Why Is Construction Productivity Flat?

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WAYNE RIVERS: Hi, everyone. This is Wayne Rivers at Performance Construction Advisors, where We Build Better Contractors.

This week I want to ask the question, why is construction productivity flat? Or is it? We'll come to that. Okay, so we did a vlog, and this was kind of a throwaway piece. I mentioned something about construction productivity being flat over the decades. I showed a little graph that purported to say that that was the case, and I said, "Why do y'all think that is?" And boy, holy moly, I got a bunch of responses, so here are some of the more thoughtful and deep, so I'll read a couple of those and then we'll summarize and talk about it.

Okay, this is from Kent Pilcher at Estes. "With regard to the productivity study, I'd offer the following. Just like cars, the technology that's in today's buildings has really added a relative cost per square foot. 30 years ago, we didn't have HVAC and lighting features and controls and IT and all these other things. Also, project schedules are much more compressed, meaning more work in less time." He's arguing for greater productivity, right? "Technology, BIM clash detection, other technologies have drastically reduced or prevented issues and rework." Again, more productivity. "Safety. On the whole, there is a huge added emphasis on safety, and it's appropriate, of course. As a result, job sites are safer, resulting in fewer losses and lowering overall costs, indirectly raising productivity. P.S., I forgot about prefab too." Thanks, Kent, for that.

From Willie Brooks at KBS Construction, "I've thought a lot about this over the years, and I'd like to share how I've reconciled this in my mind. Gaining productivity in any industry starts at the task level. The devil's in the details of task. Other industries have increased productivity by focusing on controlling variables, making them constant, and increasing productivity. Minimizing variables is key. Manufacturing is a great example.

"With that understanding, most construction tasks are performed the same way they were 75 years ago. Installing drywall, framing, most all carpentry tasks, electrical, HVAC, steel, masonry, et cetera, it's hard to think of a trade that does something different than how it was done back then." There's no reason, in Willie's mind, to expect increased productivity. Why is that? "Construction will be the last frontier for this advent, primarily because it's a business of constant change." It makes sense. "A construction site is ever-changing. Variables are aplenty, and the only thing constant is change. Until technology advances to the point of being able to process those variables, software, and actually perform those tasks with high quality hardware, I don't expect to see the productivity boost we're looking for.

"Speaking of hardware and software, I would not be surprised if in 10 years we start seeing that growth curve advance. Due to the advent of AI and humanoid robots, I suspect that will be the inflection point of such productivity boosts. My theory, and it's just a theory, is that the peaks are primarily during hard times when the economy is not great and folks were insecure about their futures. That said, my assumption is the peaks in productivity are primarily a function of effort, nothing else." Okay. Fascinating.

Ed Longville from Royal Roofing, "Otherwise, while many people would blame safety and regulations, I think it's simply complexity. As examples, fire protection, installation requirements, low voltage needs are all aspects that have significantly evolved over the years. Heck, just the advent of the wide use of air conditioning in the 1950s would account for a huge change in the complexity of construction. They had ticker tape parades in the '40s because it was easy to open the windows. Not today."

And finally, from Chip Greene at Greene & Associates, a mechanical contractor in Georgia, "Why productivity in the construction industry is flat, in my opinion. Project leaders, PMs, foreman, superintendents, are not keeping up with technology. Everything from using a tablet for drawings to understanding technology advances with equipment. In my case, boilers, AC, et cetera. Second, no planning. Show up, figure out what you're going to do for the day, get up the materials, then go to work. One hour minimum lost every day times however many folks you have waiting. Oh, and we don't have everything we need, so we work around it for that day until we get it tomorrow. Three, project communication. Even projects with weekly meetings are all noise and no action. Nothing occurs afterwards." And that's one of my pet peeves, by the way. "Project organization materials get buried in a trailer, kicked in a corner, forgotten about, et cetera. I could go on for days."

All right, so what are our members telling us here? Some are arguing that productivity is higher, some are arguing that productivity is not so good, and there are reasons for it, so let's summarize. On the productivity better side, let's start with technology, BIM clash detection, less rework, et cetera. Okay? Schedules are compressed, meaning more work and less time. That argues for more productivity. Safety, fewer losses and lower costs implies more productivity. Prefab, obviously. And then AI and robotics are already making an impact, not a huge impact perhaps, but making an impact, okay?

Now on the productivity flat side. First, technology. "Wait, Wayne. Hold on a sec, buddy. You just said that technology is an accelerator of productivity. Now you're saying it's causing productivity to be flat. Why?" Well, because of complication. HVAC, lighting controls, IT, as the members wrote. Constant change, unlike manufacturing, now some would argue manufacturing's always undergoing change, and that's true too, but it's more incremental. Construction projects are every-evolving, so complex, all these moving parts, all these moving disciplines coming onto a site to produce a finished product. I don't know how you do it. It is so unbelievably complicated.

The long upcycle, this is actually, to me, a productivity flattener. Basically, since 2013, the construction industry has been on a growth trajectory. Not every year, not every single region of the country. Some places are doing better than others. I understand all that, but if you flatten out, if you smooth out that curve, it's an upward curve of 13 years, which is unprecedented in my working lifetime. And as a result, sometimes people are a little more comfortable or complacent than they might have been otherwise.

Green building, man, that's definitely a complicating factor, and that would cause productivity to be flatter. Project leaders behind on technology, there's a lot of folks ... What did we learn at AGC several years ago? The speaker said that the average age of a construction CEO is 61 years old. That was three or four years ago now, and you think about the field, your most experienced folks in the field, also in the office, are also of a certain vintage. And I'm 65. I'm not the go-to guy on technology in our shop, that's for sure. And then finally, project communications, lots of talk, little action, one of my pet peeves about meetings.

So, we've got arguments pro productivity, arguments con productivity. What do you think? Send me an email, [email protected]. This is Wayne Rivers at PCA, where We Build Better Contractors.

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