Construction is one of the hardest working industries. In the last 50 years, projects have become increasingly complex and now have hundreds of moving parts that need to be planned and coordinated effectively. The construction industry has changed dramatically since the 1960’s, but there’s one thing that hasn’t changed – productivity.
In fact, according to a report by McKinsey & Company, the construction industry has actually seen a decline in productivity since the 60’s. What’s even more surprising is that every other industry has seen massive productivity gains in the same time frame. It’s estimated that if the construction projects were to match the productivity gains that other industries saw, it would add roughly $1.6 trillion to the industry’s value.
The cost of a construction project can be broken down into materials, equipment, and labor, with labor accounting for anywhere between 20-40% of the total cost. By working to improve labor productivity for all team members on-site, contractors will be able to lower project costs, complete projects faster, and submit more competitive bids. Ultimately, improving labor productivity can transform your workforce into a competitive advantage.
What is a people-first approach?
Your people are what drive the success of your projects and are powering the industry. Labor productivity and employee satisfaction have strong, direct correlations within construction firms. However, most construction software and technology is focused on improving and optimizing project workflows.
Your people are really the foundation of your company’s future and profitability. Optimal project management, recruitment strategies, sales and marketing, and favorable labor statistics are all dependent on your people. Taking a people-first approach to construction management simply means leveraging your workforce data to create better project teams, optimize utilization rates, and create adaptive scheduling that supports, instead of limits, your project pipeline.
What are the root causes of low construction productivity?
There are endless factors affecting the labor productivity of a construction project, from a change in orders to material delays, accidents, etc. However, a lot of these disruptions to productivity are out of a contractor’s control. When we look at the factors that a contractor can influence, we can isolate workforce management and collaboration as two key areas where a big impact can be made.
Did you know? The average journeyman on site will spend 30% of their time idling. That’s a direct cost of poor project and labor management.
THE PRICE OF POOR WORKFORCE MANAGEMENT
A lot of tedious work goes into creating an optimal workforce strategy, especially when dealing with a skilled labor shortage in a labor intensive industry. Contractors in construction industries simply don’t have the talent pool to throw more resources at a project. If there aren’t people readily available, it means project managers have to be more strategic with the people they do have. According to Autodesk and Dodge Data & Analytics, 68% of trades point to poor schedule management as the primary contributor to decreased labor productivity within the construction process.
MAKE USE OF OVERTIME WISELY
Project deadlines and milestones can creep up quickly, but asking your team to put in more time to hit targets will arguably have more of a negative impact on construction productivity than a positive one. That’s not to say that your workforce should never work extended hours, and in some cases construction workers will want to work more hours to pick up some extra money.
There’s a tipping point though.
A report by The Business Roundtable indicates that while productivity will stay constant for the first two to three weeks of scheduled overtime, there’s a steady decline that follows. In a manufacturing study it was found that for every 10% increase in overtime, productivity decreased by almost 3%. It makes sense that too much overtime leads to a fatigued and disengaged workforce, which in turn can lead to unfavorable labor statistics and quickly put your project deadlines at risk.
Take action – Monitor your team’s individual utilization rates.
- On a company level, if you’re constantly pushing 100% utilization it likely means your team is spread too thin and needs additional support. As we mentioned earlier, this is one of the leading causes of poor productivity in construction.
- On an individual level, if you’re seeing team members being utilized over 100% for extended periods of time you should reach out and initiate a conversation. The team member may very well want to continue working overtime, but the toll it will take on them mentally and physically should always be considered. Mentally and physically fatigued team members are less productive and can be a safety risk that leads to more delays. Instead of relying on their willingness to supplement labor inputs, you should focus on productivity growth through a better distribution of labor hours. For more information about the risks associated with employee burnout, read this blog.
TRY AND AVOID LAST MINUTE PROJECT TEAMS
Putting together a project team in the final hour can impact productivity by 10% or more. If project labor is left to the last minute, contractors might realize they don’t have the resources they need, or the resources they want, available to assign to a project. Most involved in construction industries are aware that staying ahead of your project pipeline and planning labor teams well in advance can help when resources need to be shuffled. It also helps to create informed recruitment strategies to ensure you aren’t over-staffed and creating cost overruns.
Take action – Start planning your project teams earlier. Have a project in pursuit or a new opportunity? Pencil in the ideal project team so you can see how taking on this new project will impact your team’s availability and utilization. Workforce intelligence tools like Bridgit Bench can even help to run scenarios to understand how the impact of one pursuit differs from another and let you measure productivity at a glance.
DON’T SETTLE FOR POOR COMMUNICATION
Poor communication is one of the key factors in a project’s failure. According to the Project Management Institute, when project communication is ineffective:
- 37% are completed on time
- 48% are completed within budget
- 52% met their original goals
You read that right, ineffective communication means hitting your initial goals comes down to the flip of a coin. In terms of productivity, your team wants a culture that allows them to build relationships and share their expertise and ideas. It’s important to communicate project expectations and solicit feedback from your team members. The more collaborative a construction project is, the more engaged your team is with the work. According to Gallup, highly engaged teams are 17% more productive than disengaged teams, allowing for more efficient utilization of labor resources.
Did you know? According to Autodesk and Dodge Data & Analytics, 60% of general contractors see problems with communication between project team members as key contributors to decreased labor productivity.
Take action – Provide your team with access to all the information they need to communicate effectively. By increasing accessibility, you’ll foster more collaborative discussions around the project schedule that can help to not only identify potential risks, but can also result in new ways to approach problem solving and risk management.
Construction software and technology can also have an impact on your company’s productivity. By streamlining processes and creating more efficient project planning, you can reduce the amount of non-productive work (data entry) and leverage your historical information to make informed, data-driven decisions derived from new technologies Bridgit Bench is a perfect example of construction software that can help improve productivity on top of improved workforce risk management. For more industry news and tips, visit the Bridgit blog.