In this construction industry report you will learn:
- Why productivity is lagging
- Why hiring isn’t always the answer
- How to avoid the tech trap
- Where to start
- How to use technology to improve productivity
And as a bonus, we are giving you four best practices in how to make the most use of your construction data.
Construction’s productivity consistently lags other industries. Since 1970, productivity in construction has declined by roughly 1% per year. By 2020, productivity levels had fallen below what they were in 1950.
In a 2023 survey led by BuiltWorlds, however, only 52% of contractors said they feel “excellent” or “very good” about their preconstruction activities — which means 48% don’t feel very confident.
Why is Productivity Lagging?
Calculating construction productivity is clear — it’s a simple ratio of output to input — but improving it isn’t. There is no clear framework or benchmark to follow to improve productivity, points out RCIS, a global association that sets land, property, and construction standards.
Anything a construction company can do to reduce input while maintaining or improving output will increase productivity. So, what stands in preconstruction’s way?
There are many reasons for this lag:
- Complex and sophisticated building designs take more time and require new skills.
- Compliance with stringent regulations is often time-consumhttps://www.beck-technology.com/blog/saving-time-with-team-estimatingtimeing and costly.
- Lack of visibility among teams leads to miscommunication and rework.
- Material availability and location affect timelines.
- Reliance on third-party partners, subs and vendors sometimes stalls projects.
- Worker shortages exist in every area of construction.
- Siloed and fragmented processes and data lead to costly corrections and a need for more awareness.
- Incorrect or missing information
“We’re a deadline-driven industry with overlapping constraints,” says Chris Reeder, preconstruction technology manager at Brasfield & Gorrie. “Preconstruction is always under a time crunch and often focused solely on reducing costs and negotiating low bids. There’s little time for researching, developing and piloting new practices and methods. On top of that, it’s the least lucrative stage of the entire building process, so some companies don’t see motivation to improve.”
Data from McKinsey underscores Reeder’s point. According to the consulting firm, AEC companies typically spend 1% to 2% of their revenue on technology, compared with other industries that spend 3% to 5%.
Another productivity challenge unique to preconstruction is high turnover. Reeder points out that many industry professionals view preconstruction as a steppingstone to other roles. “As soon as you fully train someone, they may head off in a different direction,” he explains. “Maybe they’ll come back, but maybe not. Who has time to focus on trying new things when they have deadlines to meet plus staffing issues?”
Many construction companies want to solve the productivity problem by attempting to bring on more workers, but the answer isn’t always found in hiring. Before you take that step, there are things you must do first to evaluate how well your team functions and determine whether additional workforce is truly needed to boost performance.
But there’s also a positive way to spin this outlook: The construction companies that make time to explore ways to cope with disruptive pressures actively will be the ones that accelerate to the top.
“The industry has an opportunity to work smarter and not harder,” says Stewart Carroll, chief customer officer at Beck Technology. “I believe we’re on the precipice of orders-of-magnitude improvements to the construction process that will lead to better buildings that positively impact everyone on the planet. It starts with the use of data and insights, combined with artificial intelligence and machine learning, to improve workflows and significantly change how we design, plan, and build capital projects.”
Improving your productivity isn’t about doing more but working more effectively.
Why Hiring Isn’t Always the Answer
According to the Associated General Contractors of America’s (AGC) 2024 Construction Hiring and Business Outlook report, more than two-thirds of construction companies expect to add to their headcount in 2024. Within this group, nearly one-quarter plan to increase headcount by more than 10%.
But will the labor be available? According to the construction companies surveyed for the AGC report:
- 58% view rising labor costs as a top concern for 2024
- 56% pinpoint an insufficient supply of workers as a top concern for 2024.
- 81% see inexperienced labor and/or workforce shortages as a possible threat to maintaining worker safety and health.
- 77% struggle to fill positions they already have open.
In other words, most firms know that hiring will be difficult, but they still rely on it to generate more output.
On top of that, Associated Builders and Contractors (ABC) reports that, in 2024, the construction industry needs approximately 501,000 additional workers beyond the normal pace of hiring to meet demand.
“Productivity challenges aren’t solved by just throwing more people at the problem,” says Greg O’Bryan, senior preconstruction analytics manager at The Beck Group. “Companies have to figure out another way to get more output for the same — or less — input.”
Instead of hiring, some companies respond by expecting employees to work longer hours, but that isn’t a sustainable option either, says O’Bryan. It will only create more problems, including burnout, mistakes, or possible injury.
Unfortunately, there’s no magic button that will deliver more qualified workers to your jobsite. Companies must find ways to create new “labor” in places where it doesn’t or can’t exist.
Avoiding the Tech Trap
We know that hiring isn’t always a practical option for solving productivity problems, so where does the industry turn next? Most of the time, it’s toward technology. But this approach has caveats too.
“Unfortunately, in our industry, we have leading-edge innovators who often fail,” says Carroll, “and then they are hung up as examples of why the proposed change does not work for our industry — just because they didn’t take time to explore the best option for their situation.”
O’Bryan has also seen firms lean too heavily on the wrong tools, whether those tools have been in place for a long time or involve entirely new technology.
Relying on legacy systems can result in poor data management while also creating security vulnerabilities and efficiency bottlenecks. On the flip side, chasing the latest technology for bragging rights or the sake of technology itself may lead to big investments in systems that aren’t right for the way your team works.
If workers are forced to use tools that don’t solve their problems, then getting them on board can be difficult. Implementing new technology is fraught with challenges. “Telling your precon team that they must meet a deadline but do it in a whole new way — using a system they’re not comfortable with — leads to lack of trust and a risk-filled atmosphere,” Reeder says.
Now you know what not to do when it comes to boosting productivity — so what should you do instead?
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