Defence Best Offence as Kapitol Advances Diversification Strategy

“The frightening bit is to do the old things, not the new things,” Kapitol co-founder Dave Caputo says. This philosophy of embracing innovation over tradition has seen Kapitol push into new territory with a contract to deliver Stage 2 of Hanwha Defence Australia’s $170-million Armoured vehicle Centre of Excellence (H-ACE) at Avalon, Victoria. And its entry into the defence infrastructure space features a prefabrication strategy that could also tip the scales in the construction productivity war. In an industry embattled by tightening margins and productivity challenges, construction companies are increasingly looking for new opportunities. For one of Australia’s fastest-growing construction firms, that diversification strategy has opened a path into the defence sector—a move that expands its portfolio while potentially revolutionising its approach to building efficiency across all projects. The project will enhance the infrastructure at Hanwha’s 32,000sq m facility to support the manufacture of 129 Redback Infantry Fighting Vehicles for the Australian Defence Force. The expanded facility will include an electromagnetic testing chamber, enclosed firing range, second production line, vehicle storage and a heavy washdown facility. Kapitol director Andrew Deveson tells The Urban Developer that working with the defence sector at this scale requires more than technical expertise. “It calls for a forward-thinking approach that seamlessly integrates innovation and security,” Deveson says. “Our work on [the] H-ACE facility marks a significant step in expanding our presence in Australia’s industrial manufacturing sector.” ▲ HDA general manager facilities Hichang-Lee, HDA facilities maintenance manager Darren Willson, and Kapitol co-directors Andrew Deveson and David Caputo. Caputo says the company’s entry into the defence sector is part of a deliberate diversification strategy that also includes renewable energy projects. “We try to look for new markets to stay diversified,” Caputo says. “Defence isn’t a new market but between defence and working with the primes, it’s a good lead-in to understand how that world works and sort of cut our teeth. “The other sector we’re looking very closely at is the renewable energy sector.” This expansion comes at a time when traditional construction sectors are facing significant challenges, with what Caputo bluntly calls “carnage” in traditional residential building. A key factor in securing the contract was Kapitol’s Australian ownership and its experience in the data centre space. “We’re close with our DISP certification, too, so it means all the software we use, all the data storage, and everything else is all within Australia,” Caputo says. The Defence and Industry Security Program (DISP) certification ensures the company meets defence’s stringent security and compliance standards—a critical requirement for contractors working on sensitive military infrastructure projects. The construction process for Stage 2 of the H-ACE facility leverages Kapitol’s expertise in prefabrication to meet the tight 12-month timeline mandated by the Defence Strategic Review’s accelerated schedule. Delete This approach relies heavily on advanced digital modelling, where the company first creates detailed virtual representations of all components before any physical manufacturing begins. “A lot of the electrical componentry will be built off site,” Caputo says. This digital-first approach ensures that prefabricated elements will integrate perfectly with the main structure when delivered to site. “It allows us to run certain construction elements in parallel with building to satisfy the speed that we need to deliver this facility. That’s where prefabrication really stands up for us.” The strategy involves converting complex electrical and security systems into what Caputo terms “appliances”—fully commissioned units that can be installed immediately upon completion of the building envelope. “We’re ultimately able to fully commission hi-tech electrical systems and security systems off site. “The second we finish the envelope, we’re able to install the most labour-intensive elements on the job: bolt on, plug-and-play, and off we go,” he says. This approach would reduce onsite workforce requirements by up to 30 per cent, Caputo says, significantly cutting costs and reducing risks associated with weather delays, site allowances and other variables that impact productivity. ▲ Kapitol co-founder Dave Caputo. It also addresses quality control, with factory conditions providing more reliable outcomes than site-based work. The techniques developed for defence and data centre projects can be transferred to revitalise traditional construction sectors, too. “I think it’s a real wasted opportunity to not use the skills that we’ve learned in design, in modelling and in prefabrication to do residential better,” Caputo says. He believes Kapitol can apply its innovative approaches to make these traditional sectors more viable. “If we keep evolving and being smarter as a business, systemising our processes, using AI to reduce our overheads and our prelims to make things more cost effective for our clients … I think the market [can learn from what] we’ve developed elsewhere and really push the boundaries on making residential and commercial developments a lot more successful than what they’ve ever been.” According to Caputo, the company is already applying similar prefabrication approaches to residential projects, working with trade partners to prefabricate everything from plumbing lines to water fixtures with the goal of reducing plumbing connections by 90 per cent. “We’re trying to reduce the probability of defects or failure. The more you do on site, obviously, the less perfect the conditions are. If we can reduce the connections by up to 90 per cent, then our probability of success and not having leaks and issues like that is a huge advantage,” he says. Stage 2 of the H-ACE facility is expected to be completed in 2026 and will employ a workforce of 1500 staff over the project’s lifetime. ▲ Hanwha’s Redback Infantry Fighting Vehicle. Kapitol’s first defence contract contributes to its growing $2-billion pipeline and forms part of the company’s five-year plan. “[By then] defence will make up probably close to 20 per cent of our workbook, and we’re expecting that to be around the 3½ billion at any given time. So close to half a billion dollars in defence at any one time is what we’re preparing ourselves to manage.” Currently, about 60 per cent of Kapitol’s workbook is in hi-tech industrial projects, particularly data centres. The company believes its in-house engineering capabilities, digital engineering skills and systems developed for these projects position it well to expand into defence and renewable energy sectors. As Kapitol prepares to deliver Stage 2 of the H-ACE facility by 2026, the project represents more than just the company’s first major defence contract. It could be a working example for construction efficiencies that could reshape residential and commercial development. With that, Kapitol is positioning itself not just as a builder of infrastructure, but as an architect of construction’s future—where digital modelling, prefabrication and process innovation become standard rather than competitive advantages.

Defence Best Offence as Kapitol Advances Diversification Strategy

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