This article explores how digital technologies and artificial intelligence (AI) are reshaping the European construction industry, and how they contribute to the new competitiveness agenda.

(Note: Opinions in the article are of the authors only and do not necessarily reflect the opinion of the European Union)

Introduction: A sector at the crossroads

The construction industry is vital to Europe’s economy, employing around 18 million people and generating nearly 9% of the EU’s gross domestic product (GDP). It also plays a key role in addressing climate, energy, and housing challenges. However, the sector continues to face deep-rooted issues, including labour shortages, skills mismatches, low productivity growth, and slow technology uptake.

To help reinvigorate European industry, the European Commission introduced the Competitiveness Compass in January 2025—a roadmap designed to close innovation gaps, boost industrial resilience, and ensure access to clean and affordable energy. The Competitiveness Compass highlights digitalisation as a key enabler of resilience and industrial leadership.  In this context, the digital transformation of construction is not only inevitable, but also pivotal to delivering high-quality, sustainable, and cost-effective buildings.

Why digitalisation matters for competitiveness

Digitalisation is reshaping how buildings are designed, constructed and maintained. For construction companies —especially SMEs— it offers an opportunity to:

• reduce operational costs and waste
• increase productivity and on-site efficiency
• improve regulatory compliance
• enhance collaboration across the value chain

By integrating digital tools, firms can also unlock new business models, materials and services—shaping a more innovative and competitive ecosystem.

From Building Information Modelling (BIM) to AI: Tools transforming construction

Several technologies are already reshaping day-to-day operations across the construction sector:

• Building Information Modelling (BIM): Now standard in many public procurement processes, BIM streamlines planning, improves coordination, and reduces errors.
• Digital building logbooks and digital twins: Improve lifecycle tracking, enable real-time simulation and help optimise building performance.
• Automated permit systems: Already in use in many countries, these tools reduce delays and increase transparency.
• 3D scanning and printing: While 3D printing remains niche, various applications demonstrate how it can reduce costs and construction time.
• Drones and robotics: Drones improve surveying, inspections and safety. Robotics is gradually entering prefabrication and on-site automation.
• Internet of Things (IoT): Offers untapped potential for facility management, inventory tracking and energy performance monitoring.
• Virtual and augmented reality: Used in safety training and immersive design visualisations.
• Artificial Intelligence (AI): A growing force in project scheduling, risk management, quality assurance and energy optimisation.

Digitalisation in practice: European success stories

Several projects across Europe illustrate what is possible:

France: AI-powered robotic systems for modular construction, aimed at enhancing precision and efficiency in prefabricated buildings.

Eindhoven (NL): Social housing 3D-printed at lower cost and with reduced waste.

Figure 1. A pioneering 3D-printed concrete home in Eindhoven, developed under Project Milestone.

Italy: TECLA – a zero-waste home, 3D-printed from local earth using parametric design.

Figure 2. The TECLA prototype – a fully 3D-printed, biodegradable, and zero-waste housing model constructed with local raw earth, designed by Mario Cucinella Architects and printed by WASP in Massa Lombarda, Italy.

National governments are also setting the pace:

• Italy: Mandatory use of BIM for public works exceeding €5.2 million since 2019.
• Germany: BIM Deutschland guides the digital transformation of public infrastructure.
• Estonia, the Netherlands and Finland: Leading in digital building permits and property registries.

European projects paving the way:

• CHRONICLE (Horizon Europe, 2022-2025) improves building performance and increase energy efficiency, comfort and well-being through digital tools that monitor energy use, plan renovation and maintenance, and ensure adequate living conditions.
• InCUBE (Horizon Europe, 2022-2026) promotes renovation through standardised and integrated processes based on industrialisation, innovative renewable energy technologies, digitalisation, and the inclusion of new market players. Tools include a digital platform, interoperability framework, BIM, and a digital building logbook.  
• INPERSO (Horizon Europe, 2022-2026) aims to deliver inclusive, affordable, efficient and sustainable renovation solutions by addressing the building lifecycle and tackling digitalisation, fragmentation, quality and speed. It follows a human-centric approach supported by a digital platform.
• DigiBUILD (Horizon Europe, 2022-2025) leverages high-quality data and next-generation digital building services to support the EU-wide deployment of the digital building logbook framework.
• BuildON (Horizon Europe, 2023-2026) focuses on the transition towards decarbonisation and digitalisation in buildings through technology-driven monitoring, assessment, prediction and optimisation
• EBENTO (Horizon Europe, 2022-2025) aims to develop an integrated digital one-stop-shop platform for all actors in construction and renovation, using tools such as BIMs, digital twins and sensors.
• DeCO2 (Horizon Europe, 2024-2027) aims to address the compelling need for advancing innovative technological applications and solutions on the built environment, focusing on building elements, materials and products. It develops new design techniques that enable deconstruction and optimise the reuse of secondary materials.
• DATAWiSE (Horizon Europe, 2024-2027) transforms building management by integrating advanced digital technologies with sustainable practices.

Barriers to adoption

Digital technologies can be integrated throughout a building’s lifecycle—from initial design to long-term maintenance—and can be a game changer for a more competitive construction sector. However, they are more commonly deployed in new buildings, where implementation is more seamless and cost-effective. Retrofitting existing structures with digital solutions often requires additional investment, making it a less common practice despite its long-term benefits.

