Inefficient and tradition- bound construction firms are "holding Ireland back" and must modernise, the Taoiseach has told industry leaders.
But the Construction Industry Federation (CIF) fired back, identifying the Government's own procurement rules as "the key logjam" preventing cost-effective delivery of public projects.
The two squared off at the CIF annual conference yesterday in Croke Park, where Leo Varadkar said the construction sector was less open to new ideas and technology than other industries.
"While there are many great innovative firms working in the sector, those practices and approaches are not mainstream," he said.
"Compared to other sectors of the Irish economy, or compared to construction sectors in other European countries, productivity in this sector is far too low. And it's holding Ireland back. It's adding costs to projects both big and small."
He said construction firms "of all sizes should be at the forefront of integrating new technology and new ways of doing things into its work. Unfortunately that's not the case today... but we can and will change that."
CIF president Pat Lucey, who spoke before the Taoiseach, said he was right to challenge the industry to raise its game - but declared that governments for the past 15 years had harmed delivery of projects with bad procurement rules.
Mr Lucey, who is director of infrastructure at John Sisk and Son, called on the Government to reverse a May 2004 decision requiring "fixed price lump-sum contracts for construction" because, he said, such contracts "foster bad behaviours and build wasteful practices into the delivery of national assets".
He said they represent "the key logjam in the efficient and cost-effective delivery of public sector contracts in this country".
He and the Taoiseach agreed that the Government's envisaged Planning and Development Bill must reduce room for time-wasting appeals.
"It has been enormously frustrating for me, for Government, for many people in the room to see good developments go through the council or An Bord Pleanála quite quickly but get stuck in the courts, in unnecessary and in some cases vexatious disputes that are far too easy to take in this country," the Taoiseach said in unscripted remarks.
Mr Lucey said that while even the biggest projects might take only around three to five years to build, the planning and appeals process combined with Government U-turns and potential economic shocks meant "large-scale public projects can take 30 to 40 years to develop from concept to concrete".
"Everyone must have the right to object. However for strategic developments, that right must be matched by measures that protect the greater good," Mr Lucey said.
Mr Varadkar said the Government would boost capital spending by 10pc, or €900m, regardless of how Brexit unfolds. He said no-deal Brexit would make it all the more important to increase spending on public transport, roads and other infrastructure.
"That 10pc increase in the capital budget for next year is written into the Budget for next week. It's going to go ahead. It'll happen, deal or no deal."