Construction Productivity: Addressing the Industry's Largest Problem

The construction industry works hard. But, for all the labor that goes into building the modern world, the industry has been seeing less and less output over time.

Yes, that means that even though construction workers are working as hard as they have in the past, they’re producing less results for the same amount of input.  

Review of Building Information Modeling (BIM) Software Packages Based on Assets Management. [accessed May 11, 2017]

Review of Building Information Modeling (BIM) Software Packages Based on Assets Management. [accessed May 11, 2017]

This trend of declining productivity contrasts every other major industry in the world, and logically so. As new technologies emerge and are integrated into workflows, they allow people to do more in the same amount of time. 

Average Productivity Growth by Industry 2005-2014

Based on BLS Monthly Labor Review, June 2016

So, while every other industry has seen productivity gains over the last 50 years, some by large orders of magnitude, why does construction continue to lag behind? Experts can't seem to agree:

  • A recent literature review by the Construction Industry Training Board found over 70 factors that can influence construction productivity.
  • A BLS research paper asserts construction productivity may not have a downward trend at all, claiming productivity measurements are inherently flawed primarily due to unreliable economic deflators.
  • A third major research study by the McKinsey Global Institute concluded that action in seven different areas could boost global construction productivity by 50-60%.

While these arguments help guide policy discussions, inform investment decisions, and fuel academic debate, they don’t provide the actionable insights needed to fix the productivity issues of everyday contractors.

However, in reviewing this literature we have noticed a common trend: failures in project management and collaboration are the strongest disruptors of productivity.

Take a look at this collection of excerpts from major research institutions:

  • “Through our analysis of more than $1 trillion worth of capital projects over the past five years, we have found that improving “basic” project-management skills offers the most potential to improving site performance.” - McKinsey Global Institute

  • “Lack of consistent engagement by construction project stakeholders to each other has made project information flow unevenly, causing chaos.” - National Society of Professional Engineers

  • “The supply chain report found that the quality of site management was pivotal to improving productivity. This was particularly true of the ability of the site management to communicate well.” - The Chartered Institute of Building

  • “People and their effective engagement in project teams are the foundation of a project’s success. ” - National Institute of Building Sciences

The one thing almost everyone agrees on is focusing on project management and collaboration will yield the largest productivity gains. There are a couple important takeaways to drive home from this:

  1. You can make a large productivity impact relatively easily.

  2. The firms that act quickly will be miles ahead of their competition.

  3. Neglecting to address collaboration will eventually cause you to lose bids.

It all feels easier said than done, right? Luckily, there has been a recent explosion of software companies that do exactly this. Through a combination of drones, IoT, satellite imagery, mobile technology, and cloud storage, the best construction collaboration platforms will help you overcome the biggest roadblock to productivity, effective collaboration.

If you’re interested in the major players, you can check out our Guide to Purchasing Construction Software. Otherwise, use the following table to get an idea of how software will help solve your project management and collaboration issues:

 

Aerial Maps
Benefits

Drones and satellites provide a high-resolution common operating picture that can be used for spatial measures, geo-referenced communication, and monitoring build progress.

Replaces

Expensive and impractical helicopter photography.

EXAMPLES:
Chat
Benefits

Real-time messaging platforms provide a quick, accessible means of getting answers and information to all project stakeholders.

Replaces

Slow and easily missed emails.

EXAMPLES:
Cloud Storage
Benefits

Secure cloud servers make your data accessible from anywhere and keep it from getting destroyed. Good software will also organize your data for you within the cloud.

Replaces

Local storage that is susceptible to damage, loss, and clutter.

EXAMPLES:
Document Management
Benefits

Construction requires a lot of paper, and good document management platforms replace all those dead trees with easily organized, digital forms.

Replaces

Wasteful and outdated paper.

EXAMPLES:

Construction’s productivity issues have serious financial repercussions:

  • Westinghouse, the nuclear power company, declared bankruptcy because they couldn’t afford the cost overruns and delays of building nuclear power plants.

  • Mckinsey Global Initiative found that the construction industry could boost its value by $1.6 trillion globally by bringing its productivity up to speed.

  • The World Economic Forum states that successfully adopting technology can reduce costs by 20% of the life-cycle of a project.  

We won’t see change at the macro level unless construction firms start adopting technology on the micro level. And with so much money at stake, the industry is ripe for an outside player, like an Elon Musk, to come in and completely takeover with a new type of tech-savvy construction firm.

A technology-powered productivity revolution is coming to construction. The question is, who will be the first to make an impact?