There’s a serious productivity crisis in the construction industry. Where other industries are growing leaps and bounds, the business of building isn’t really growing at all. Why?
The global construction industry has a chronic productivity problem. Over the past 20 years, productivity has grown at only 1% annually, only around one-third the rate of the world economy and only around one-quarter of the rate in manufacturing.
While construction has appeared stuck in a time warp, other sectors have transformed themselves. Consider that in the United States between 1947 and 2010, agriculture achieved cumulative real growth in its productivity of 1,510% and manufacturing 760%. Construction managed only 6%. U.S. construction-sector productivity is lower today than it was in 1968, and investment has fallen over the past decade.
Those are troubling statistics. The authors go on to blame the usual concerns:
- Low-productivity small firms
- Confrontational contracts leading to disputes and changes
- The high cost of regulation
- Underinvestment in technology
These are all serious problems. They affect not just the construction industry, but anyone who provides contract services to create a finished product—especially if it’s going to be used by the public. But there’s a bigger issue at work, and it’s causing inefficiencies and frustrations across the board.
To understand the productivity problem in the construction industry in the United States, the first thing to do is to explain what isn’t causing the issue. It’s not a lack of investment in technology. It’s not ignoring new trends in materials, project management, or resource allocation. Rather, it’s failure to change mindsets to meet new market demands
From Big vs. Small to Fast vs. Slow
A chief complaint about productivity in construction is that larger firms are able to run circles around smaller ones. But this shouldn’t be the case. As the saying goes, “It’s not the big that eat the small, it’s the fast that eat the slow.” Gigantic construction firms are often mired in red tape, internal politics, and complex bureaucracies. But a small organization can move nimbly and solve problems quickly. This is especially the case if many of the employees are also owners, and they see the value in acting fast and doing what’s best.
That’s not to say enormous businesses can’t also thrive. Small, entrepreneurial teams inside enormous firms can make a huge difference, according to sources such as the Engineering News Record. The secret is to not be afraid of new ideas, and to empower employees to consider them.
Confrontation vs. Collaboration
The usual method to assemble a project in the construction business is, to be frank, completely insane. In many cases virtually all aspects of the proposal are done up front, ranging from blueprints to material lists to detailed quoting. An incredible amount of work is done in the hopes of getting the opportunity. And although there is some support for the idea that even losing bidders should be compensated, most people think that if you don’t get the project, your firm should eat the cost.
There are several new approaches in construction that represent different ways of thinking. The most obvious is the design-build delivery system, where the client has a single point of contact for all work and the architectural and construction phases are integrated. This prevents architects and builders from fighting over the same pie, since their collaboration is established up front.
Likewise, the rise of the manager-developers shows a desire to move away from collaboration. These are firms that are creating value by being the designer, the general contractor, and ultimately the property manager. But even beyond merging the roles into a single firm, a new mentality of collaboration is the spirit of all of these approaches. Everyone wants to win, and when all players work together there is greater success and greater productivity.
Technology Also vs. Technology First
The biggest contributor to the productivity issue in construction is the same one as in other industries; it’s just worse in the building world. That’s the difference between “also using technology” to “using technology first.”
Some of this is certainly industry-specific. Moving your building information modeling (BIM) from 3D to 4D to 5D is essential. But much of it has to do with how we use technology in general: sending emails instead of using collaboration spaces, giving users outdated or insufficient computers, or getting distracted by instant messaging or other urgent, unimportant tools.
The secret is to think “technology first.” How can we use tools throughout this process to maximize our productivity? And if we’re not using a tool to it’s full potential, why not?
Advice for Everyone
Even if you’re not concerned with joists, LEED standards, or fixed sum change orders, this is all advice to consider. The productivity problem you’re facing is mostly about mindset. Change the way you think, and you’ll change the way you operate, communicate, and succeed.
To win: think different.