Construction is falling behind, but it’s not all bad news.
The concept of productivity ought to be integral to the construction industry.
On a very basic level, if a construction programme can be completed ahead of schedule, as a consequence of better processes, better technology or both, then the client will be able to start making money out of the building sooner than anticipated.
It naturally benefits the contractor, too, either very directly in the form of incentive payments, or indirectly through going on to the next job early.
But the phrase ‘ought’ deserves consideration, because construction has not historically been great in this area, in part because variety in projects and site conditions make it difficult to ‘standardise’ construction. Or it might simply be that the industry has been overly dependent on the skills of individuals and has overlooked other areas where processes can be improved.
But the net result is that construction has been rapidly outpaced on the productivity front by many other industries, from aerospace to retail.
This state of affairs has brought construction to the attention of the global management consultancy gurus at McKinsey Global Institute. The February 2017 report, Reinventing Construction: A Route to Higher Productivity, puts it plainly, noting that while the likes of retail has rapidly moved from ‘mom and pop stores’ to global digitised distribution and big data analysis, construction “has evolved at a glacial pace”.
Stuck in the mud
The consultant witheringly notes that while in the US sectors like agriculture and manufacturing have increased workforce productivity by 10-15 times since the 1950s, productivity in construction “remains stuck at the same level as 80 years ago”.
“Current measurements find that there has been a consistent decline in the industry’s productivity since the late 1960s,” it adds.
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McKinsey believes the reasons are many and varied, but among the main culprits are the complexity of today’s projects; the extensively regulated and highly cyclical and volatile nature of the business; the fragmentation of the various sectors of contracting and subcontracting; the informality in many areas of a contract; and the inexperienced ownership that makes it “hard to navigate an opaque marketplace”.
This brings the consultant to a comprehensively damning conclusion: “The result is poor project management and execution, insufficient skills, inadequate design processes and underinvestment in skills development, R&D and innovation.”
The good news, however, is that rather than stopping there, McKinsey has applied its considerable corporate brainpower to point the industry in the right direction. In its report, the firm has identified seven areas, which if applied all at once, it believes could boost construction productivity by as much as 50-60 per cent.
More enticingly, it believes the barriers to improvement are now lower thanks to the parallel improvement in materials, technology and processes as well as new players in the market who are both disruptive and large enough to make a difference.
A hint of threat
The report ends with some encouragement wrapped up with a hint of threat: “Construction sector participants should rethink their operating approaches to avoid being caught out in what could be the world’s next great productivity story.”
The seven areas it specifically raises where the industry can significantly improve productivity are: regulation; collaboration and contracting; design and engineering; procurement and supply chain management; onsite execution; technology; and capability building.
The ‘organisational’ areas of regulation, contracting and procurement can all be improved with appropriate attention in the corridors of power, the consultant argues, but perhaps it is the more site-based opportunities that are potentially most within the grasp of everyone in construction.
By looking afresh at the design and operation processes, and bringing new techniques and technology to bear, productivity improvement of up to a whopping 35 per cent could be achieved, McKinsey suggests.
‘Digitalising’ processes such as building information modelling and offsite construction / prefabrication techniques are the well-known major players in this productivity revolution, but exciting innovations are possible in many other areas through smart use of technology.
The role of the manufacturer, according to Hilti
“There is space here for innovative manufacturers to help change the landscape,” says Abdul Rahman Saleh, northern Europe head of professional services at Hilti.
“For example, global construction products manufacturer Hilti has a proven track record of creating power tools and fixings that make site workers more productive.
“This mantra has now taken on a 21st century angle, with the move into higher productivity being achieved through advanced digital information technology.
“These new service and software technologies, such as Hilti ON!Track Asset Management Solution and Hilti Connect Mobile App (pictured), are more than just organisational tools; they are designed to offer a level of information to companies and individuals which ultimately addresses the complex ownership of large fleets of tools through to true lifetime cost and productivity to health and safety.
“Delivered through its direct salesforce and dedicated consulting team, all solutions are tailored to the customer’s needs. For example, some of the proposed solutions focus on resolving how the customer manages their power tools across multiple job sites, optimising composition of the fleet of power tools, associated repair processes, theft or even consumables consumption.”