Construction is an economic powerhouse. This $10 trillion-dollar industry accounts for a large portion of the global economy and is expected to get even bigger this year, growing an estimated 3.5%. Sure, these numbers are impressive, but there are other statistics that tell a different story. For example, 90% of infrastructure projects around the world are either late or over budget.
It’s clear: the construction industry has a productivity problem.
While other industries have become more efficient and productive, construction has remained stagnant. According to a McKinsey report on construction productivity, the industry has failed to keep up with the global averages for productivity growth. Over the past 20 years, global productivity has grown by 2.8%. By comparison, manufacturing productivity has increased by an impressive 3.6%. The construction industry, however, has only grown by 1%.
What’s needed is a productivity revolution: a massive transformation in the way the industry utilizes technology and standardizes mass-production.
McKinsey explains that what’s needed is a productivity revolution: a massive transformation in the way the industry utilizes technology and standardizes mass-production. If construction can adopt new operational strategies, there’s a lot to be gained. Just by catching up to the global average for productivity growth, the industry could grow by an estimated $1.6 trillion and add 2% to the global economy.
That’s some serious incentive for solving the industry’s productivity woes. But how can construction change its ways and revolutionize its practices? The first step is identifying the sources of poor productivity.
Always Preparing for the Next Recession
A recent Economist article says the productivity challenges faced by construction companies today are caused in part by a lack of investment in capital goods. Quoted in the Economist article is consultant Luc Luyten: “The industry has learned through bitter experience to prepare for the next recession.”
Many construction companies are afraid to invest in advanced technology or equipment because they’re afraid that if construction demand takes a dive, they’ll have difficulty scaling down operations. As a result, firms tend to invest in human labour over tools for automation, despite the high cost of labour in many parts of the world.
The fear of unexpected economic downturns has also impeded the industry’s adoption of technological solutions. According to the McKinsey report discussed above, construction is the least digitized industry in the world (in the US, it’s second last).
Today, the opportunities afforded by digital technology are far superior to anything paper can offer.
“While we are all using iPhones, construction is still in the Walkman phase,” says Ben van Berkel, an architect quoted in the above Economist article. And in fact, many of the tools and practices used by the industry aren’t even as high-tech as the Walkman. For many years, technology simply couldn’t compete with the convenience and simplicity of paper. But today, the opportunities afforded by digital technology are far superior to anything paper can offer.
It’s for this reason that CMiC recently partnered with PlanGrid to provide our customers with access to digital building plans. By using PlanGrid and CMiC together, construction teams can access construction drawings on their mobile devices, collaborate in real-time and flag issues on the job site by snapping a photo and overlaying it on the PlanGrid blueprint. Most importantly, CMiC is a single platform, meaning that data entered into PlanGrid and data entered into CMiC applications are stored in one database. With central storage, teams can trust the accuracy of the data and communicate and share information more easily.
This is one example of how investing in capital purchases like construction software can improve the overall efficiency of a company, which in turn will impact the entire industry.
Customization vs. Standardization
Construction also faces many challenges when it comes to standardization. For enterprises to do business on a large scale, they’re required to replicate their processes, products and designs across markets. A company producing cars, for instance, can’t design a completely new car for every country it sells in — this would be too complex and costly. Instead, that company creates only a few different models of cars and replicates this design over and over, allowing for mass production.
But for the construction industry, it’s difficult to replicate projects in different regions. Building codes, regulations and the cost and availability of materials vary significantly depending on location, making it difficult to apply a single design to projects around the world. As a result, many construction firms are forced to create custom designs for each project.
While building location variables pose challenges to standardization, there are still ways for companies to standardize. Exploring pre-fabrication or module opportunities is one option. Firms should also look at how plans can be adapted for different requirements. It’s better to adjust existing building plans to address project constraints than to completely start from scratch.
The High Cost of Rework
When it comes to lagging productivity, one of the biggest culprits is rework. Whenever construction work has to be done twice, it wastes time and money. Rework can also become a vicious cycle. If a project is going over schedule because of rework, PMs can be tempted to lower the quality of the work or accelerate the project by getting their team to work overtime. When team members are asked to work longer hours for an extended period of time, they’re more fatigued and, therefore, more prone make mistakes that will inevitably lead to more rework. Similarly, when PMs sacrifice quality in order to meet deadlines, rework is required to fix subpar work.
If every construction firm could eliminate a large amount of rework, this would significantly impact global construction productivity. To do this, firms must first identify what parts of their projects are causing mistakes and delays.
In a report on the causes and costs of construction rework, Robin McDonald, CCM, LEED G.A. explains the 5 areas of construction management that cause rework:
- Human Resource Capability
- Unclear guidelines given to team
- Too much overtime work
- Workers with insufficient skill levels
- Not enough worker supervision
- Leadership & Communications
- Poor communication
- Lack of safety protocols
- Ineffective management/leadership
- Material & Equipment Supply
- Problems with construction plans
- Late input from a designer
- Unrealistic schedule
- Engineering & Reviews
- Late design changes
- Changes in project scope
- Errors in design
- Poor document storage and control
- Construction Planning & Scheduling
- Materials delivered late
- Work not completed to specifications
- Construction materials not to project requirements
One factor affecting each of these areas is communication. For construction companies to avoid the pitfalls listed above, they must create a solid foundation of clear and consistent communication. When construction teams aren’t communicating, errors happen. For example, if change orders aren’t communicated to all areas of operations, there will be delays in arranging for the added work, and unnecessary work may be completed in the meantime. Crews will then have to backtrack and re-do work they’ve already done.
The old ways of collaborating and communicating aren’t effective enough to handle this fast-paced, information-saturated age.
Increasing communication will certainly reduce rework and backtracking. But modern construction demands have made communication much more difficult. With many stakeholders to keep in the loop and mountains of data and documents to manage, construction projects are more complex than ever. As a result, the old ways of collaborating and communicating aren’t effective enough to handle this fast-paced, information-saturated age.
To foster open communication and avoid costly rework, the construction industry must innovate. Pen and paper, fax machines, landlines – even email – just won’t cut it anymore. As providers of robust construction software, we’ve watched countless clients respond to the call for a productivity revolution. Embracing technology has allowed them to increase profits, reduce waste and eliminate inefficiencies. To learn more about how CMiC software has improved our clients’ operations, check out our client testimonials.