According to a recent study of more than 12,000 projects by the Independent Project Analysis Group, more than 35 percent of all construction projects will incur a major change. What’s more, almost any change in a project will have a negative impact on construction productivity resulting in inefficiencies: 25 percent of projects slip by over 20 percent and 25 percent of all project costs grow in the field by over 30 percent.
These percentages increase when you take into consideration megaprojects, 98 percent of which “suffer costs of more than 30 percent.” Indeed, a whopping 77 percent of megaprojects are at least 40 percent late.
Inefficiencies, such as schedule slip and project expansion, are the biggest contributors to job overruns, resulting in an average cost increase of 80% of original value.
While many factors contribute to cost overruns, the primary factor is low productivity. “Productivity,” generally defined as the measure of the rate at which work is performed, has been historically neglected in construction. While other industries such as manufacturing have seen productivity double, construction has remained flat for decades. In fact, construction is actually one of the few industries that are less productive now than it was 60 years ago. In a new report, McKinsey Global Institute goes so far as to refer to lagging construction productivity as an “intractable productivity problem.” One need only examine the lag in digitization, a primary drain on construction productivity, to see exactly why this is the case—the 10-trillion-dollar construction industry has been outpaced by every sector, including mining, gas and oil industries, spending less than 1% of revenue on information technology.
But the construction industry is starting to make productivity a priority as costs from inefficiency continue to soar. Even minor inefficiencies can result in staggering costs. Take rework due to poor document control as an example. An independent study revealed that such rework can cost as much as 4.2 billion a year in the U.S. alone. Lagging construction productivity as a whole costs the U.S. global economy 1.6 trillion dollars a year. It’s safe to say that deceptively small gaps in productivity add up to exorbitant costs, which have become simply too high to ignore any longer.
But here’s the thing—when construction productivity increases, everyone benefits, especially the contractor:
- Projects are completed faster
- Project costs are reduced
- Contractors can bid more competitively
- And the overall project will be more profitable
The good news is that if minor inefficiencies can result in massive costs, then even incremental improvements to productivity on the job site can save contractors a lot of time and money. With this in mind, we’ve reviewed some of the most innovative research on construction productivity and highlighted the seven best ways to help you complete projects faster, reduce costs and increase your profit:
1: Bring Technology on Board (faster)
When it comes to increasing productivity, adopting new technology is likely the fastest path with the biggest payoff. New technology such as onsite productivity software, project management software and building information modeling software can all but eliminate wait times and reduce costly rework.
- PlanGrid Construction Productivity Software — PlanGrid’s construction productivity software allows teams to collect, manage, and collaborate in real-time on drawings, submittals, markups, photos, issues and RFIs. PlanGrid can help improve productivity in innumerable ways, by reducing trips to the trailer and time expenditures, allowing teams to complete accurate takeoffs electronically instead of surveying or using other means to track issues and tasks electronically.
- Kahua Project Management & Collaboration Software — Kahua is reinventing how companies manage and collaborate on projects by solving the problems with legacy project management tools. As an added benefit, Kahua allows teams to synchronize their drawings and markups between Kahua and PlanGrid to drive office and field collaboration.
- RedTeam Cloud Construction Software — RedTeam offers a comprehensive, cloud solution for construction project management and accounting. With RedTeam, you can send drawings from RedTeam to PlanGrid in the field, and pull your RFIs from PlanGrid back to the office in RedTeam.
- eSub Construction Software — Built for subcontractors, eSUB’s mobile and cloud project management software connects the field and office in real-time. Coupled with PlanGrid, you can save snapshots of drawings and annotations to eSUB documents for a complete record of what happens on the job site.
