The construction industry is sluggish; can technology give it a lift?
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.
Every construction productivity problem is also an opportunity. At an industry-level, McKinsey’s research suggests that if construction increased its productivity to match that of the total economy, it would boost the industry’s value by an estimated $1.6 trillion. A significant portion of this opportunity is in the United States.
Who’s Bucking the Trend?
For individual companies, the construction productivity problem represents a chance to leapfrog ahead of the competition. All it takes is a bit of forward thinking, as successful marine contractors demonstrate.
Marine contractors have massively improved their productivity. They are doing better-quality work more quickly—and at less cost than the majority of the construction industry. According to The Economist, “[i]n Belgium, home to two of the world’s five biggest dredgers, efficiency gains have been so large that they have skewed productivity figures for the entire building sector.”
What’s their secret? These marine contractors do several things that many American construction companies can learn from:
- They rely on technology
- They mass produce
- They track everything
Adopting Technology
“While we are all using iPhones, construction is still in the Walkman phase,” Dutch architect Ben van Berkel told The Economist.
Maritime construction projects have become so large and complex that companies have been forced to use machines rather than labor. While other construction firms have been adverse to investing in technology, the marine sector had no choice.
According to MGI’s digitization index, construction is the second-least digitized industry in the United States. This is a huge drag on construction productivity. Everyone from architects to aerospace engineers commonly use computer-aided design, yet this method remains rare among builders. Industries from agriculture to manufacturing are embracing the Internet of Things, leaving construction behind.
Paper dominates in the construction industry. Blueprints, design drawings, contracts, procurement orders, equipment logs, progress reports, project plans—most of the time, everything is done with paper.
It’s time to put the pen and paper down. Construction today demands a more efficient, real-time approach when it comes to project management and work coordination. A reliance on paper has numerous negative consequences:
- Information is slow to travel between departments and between employees and customers, causing delays in service
- Instructions and specifications are misinterpreted due to difficulty deciphering written notes
- Essential information stored on paper invoices, timesheets, and service orders, are easily lost or damaged
- There’s a high risk of errors in reporting, accounting, and customer service due to lost, misfiled, or hand-written documents
- Employees and customers may not have access to the same information, causing disputes and a poor customer experience
- Leadership struggles to accurately capture and analyze data in real-time, making it difficult to identify opportunities for improvement
Compare this with the maritime construction industry, where manual work has been automated. GPS-guided bow thrusters, rather than anchors, steady ships. Underwater robots have replaced divers to do the work required in deep, cold waters.
Yet the construction industry has not broadly embraced technology. Information technology accounts for less than one percent of revenues for nearly half of construction companies, even as workforce management tools and other software have been developed for the industry.
Moving Towards Mass Production
Maritime construction has come to rely heavily on modular building, which speeds up construction. On land, a few companies are moving in this direction. Take IKEA’s BoKlok as an example. The majority of its homes are built in factories, with standardized parts. Only a small portion of the construction work is done on site, making the process cost-effective, highly controlled, and sustainable.
Similarly, companies are starting to produce prefabricated homes and apartments. They complete at every stage of construction itself, cutting out subcontractors and simplifying the process. The experience of such companies suggests this method can increase construction productivity, in some cases shortening the turnaround time for a project by six months.
Monitor and Evaluate Everything
“We now measure everything,” said Koen Vanderbeke of DEME, a dredging and marine engineering company. The company monitors how fast hammers pound, what cranes are doing, how long employees spend completing tasks, activity on the seabed, and how these things interact with each other. Such monitoring helps avoid mistakes and identifies opportunities for greater efficiency.
Construction companies can learn from this example. Monitoring improves:
Equipment Maintenance and Repair
Imagine receiving automated alerts when equipment needs to be repaired, or having comprehensive usage and maintenance data—advanced sensors make this possible.
Worker Efficiency
Construction scheduling software allows your company to digitize workflows, which makes for more organized teams that can expedite work to the right people. It also allows you to record labor hours, parts, and expenses from anywhere on a per task basis.The construction industry is overdue for change. Skilled labor is becoming more expensive and harder to find. Pen and paper is no longer cutting it. Technology, mass production, and advanced monitoring are critical for construction to become more productive and close the productivity gap with other industries.
Kevin Hutchinson is the Founder and CEO of MyTaskit, a comprehensive and user-friendly work coordination platform that businesses use to connect their service teams, subcontractors, and customers. MyTaskit smooths the rough edges of service delivery so technicians get more done, customers are happier, and the business makes more money.
