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Understanding Construction’s Productivity Gap and how it can be Overcome

Posted by Charles Preuss on 5/14/19, 11:00 AM


Improving a mere 1% globally over the past 20 years, the construction industry is far behind the global average for productivity increases across the past several decades. Presently, the industry lags in productivity by about $1.6 trillion each year as compared with the global average.

The impact? Lost jobs, low profits, and unnecessary headaches for contractors and other industry professionals.

Thankfully, the industry is on the verge of a fundamental overhaul as urgency grows on a global level. A strategic shift of this size doesn’t happen overnight, but construction is changing.

The industry is actively adapting as new technologies are introduced globally. An optimistic 92% of construction executives believe construction technology can help close the productivity gap, according to a 2017 KPMG study.


Why is there a productivity gap?

From the outside, the construction industry appears to be evolving rapidly with the continued introduction of advanced technology. In reality, the industry faces pressure from all directions. Some of the main forces influencing the gap include:


What is happening as a result of the gap?

The productivity gap is driving a number of negative outcomes, including higher costs, increased risk, and more waste (labor and material). The industry can’t continue like this.


How can it be closed?

Thankfully, the industry is continuing to evolve, helping to reduce the gap. There are a few ways the industry can work to close the productivity gap and start seeing new growth.

  • Increase technology adoption rates. Adopting emerging technologies has the potential to drive outcomes like improved safety, lowered labor costs, faster issue resolution, an increase of quality, and improved customer experience. There is more to come by way of new technology in the construction industry, but in order for it to be impactful, the industry needs to be open to adopting and implementing it.
  • Better scenario planning. With the potential for so much to go wrong on the job site, it’s crucial for project managers to have foresight here. While it’s impossible to predict everything that could happen within a project, it is possible to have a backup plan for some of the more common scenarios such as permits not coming in on time, materials not being onsite, or the job site not being ready to start work.
  • Modular design and standardization. The biggest boost in productivity can come from the use of modular design and standardization. Additionally, utilizing prefabrication processes will allow much more work to happen off-site which is cheaper and more efficient. While it requires a greater time and financial investment up front, it will pay off ten-fold in the long run. All of these combined allow facilities to have a longer lifespan as they are built in a uniform fashion, allowing spare parts to be used interchangeably across buildings.

All of these activities tie-in with the general concept that there needs to be more focus on the planning and development part of the construction.

There is a notable productivity gap present in the construction industry as compared to other industries. This is a result of a handful of factors, most notably mistrust within the construction industry and poor project management. As a result of the gap, project costs are higher, risk is higher, and there is more labor and material waste created. While this is an enormous gap to close, adopting new technology and implementing a culture of better collaboration within the construction industry can help to ensure the gap is lessened and, eventually, closed.


Tags: Construction, Communication, Tech solutions

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