Productivity in the Construction Industry

A No Nonsense Approach To Increase Jobsite Productivity

In core purpose, this article presents a no nonsense approach on how contractors can increase productivity in construction. However, before dipping into the methodology behind successful improvement of construction productivity, we need to acknowledge the existing lack in processes that enable correct measurement of construction-related productivity.
The problem comes about due to a long history of limited accumulated performance data combined with a lack of applied study concerning the processes associated with production within the construction industry. Without sufficient background data, reliable methods for tracking performance, and industry acknowledgement of these shortcomings, measuring any form of productivity growth can be complex and difficult. In confirmation of this concept, two primary points of evidence come to surface:

• For the construction industry as a whole, few reliable output deflators exist
• Existing growth factors indicate decades of declining growth in labor productivity as well as growth in multifactor productivity.

Existing evidences imply negative construction productivity trends in an age when most industries seem to be gaining ground. Yet tracking cause and effect has for many years remained an evasive endeavor. What are the driving forces behind negative growth in productivity trends within the construction industry, and why are they so difficult to manage?
To answer these questions, we must first define the obstacles that hinder progressive response to the problem.

Four Factors That Hinder Reliable Measurement of Productivity Growth In Construction Productivity

Perhaps we reap best answers and conclusions from the “BLS Working Papers,” a construction productivity growth study as presented by the U.S. Bureau of Labor Statistics. Herein we see listed the following four factors that hinder accurate measurement of productivity growth in the construction industry:

1. The possibility that government statistical agencies have applied inappropriate methods for measuring construction productivity trends




2. Inherent weak or negative complications within the industry itself generate a variety of the problems associated with growth in productivity




3. There may be a systematic shift of resources toward the lower portions of construction industry productivity




4. AND The negative productivity growth within the industry may be tied in part, at least, to an increase in governmental environmental regulations and tactical workplace changes

Source: U.S. Bureau of Labor Statistics, BLS Working Papers, “Productivity Growth In Construction.” October 2014, Leo Sveikauskas, Samuel Rowe, James Mildenberger, Jennifer Price, and Arthur Young.

Although not specifically identified throughout this list, production changes stand as a core factor within each subsection. Collected statistical data fails when routine job changes remain outside of the accumulated data loop. When inherent decisions revolve around unscheduled and undocumented on-the-fly jobsite changes, excessive costs in productivity remain unexplained. Likewise, when multiple undocumented changes occur at multiple lower levels of operations, the cumulative cost overages tend to filter so widely as to be untraceable.
For complete understanding behind the industry failure to adequately craft a method for reliable measurement of productivity in construction, we must now examine the factors that drive routine project changes within the industry.

Factors That Drive Change In Construction Projects

In order to resolve the issues that hinder our ability to accurately measure productivity in construction, we must pinpoint the major cause of confusion. Item four in the BLS Working Papers points toward the core of all issues. After but some small time devoted to tracking the flow of productivity in construction projects, one glaring hindrance to reliable tracking and measurement leaps to the forefront.
As the single force that creates the most problems in construction productivity consider:

Change –
Excessive, Unpredictable and Always Costly in Time and Labor

In industries less troubled by major design changes, performance and productivity often follow predictable patterns. This enables rapid development of organized productivity measurement processes. However, the construction industry endures excessive change that often comes from various and sometimes-unpredictable angles.
Yet “change” remains an inherent component of the construction industry. It cannot be eliminated. It can, however, be studied, understood and more effectively managed. Thus the first stage of control and resolution begins with identification of the factors that drive the disproportionate intrusion of “change” in construction projects. With this in mind, experts in the processes that hinder accurate measurement of productivity have classified the factors that drive change in construction projects into two groups:

Internal Factors Driving Change In Construction Projects:

• Changes that consist of decisions brought forth by design consultants
• Changes pertaining to decisions of construction management consultants
• Changes introduced by working contractors
• AND Changes introduced by owners.

External Factors Driving Change In Construction Projects:

• Changes initiated due economic and political forces
• Changes introduced due to natural environment necessities
• Changes that reflect the introduction of advanced technology
• AND Changes brought about due to third-party conflicts.

Understanding Construction Change Agents

Knowing the factors that drive project changes is only one component of the resolution. Contractors must also understand the order and significance of the change agents, as well as the order of their occurrence. In a study released by Science Direct, the primary cause for change in construction project design streams from factors initiated by the owner. Subsequent influential factors follow the order of:

• Design consultant
• Construction management consultant
• Political and economic factors
• Adjustments due to the natural environment
• Third parties
• AND Adjustments due to an advance in available technology.

Source: Science Direct, “Analysis of Factors Affecting Design Changes in Construction Project with Partial Least Square (PLS).” 2015, A.A. Gde AgungYana, Rusdhi H.A., M. AgungWibowo.

Awareness and understanding enables the construction industry to reduce occasion for design changes –
As well as advance the jobsite performance and productivity of ongoing construction projects.

Independent studies suggest that over thirty-five percent of all construction projects endure disturbing cost increases due to major project changes. The negative impact on project productivity and performance is reflected by inefficiencies in:

• Missed schedules
• Project growth
• Job overrun
• Reduced labor productivity
• AND as much as an eighty percent of original value task cost increase.

