Productivity Declines in Construction
by Jonathan McGaha | 6 April 2015 12:00 am
In a world where we are inundated with new technologies designed, in large part, to make us more productive, it is surprising to see the lack of productivity changes in the construction industry. Right now, I could be writing this editorial on a machine that would fit in my shirt pocket. When done, I could submit it immediately from anywhere that had cell phone service. In fact, if I wanted to spring for a satellite phone, I could submit it from the top of Mt. Everest or the middle of the Pacific Ocean.
Those kinds of remarkable changes in technology have abetted an increase in efficiency and productivity in all kinds of industry, including manufacturing. But productivity in construction has actually declined. Stanford University professor emeritus, Paul Teicholz, published an article in AECbytes, an online publisher of technology news for the architecture, engineering and construction industry. He compared construction labor productivity to non-farm industry labor productivity from 1964 to 2012. During that period, construction productivity declined 0.32 percent annual on average. Non-farm industry productivity increased 3.06 percent during the same period. Teicholz identifies several factors that constrain labor productivity in the construction industry:
- Every job is unique. It’s built by different people and on varying sites in different weather and regulatory conditions.
- Purchasing-of products and services-is based on competition rather than collaboration.
- A reliance on paper documentation undermines the use of data.
- The boom-and-bust cycle restrains capital investment in labor-saving equipment and off-site fabrication and encourages poor training for unskilled workers. That has resulted in an overall decline in worker wages from 1964 to 2012.
- Fragmentation of the industry, which means small firms do a significant percentage of the work.
- Much of the work, nearly 35 percent, is on existing structures in either improvements or maintenance and repair.
Other studies and authors have identified additional reasons for the decline in productivity, including the use of draconian contracts that pit stakeholders against each other.
Teicholz and others point to technology as a possible game changer, suggesting the building information modeling (BIM) could have a significant impact on productivity. More data presented in a more accessible format will help all the players on a project speed their production cycles, get more out of fewer workers and generally grow more efficient in their work processes.
The second area of opportunity is the greater use of off-site fabrication, such as with pre-engineered metal buildings, modular construction or panel plants. That fits well with the metal construction industry since much of our work is fabricated off site, then delivered for installation. In fact, this is one of the biggest advantages in the marketplace that the metal construction industry has. If all players would adopt our processes, we could see a huge increase in construction productivity.
There is another area that I want to address, and that is the price-focused, competitive environment of construction. Too many stakeholders are focused on the lowest price, from the municipalities putting projects out to bid, to the general contractors estimating to land the job, to the trade contractors cutting costs to undermine their competitors.
If our industry focused on long-term relationships rather than price competition, we would see the same kinds of productivity increases that other industries experience. In fact, individual companies that pursue long-term relationships with suppliers and trade contractors can see increases in the complexity of the projects they manage, greater profits and smoother production. A good example is Premier Building Systems (PBS) and Premier Contracting Systems (PCS), Lawrenceville, Ga., the focus of our success story on page 30. The relationship between PBS and Schulte Building Systems, Hockley, Texas, is a great demonstration of how a long-term, value-based relationship benefits all the stakeholders.
Source URL: https://www.metalconstructionnews.com/articles/productivity-declines-in-construction/