From the Editor: Small Firms, Big Productivity Gains
In the last 20 years, global productivity in the construction industry has grown by a measly 1 percent. By comparison, manufacturing productivity has increased by about 4 times that amount.
In financial terms, productivity is the measure of output for a production process compared to the input required for that production. In construction, the output typically is expressed in some physical measurement of what’s built (e.g., length of a road, volume of earthwork movement, square-footage of a building, etc.), and the input typically is the cost of labor (e.g., man-hours).
What’s the Problem?
The lack of construction industry productivity increase is a major issue, and many organizations, governments and academics a whole lot smarter than me have been working to address this problem at global, national and local levels. The results of these efforts have identified several causes, including the cyclical nature of the construction industry, which leads to reluctance on the part of construction firms to invest in equipment that may sit idle in a downturn (it’s easier to layoff laborers than to sell equipment).
Other causes include lack of consolidation in the industry (per The Economist, America has approximately 730,000 construction firms, with an average of 10 employees each); and a McKinsey report on the subject ticks off a long list of problems, including poor organization, inadequate communication, flawed performance management, contractual misunderstandings, missed connections, poor short-term planning, insufficient risk management and limited talent management. There’s no easy solution to address all these obstacles.
Working to Improve
For about as long as construction productivity has been stagnating, I have been providing consulting services to the industry with the goal of reversing this trend. Although I’d love to claim my small firm has the ability to impact global construction productivity, the reality is that we have a much smaller reach. This small reach, however, has a major impact on the individual small firms that are trying to improve their own productivity.
In one example, a client decided to replace their homegrown systems (of which they were very proud, I might add) with purpose-built project-management software. The initial plan was to tackle the thankless task of managing submittals. Improving productivity in just this one task would have more than offset the costs of implementation. However, as we dug into the full range of features, the client realized there was much more they could do to improve operations. Their productivity in these areas has skyrocketed.
In another example, the rapidly dropping costs of reality-capture tools from the likes of Matterport, 3DR and Leica are changing the way my clients think about their service offerings. Daily scans once seemed like an unnecessary luxury, but when costs drop and benefits rise dramatically, one gets a different perspective on the terms “unnecessary” and “luxury.”
In yet another example, a group embraced virtual reality as an extremely efficient tool for communicating with clients. Far beyond the primitive-looking virtual interiors and landscapes of only a few years ago, they’re rapidly deploying photorealistic panoramas and walkthroughs to make upfront decisions and significantly reduce construction schedule delays.
None of these examples rely on cutting-edge technology—this industry doesn’t take well to “cutting edge.” But decision-makers and owners must commit to taking productivity improvements into their own hands instead of waiting for someone else to do it.