How To Boost Construction Productivity

THE CONSTRUCTION INDUSTRY IS SLUGGISH, CAN TECHNOLOGY  GIVE IT A LIFT?

- Kevin Hutchinson

Construction productivity statistics paint a grim picture. Over the past 20 years, global labor-productivity growth averaged 2.8 percent annually, and manufacturing outpaced that with 3.6 percent growth annually. Construction, on the other hand, averaged only one percent growth in the same period.

In some countries, construction productivity has actually declined since the 1990s. Discouragingly, construction productivity in the United States has plummeted 50 percent since the 1960s.

Construction projects are notorious for taking longer than scheduled and going over budget. Apple’s headquarters in Silicon Valley opened two years behind schedule and cost a shocking $2 billion more than budgeted. Berlin’s new airport, originally scheduled to open in 2012, still hasn’t been completed. According to McKinsey, large construction projects that span asset classes typically take 20 percent longer than scheduled to finish and run up to 80 percent over budget.

It’s apparent that the construction sector struggles with poor productivity, but how can it change? The answers lie in more innovation, better organization, and increased adoption of technology.

The Problems and Opportunities Facing Construction Productivity

The construction industry faces particular challenges. It’s highly regulated, dependent on public-sector demand, and subject to a volatile market. In tough economic times, homeowners may decide they don’t need that new deck or house extension and companies will most likely choose not to spend on premise expansions.

These challenges make the industry risk averse and investors reluctant to invest in capital with high fixed costs, like infrastructure or technology. For many companies it’s easier to hire and shed employees as necessary, yet as the construction industry faces a shortage of skilled workers, this strategy won’t work well in the long-term.