Source: Independent Project Analysis Group, “Managing Efficiency in Work Planning“

Low Productivity Responsible For Construction Cost Overruns

Historical data confirms “low productivity” as the primary factor in construction project cost overruns. Twenty-five percent of all construction in-the-field project costs typically increase by thirty percent or more. Studies by McKinsey Global Institute evidence a doubling of productivity growth within the manufacturing industry, yet the same review reveals a ten-year long flat growth in construction productivity.
Here are but a few of the particulars wherein project changes can affect labor productivity:

Overtime

Project changes often force contractors to adopt extend work hours. As a consequence, workers experience greater physical fatigue and a hindered mental attitude. Thus even as the extra hours pump up a higher costs ratio, work output and task efficiency decrease.

Stacking of Trades

Project changes often force rescheduling of assets and workforce. However, sometimes rescheduling is not an acceptable option. Thus various operations may conflict one with another for the available physical workspace. As site congestion of personnel increases, productivity output decreases.

Beneficial Occupancy

Project changes sometimes force owners, laborers and other crafts workers into a conflict wherein dusty environments, noise limitations and other safety limitations restrict simultaneous operations. Idle time accumulates. Project productivity decreases. Labor costs expand.
The ten-trillion-dollar construction industry productivity-ratio remains outpaced in nearly every sector of industry. This shortage in corrective principles defines a critical error in the existing methods for monitoring, adapting and controlling productivity within the construction field.
In a moment, we will turn this discussion toward ways that contractors can use this information as a means for increasing jobsite productivity. But first let us consider the benefits that construction contractors can reap by increasing construction project productivity.

Source: McKinsey Global Institute, “Reinventing Construction Through A Productivity Revolution,” Feburary 2017, Filipe Barbosa, Jonathan Woetzel, Jan Mischke.

Benefits Of Increasing Project Productivity In Construction

Productivity is measured by applying the ratio of production output to the required processes and effort associated with said production. In simple terms: productivity is measured as total output per one unit of total input. However, in the construction industry the equation must be expressed somewhat more completely:

• Output must be articulated in terms of length, volume or weight.
• Input must be expressed as a resource that pertains to man-hours and/or cost-of-labor.

As previously noted, the “negative cost-impact of project productivity and performance typically springs forth through cost increases associated with minor inefficiencies.” This establishes a productivity management framework wherein small incremental improvements in simple task-related processes can produce cumulative saving across multiple regions of project productivity. Some of the specific benefits associated with increased project efficiency and productivity include:

A Reduction In Overall Project Costs

In an industry often troubled by small-scale project delays, every practical improvement in productivity increases the cumulative cost saving.

Quicker Project Completion

Looking back to reports from the Mckinsey Global Institute, we see evidence that increased construction performance efficiency improves project-time-to-completion by forty-three percent and better. The greater extremes in project costs occur in the field. It is there that contractors can reduce and/or eliminate excessive project delays, unnecessary labor hours, and counter-productive overruns.

An Increase In Employee Morale

With greater job efficiency and productivity comes also a sense of overall pride in a job well done. When employee enthusiasm receives a boost, self-discipline spurs forth even greater project productivity.

Higher Profit Margins

Fewer project delays, reduced labor expenses, and better productivity efficiency help ensure that construction contractors reap the best possible return on investment. That, my friend, is the definition of higher profit margins.

More Effective Competitive Bidding

Couple efficient project productivity and a reduction in overall downtime and waste to effective cost tracking and project analysis opens new paths in competitive project bidding. Get there quicker. Win more often.

Successful Application, The Meat Of The Matter
Five Steps That Enable Contractors
To Increase Project Productivity

With the causes for low construction project productivity cleanly defined, the path to increased productivity becomes rather clear and easily stated. The goal is to help contractors:

• Reduce project delays
• Adapt to routine project changes
• Improve operations cost control
• Complete task quicker and with greater efficiency
• Close the project in a timely manner
• AND ensure better overall profits.

The following steps represent a collection of the top five methods most successful in helping contractors achieve these goals by bringing about increased project productivity.

1. Adopt and Apply Modern Construction Management Technology

If limited accumulated performance data, ineffective process tracking and failure to manage disruptive project changes marks the primary reason for low construction project productivity, will not the efficiencies of modern data management provide a primary path toward increased productivity?
Construction-based digital technology opens windows and doors into a smoother, more accurate and functional method for collecting, storing and analyzing jobsite data. For example:

Software based Workforce Management empowers management for tasks pertaining to:

• Operator experience on equipment and tasks
• Training and certifications
• Timesheet collection and confirmation
• Document collection, storage and access control
• Scheduling and allocation of available compliant workers
• AND more.

Software based Assets and Plant Management empowers management for:

• Scheduling equipment maintenance
• Ensuring the existence and accuracy of machine pre-start requirements
• Conducting and collecting equipment compliance and performance reports
• Scheduling asset availability and activities
• AND analyzing a host of other critical asset and plant components.

