided designs to transform building materials to create novel building forms according to precise design and within accelerated time frames. This process enables production off-site or directly on construction sites and minimises the level of defects that may arise in projects to only those arising from the original design or the material used, and greatly reduces overall project timelines. The increased speed of 3D printing in construction was recently demonstrated on the Dubbo Contour3D social housing project, where the initial building framework was completed in only 16 days. 

Challenges may arise in terms of the management of future defects and repairability when using 3D printed materials in projects. Owners and builders must satisfy themselves that 3D printing processes meet Building Code requirements, in a regulatory environment that requires 3D printing to align with ordinary construction processes.