Tackling Construction’s Productivity Problem



Productivity has been a popular topic of discussion in construction, especially over the past year. In 2017, McKinsey Global Institute released a report whose findings were enough to make any decision-maker in the construction industry pay attention. The report, “Reinventing Construction: A Route to Higher Productivity,” found labor productivity in construction only increased 1 percent globally over the past 20 years, compared to 2.8 percent growth for the economy as a whole.

Here’s the really eye-popping statistic: If the industry closed that gap and increased productivity levels to match the rest of the economy, the construction sector’s value could increase by $1.6 trillion.

A lag in productivity doesn’t only mean the industry loses out on possible earnings. According to McKinsey, meeting global infrastructure needs will be a challenge if the industry doesn’t improve how it operates. On a smaller scale, contractors who don’t focus on productivity improvements can face delays, lose out on jobs, and miss an opportunity to improve the bottom line. So is there hope for improvement? Definitely. New data indicates some progress, and new tactics can help contractors do their part to close the productivity gap.

New Construction Productivity Data

A new study from the Bureau of Labor Statistics called “Measuring Productivity Growth in Construction” indicates several subsectors of construction, including single-family housing and industrial construction, saw productivity improvements in recent years, even if the industry as a whole didn’t significantly improve productivity. The study used slightly different productivity measures than other recent studies to calculate improvements.

Some experts caution against reading too much into this data, pointing out that these subsectors only account for part of the industry and that their gains are still slow compared to the rest of the economy. Yet this new data does suggest there’s something to be optimistic about. Even small improvements indicate that some of the methods being used by contractors right now to improve productivity have an impact. That means there’s even more of a reason to implement these and other tactics to keep the industry moving in the right direction.

How to Increase Productivity in Construction

There isn’t a one-size-fits-all solution to construction’s struggles with productivity. We have to remember that productivity in construction varies greatly from region to region (both from country to country and within countries). We also have to remember that the reasons for this struggle vary widely. For example, contractors might face many different regulations, struggle with project management, lack enough skilled labor, or haven’t invested in the right technology. As an industry, construction is also quite fragmented, which makes it easy for inefficiencies to arise.

McKinsey’s productivity report from last year does offer concrete suggestions for improving productivity in the construction industry. Some of these—such as reshaping regulation and increasing training and education opportunities for the workforce—need to be tackled by governments and industry leaders. But many of the suggestions, including rethinking design processes, improving supply chain management, enhancing jobsite function, and adopting digital technology, are things contractors can do themselves.

Many contractors are already turning to new technology to boost productivity. Computer vision and AI technology, for example, are being used to measure labor productivity by monitoring every part of a project to help quantify progress. Mobile devices and tablets are also being deployed in the field to reduce dependence on paper and speed up processes.

Leading contractors are adopting cloud-based construction management software to increase productivity as well, since these software solutions can improve collaboration throughout the entire construction organization. Construction professionals in the office, team, and field can more easily access information, more effectively communicate and collaborate with each other, and gain better insight into their projects when they have an integrated, streamlined solution.

If you’re looking for advice about selecting technology to increase productivity in your business, Viewpoint experts would be happy to discuss solutions with you. Get in touch with us at our website or on LinkedIn.