Software based Compliance Management enables contractors to:

• Eliminate the last minute stress of audits
• Pass ISO requirements as a formality
• Stay compliant year-round.

Software based Subcontractor Management incorporates simplified:

• Direct links to subcontractors and supply chains
• Ensured supplier compliances
• Use of live field data for comparison of budget to actual
• And visual analysis of overall connections.

2. Improve Planning With Advanced Techniques In Data Collection

Operative planning establishes a backbone for improved productivity. Modern software includes integrated tools that enable contractors to perform end-to-end job cost analytics. This means the ability to isolate productivity strengths as well as the associated weakness.

Whether dealing with general problems or major project changes, effective response demands rapid and accurate adjustment, cost analysis and an adjusted plan of operation. In line with successfully satisfying these needs, the Assignar workforce and asset allocation and planning software offers contractors many features, including the following:

• Real-time field and vendor communications
• Reliable data collection and analysis
• Rapid access to previous projects and the associated areas of gain and/or loss
• Cross-referencing between bids, contracts and specific activities.
• Relational job modeling
• AND customizable planning functions.

It all begins from a reliable method of data collection, accumulation and application. When all options are on the table in easily accessible digital format, contractors can rapidly:

• Receive team input
• Evaluate possibilities according to available options
• Identify points of waste
• Incorporate factors specific to safety and quality control
• And then devise a new plan best suited to meet the immediate need while also moving forward toward increased project productivity.

3. Ensure Jobsite Experience With Reliable Productivity Training

According a study by McKinsey & Co. as reported in Forbes, “only 25% of respondents to a a 2010 survey found that training improved employee performance. That’s a rather startling conclusion. Even as we acknowledge the need for training construction supervisors, operators and work crews, we encounter evidence that training, as often presented, is a waste of time and money.
These following facts are true:

• Properly trained construction supervisors have the ability and skill to make your job
• Properly trained employees can bring about huge company dividends.

Note the operative word: Properly. Unless contractors learn how to identify the distinctions between proper and successful training programs and failed training programs, they reap no guarantee of an increase in project productivity.

Source: Forbes, “Why Your Employee Training Is A Waste of Time And Money – And What To do About It.“

Productivity Training Reality Check

Effective training begins with planning. For training to have value and return, construction contractors must first develop a clear strategy and execution plan. Set focus on:

• Training supervisors to focus not only on day-to-day processes but also on how to achieve milestones with a goal of increasing the chances of on-time project completion
• Three to five primary functional skill sets and competencies
• Three to five primary activities that make execution of company plans feasible
• Real life experience versus fancy diplomas
• Presentations that make things clear, simple and focused on results
• Short learning sessions rather than marathon training programs
• Practical processes rather than tool less study periods
• Results rather than high-cost documentations and programs
• Implementation, repetition and assessment rather than checking all the right boxes

4. Advance Safety Awareness and Safety Training

Accidents often cause delay, a reduction in available workforce, and cost overruns. Even minor safety events can result in a major temporary decrease in construction project productivity. Successful safety training should focus on:

• Awareness of environment and the associated hazards
• Unique risks for certain operations
• Importance of knowing and adopting new safety methodologies
• Elimination of ineffective outdated jobsite safety practices
• Individual responsibilities to self and others
• AND the cost, personal and corporate, for failure to conform to established safety requirements.

5. Communication

Low jobsite productivity impacts supervisors, employees, subs and even owners. It has been said that only twenty percent of the people do eight percent of the work. If this is so, then it is a condition of learning. Like children with their parents, many employees go only so far as experience reveals necessary.
Communication can help resolve such issues.
Everyone has some desire to be considered one with the group. In knowing this, contractors have a tool that helps them shift the dynamics of acceptable jobsite behavior. Do this by:

• Effective communication on the importance of jobsite productivity
• Ensuring that everyone grabs hold of the acknowledged productivity goals
• Inviting involvement by actively soliciting suggestions from workers and operators
• Use incentives to help motivate employees toward improved project productivity
• Communicate and leverage group and team collaboration
• Utilize specialized construction productivity software for enhanced real-time communications.

Remember: Rapid real-time communication promotes rapid conditional responses. When managers have immediate access to project changes and/or the need for correction of errors:

• Delays tend to vanish
• Focus remains on relevant details
• Costs remain low
• AND Construction project productivity increases.

Assignar: A Tool Toward Increased Project Productivity

Project changes affect workforce and asset scheduling, cost ratios and project productivity. To effectively adjust for the inefficiencies associated with the factors of change, contractors need access to reliable and efficient real-time options for project analysis and project planning.
With the right applied construction-focused digital tools, prevention and correction from negative outcomes need not be complex.
We live in an age wherein static construction productivity should be a term of yesteryear rather than a complication of modern construction. Cloud-based digital solutions enable contractors with power over planning, organizing and implementation of practical productivity processes.
Make Assignar Workforce and Asset Allocation and Planning Your Power Toward Increased Project Productivity.
Get the construction management software that provides the best in:

• Construction planning
• Management of change orders
• Text and visual documentation
• Real-time communications
• On-line images and photos
• Warranty management
• ISO compliance and audit management
• Quality control resources
• Payroll, invoicing and so much more.