2: Improve Planning with More Data
It goes without saying that improving planning will improve productivity. You can start by analyzing the entire construction process from end-to-end on previous jobs to locate and determine productivity weaknesses and strengths. If problems or changes arise during construction, then re-planning is advised. Improving data use is imperative for increasing productivity. In particular, for teams using BIM, enabling each team member to input their information into one model so it can be evaluated as a team from the beginning of a project will deliver huge gains in productivity by dramatically decreasing building process waste. But it’s not enough to use more data in current planning processes. Contractors should also strive to analyze data from previous projects to identify and eliminate barriers to productivity. By developing metrics determining how accurate current planning processes are, contractors can then set realistic benchmarks to ensure improvement.
3: Improve Construction Productivity Training and Require More Job Site Experience
Have you been providing enough training for your construction supervisors? Like it or not, supervisors have the ability to make or break a job, and contractors that invest in training employees will reap huge dividends. While the industry traditionally sees training employees as essential for project completion—e.g., how to operate a new piece of equipment—few contractors actually train their supervisors on how to increase productivity or be mindful of it. Supervisors need to be trained not to look at a job on a day-to-day basis, but on how to increase the odds of on-time completion. Does the project have milestones? If so, is the project on pace to meet those milestones on schedule and within budget? In addition, the industry as a whole can benefit from requiring design students to complete internships on job sites to reduce conflict between designers and contractors and help designers create more “constructible” designs.
4: Increase Use of Prefabrication
With a large project comes repetition—with many repetitive elements, you can prefabricate in a factory rather than build each one from scratch on site. However, many are unaware that using prefabricated elements not only decreases costs, but also increases quality. In fact, according to Civil and Environmental Engineer Emeritus, Paul Teicholz, “If you can put the proper design content for prefabrication into the design from the beginning, you can achieve a very significant improvement.” Check.
5: Move Toward Shorter, Team-Friendly Contracts
“Draconian” contracts continue to impede productivity and impact the bottom line of projects. When each party seeks to provide as much legal insulation as possible, it makes it more difficult for team members to engage directly with each other, increasing the likelihood of errors and discrepancies that lead to inefficiency. Rather than beefing up your legal team, modern construction negotiations would do well to follow the lead of Japan and Korea, where shorter contracts require less legal mediation and more direct engagement from team members. In this scenario, problems and solutions are discussed fully and openly and compensation is agreed upon with less legal involvement. All of this serves to improve overall productivity of a construction project.
6: Improve Safety Training and Provide More of It
Accidents are a primary cause of project delays and cost overruns. Contractors need to offer more safety training to make employees more aware of hazards and risks in their environment as well as encourage them to adopt new safety methodologies. Many outdated safety practices have been proven ineffective, so contractors need to continually incorporate new methodologies into daily operations to reduce risks and liabilities. Raising awareness about safety and providing more awareness curriculum will also help to improve safety while increasing construction productivity. In general, don’t just provide safety training—make sure it’s up-to-date.
7: Communicate Better
It goes without saying that productivity impacts everyone on the job site, but contractors can really shift the dynamic on their projects by communicating the importance of productivity to the entire team. Moreover, the construction company should explicitly solicit suggestions from workers on how to improve productivity and incentivize them to do so. But you can also go beyond analog modes of communication and leverage construction collaboration and/or productivity software to improve communication across all your teams. Using such software can allow a worker to immediately communicate a change or error to managers that will grow the project unnecessarily or lower cost performance.
In short, changes that lead to inefficiencies affect schedule and cost performance throughout the construction industry, resulting in significant schedule slips and cost overruns. Although a lack of productivity is the primary factor contributing to these negative outcomes, there are many quick and easy ways to make productivity improvements that will have a dramatic effect on your bottom line. Adopting new technology and using more data in the planning process are just two of the most expedient means to reduce inefficiencies. Although construction productivity has been static for decades, that’s all about to change as construction begins to prioritize productivity amidst a digital renaissance. Armed with these seven key insights on how to improve your productivity, you’ll be better equipped to keep your projects on schedule and under budget.
Leverage our experience by downloading our ebook, “Construction Productivity 101: A Practical Guide to Increase Productivity in 7 Easy Steps,” and learn how you can keep your projects on schedule and under budget.