Attend any gathering of subcontractors over the past decade and you’ll likely hear the same topics of conversation. “Margins are shrinking”. “Good help is getting harder and harder to find”, “Timelines and schedules are getting tighter, etc. etc. While there are many factors driving this, the primary factor is low productivity. “Productivity,” generally defined as the measure of the rate at which work is performed, has been historically neglected in construction. While other industries such as manufacturing and agriculture have seen productivity double and in some cases triple, construction has remained flat for decades. In fact, construction is actually one of the only industries that are less productive now than it was 60 years ago. One need only turn to the lag in digitization, a primary drain on construction productivity, to see exactly why this is the case—the 10-trillion-dollar construction industry has been outpaced by every sector, including mining, gas and oil industries, spending less than 1% of revenue on information technology.
But the construction industry is starting to make productivity a priority as costs from inefficiency continue to soar. Even minor inefficiencies can result in staggering costs. It’s safe to say that deceptively small gaps in productivity add up to exorbitant costs, which have become simply too high to ignore any longer.
But here’s the thing—when construction productivity increases, everyone benefits, especially the contractor:
- Projects are completed faster
- Project costs are reduced
- Contractors can bid more competitively
- And the overall project will be more profitable
The good news is that if minor inefficiencies can result in massive costs, then even incremental improvements to productivity on the jobsite can save contractors a lot of time and money. With this in mind, we’ve reviewed some of the most innovative research on construction productivity and highlighted some key ways to help you complete projects faster, reduce costs and increase your profit:
1: Measure Productivity With The Right Tools.When it comes to increasing productivity, adopting new technology is likely the fastest path with the biggest payoff. Nowadays, there is an abundance of tools available for contractors to better manage their projects, cash flow and productivity. Still, the industry average hovers at only around 1% of their total budget spent on technology. Proper use of productivity measurement tools like JPAC® and Obstacle identification and avoidance tools like SIS® are proven to increase productivity and profitability on a project by project basis on average 30%! Even rudimentary understanding of these tools will provide a solid ROI, yet most contractors have yet to adopt them. The simple fact is, if you aren’t properly measuring productivity, how can you possibly hope to improve?
2: Educate Your WorkforceOne of the roadblocks to successfully implementing new methodologies and technology is the pushback from the field workforce While most companies will try brute force methods that are met with resistance, smart contractors understand that education is the pathway to success. If you are going to adopt new technology or implement new processes, make sure to partner with the right organization, one that not only sells it to you, but also supports and educates your team on its use. One particular company, MCA, inc. has a wide range of classes. Check them out here.
3: Implement PrefabricationPrefabrication is one of the hottest topics in construction nowadays. While it is an integral piece in becoming more productive, understanding the proper use of prefab is critical to a successful launch of your prefab shop. Too many times, I see construction companies put the cart before the horse and purchase a large building, outfit it with stacks of material and promote or hire a “prefab” manager to run it. It is much more effective to start small, carve out a small portion of your shop and use it to build fixtures, snap together conduit, etc. Using this method, you can scale your prefab operation slowly rather than tackling it all at once while still reaping the rewards of improved productivity.
Improving Construction Productivity Starts with a Plan
In short, it is clear that even small positive changes can have a dramatic impact on your company’s productivity. The simple fact is that because construction productivity is lagging so far behind where it could be, these small incremental steps can lead to large increases in profitability. . Adopting new technology and educating your workforce are just two of the most expedient means to reduce inefficiencies. Additionally, proper implementation of prefab (no matter how small) will have a dramatic impact on your bottom line. Although construction productivity has been static for decades, that’s all about to change as the construction industry begins to prioritize productivity amidst a digital renaissance. Armed with these key insights on how to improve your processes you’ll be better equipped to keep your projects on schedule and under budget.