Despite progress, adoption rates vary depending on company size, investment capacity, technological readiness and market conditions. Factors such as perceived benefits, regulatory frameworks and sector-specific constraints also influence the speed and scale of digital transformation, while several challenges persist:

• High upfront costs for equipment and training
• Organisational resistance to automation
• Limited digital skills, particularly in SMEs
• Interoperability and cybersecurity risks

The lack of standardised AI governance frameworks for construction-specific applications raises concerns about interoperability and data security. Ethical considerations and governance challenges linked to AI-driven decision-making must also be addressed. The recently adopted EU AI Act will introduce new governance frameworks for AI applications, ensuring safety and ethical compliance— including within the construction sector.

Policy support: A multi-level European approach

The EU has developed a broad policy framework to accelerate competitiveness and ensure a seamless and standardised digital transition for the construction industry.

These policies stem from one of the European Commission’s key political priorities: creating a Europe fit for the digital age and delivering the 2030 Digital Decade. Specific measures promote digital skills, digital infrastructure, and the digital transformation of businesses—including through the recently announced Competitiveness Compass. At the same time, the Transition Pathway for Construction highlights the need to accelerate the green and digital transition of the EU industry and its ecosystem, in line with the EU industrial strategy.  

The Net Zero Industry Act promotes competitiveness in the construction sector by supporting the manufacture of net-zero and green technologies such as heat pumps, batteries and solar systems. The building sector can contribute to the Act's goals by optimising the lifecycle impacts of these technologies and integrating them with energy efficiency measures and passive heating and cooling systems.

The Energy Performance of Buildings Directive (EPBD, EU/2024/1275) aims to achieve a highly energy-efficient and decarbonised building stock by 2050, create a stable environment for investment decisions, and modernise the building sector through the promotion of smart technologies. The Smart Readiness Indicator (SRI), which assesses a building’s digital capabilities, is expected to trigger further investment in digitalisation.

BIM requirements are increasingly included in procurement processes, following the recommendations of the 2014 EU Public Procurement Directive and the CEN BIM standard. The EU BIM Task Group promotes the common use of BIM— referred to as ‘digital construction’— in public works, aiming to improve value for public money, the quality of the public estate, and the sustainable competitiveness of the industry.

The Strategic Roadmap for Digitalisation and Artificial Intelligence (AI) in the energy sector (expected in 2026) will play a key role in accelerating the rollout of European AI solutions across multiple areas, including energy efficiency in buildings and demand-side flexibility. Developed under the Action Plan for Affordable Energy (published on 26 February 2025), the roadmap reflects the EU's commitment to using digital innovation to reduce energy consumption, enhance grid responsiveness and optimise building performance.

The EU Data Act, which entered into force in March 2025, facilitates access to industry data for businesses across Europe. For construction, it is expected to drive innovation through improved data-driven decision-making.  Construction companies must harness this data to unlock new efficiencies, improve project management and enhance operational performance.

With regard to data privacy, the most prominent regulation is the General Data Protection Regulation (GDPR)—Regulation (EU) 2016/679—which governs the exchange of data and clarifies privacy-related obligations. This is especially relevant for the construction sector and the use of digital technologies such as IoT, sensors and digital building logbooks, all of which rely on data collection and sharing. The EU Data Act will facilitate access to industry data, enabling businesses to make informed decisions across research and development and to foster technological innovation.

The EU AI Act, in force since February 2025, applies across sectors using advanced technologies such as predictive analytics and automation tools, including during project execution in construction. In 2025, AI is at the forefront of construction innovation—transforming project management by predicting timelines, identifying risks and enabling real-time adjustments.

As the construction sector continues to adapt to emerging trends, workforce skills must be redefined to ensure that workers can effectively understand and use digital tools. This objective is supported by the European Skills Agenda, the EU Pact for Skills—in particular, the pact for the construction sector—and the Union of Skills.

Financing the digital shift

Digital transformation requires capital—and the EU is supporting it through multiple instruments.

The current Multiannual Financial Framework (MFF) places significant emphasis on digital transformation and provides the necessary financial support, most of which is managed directly the Member States. Programmes such as Horizon Europe and Digital Europe support investments in digitalisation-related infrastructure, the deployment of digital technologies and related research and innovation. These programmes are complemented by investment tools, including the digital component of the Recovery and Resilience Facility and InvestEU. The EU's new InvestAI fund will finance four future AI gigafactories across Europe, specialised in training highly complex, large-scale AI models.

Conclusions: A call to action

In 2025, Europe’s construction sector stands at a digital tipping point. Technologies like BIM, AI and robotics are no longer optional—they are becoming essential to remaining competitive. Digitalisation is not a distant goal; it is already reshaping how buildings are imagined, constructed and operated. Those who act now will lead the sector into a future that is not only more competitive, but also greener, smarter and more resilient. However, the journey requires overcoming real barriers: from high costs and cybersecurity risks to skills shortages and resistance to change.

A mix of different EU policies, initiatives, and funding mechanisms is in place, playing a key role in accelerating the sector’s digital transformation. The construction industry can leverage initiatives under the Competitiveness Compass to become more  By integrating advanced digital technologies, the industry can enhance productivity through innovative processes and unlock new materials and solutions.

In the long term, it will be essential for policymakers to ensure the digitalisation of all construction phases, in line with circular construction policy objectives and their role in achieving EU renovation goals.