Analysis of the innovation process should take into account the characteristics of the sector under investigation. In construction, there are multiple stakeholders and, therefore, innovation is codeveloped at the project level. However, innovation is driven by a high number of factors that could be distinguished at the industry, firm, and project levels. The major objective of this research is to investigate the role of different factors in driving innovation in construction projects. In this respect, a framework has been proposed, in which the main components of innovation are identified as the drivers, inputs, and outputs. The relationship between those components are analyzed using structural equation modeling based on data collected from 110 construction projects. The findings of the study suggest that the innovation decision is governed mainly by project-related factors that are followed by firm- and industry-related factors. Project complexity, innovation policy, and environmental sustainability are found to be the main motivations behind construction innovation. Research findings are expected to help project managers devise proper strategies to effectively implement innovation.