Why Construction Has a Love-Hate Relationship with Productivity

Get more out of your CRM.

Learn about all the tasks a CRM can take off your plate with this free guide.

Construction : 11 min read

Why Construction Has a Love-Hate Relationship with Productivity

Productivity is in crisis. How many times in the last year did your projects go over-budget and overtime? How many nights did you spend worrying about upcoming construction deadlines? How many days did you waste waiting for materials that were ordered too late?

If these situations sound at all familiar to you, you’re not alone.

In fact, recent studies show that productivity in construction is in an ongoing crisis—and you’re losing out on a significant amount of money.

So, what are the productivity killers?

And how can you turn this situation around?

How bad is the problem of productivity in construction?

According to a report by the McKinsey Global Institute, a lack of productivity growth in construction is causing major issues for the industry as a whole.

In the total world economy, labor productivity has grown over 2.8% per year over the last 20 years. The construction industry, however, has only seen a 1% increase per year.

This is costing the world economy a huge amount of money.

The report stated that if construction productivity growth matched the total world economy, this would add $1.6 trillion to the world economy per year.

productivity gap in construction.

But it gets worse: first-world countries, the wealthiest in the world, are the ones that are dragging these numbers down. Some of the countries that spend the most money on construction are the same ones that are facing the worst numbers in terms of construction productivity.

construction labor growth
Unfortunately, the U.S. is one of the biggest losers: the same report found that the productivity of construction in the U.S. is stuck at the same level as 80 years ago.

After going through the data, it’s clear that productivity in construction is a major issue.

What could improving the productivity growth of the industry mean for you?

Currently, $10 trillion is spent on goods and services related to construction every single year. With increased productivity, that same money would be spent on construction projects that finish earlier, making room for more projects (and more spending). That means the world’s infrastructure needs would be better met, and construction workers would be earning more for the time they spend.

Think about how much money you earned at the end of your last construction project. Now, imagine that increased productivity could get that project done in half the time.

How much would you have been earning per day of labor?

An increase in productivity would bring serious benefits for both workers and consumers. But if that’s true, how has productivity ballooned into such a large issue in construction?

What’s killing productivity in construction?

Specialized trades battle cheap labor and inexperienced owners.

Unfortunately, change orders seem to benefit some individual contractors in specialized trades (such as framing, roofing, HVAC, etc.). These changes end up bringing in more money for unproductive work than for productive work.

At the same time, owners will often go with the person who quotes the cheapest price: which, unfortunately, is normally the contractor whose labor is less productive.

This leads to disaster: owners end up paying more for change orders down the road, and more productive contractors are losing out.

These and other issues cause specialized trades to lag behind in productivity compared to other parts of the construction industry.

According to the McKinsey Global Institute, framing and drywall are some of the most unproductive sectors, declining in productivity by 2-3% per year:

mckinsey construction productivity statistics.

Design errors ruin productivity.

Your budget and timeline will never be accurate if there are serious flaws in the design.

These could include bigger issues like missing mechanical equipment such as exhaust fans or access panels and incorrect electrical equipment size or configuration. Or, there may be smaller errors that lead to a visually unappealing design, such as a door or window frame that will create a problem with the trim, or ceiling framing in a place where there was supposed to be recessed lighting.

Inaccurate plans and design flaws, whether big or small, will inevitably lead to last-minute changes, higher spending, and unhappy customers.

In fact, the cost of design errors can make up as much as 7.3% of the contract value.

Important project data isn’t kept in its place.

Did you know that construction professionals spend 35% of their time on non-construction tasks?

That’s more than 14 hours a week wasted on unproductive activities: 5.5 of which are directly related to looking for project data and important information.

You know how frustrating it is to waste time searching for information on the project. How long did it take you to find the most recent version of the site plan? When you’re searching for the number of your supplier, how long can it take?

This kind of information loss results in wasted time and frustration.

Time is wasted on disputes that could’ve been avoided.

How many hours a week do you spend resolving conflicts and dealing with disputes?

If you’re like the average construction worker in the study mentioned above, you probably waste at least four hours per week on dealing with disputes that could’ve been avoided.

One of the most common causes of these disputes is design issues, resulting in 38% of all conflicts. Other causes that will sound all too familiar to you are problems with the contract conditions, timing, and the construction process itself.

Communication isn’t streamlined.

Did you know that almost half of all rework on a site is a direct result of poor communication?

That’s right: in the U.S., 48% of rework could’ve been avoided if communication between contracts and project stakeholders had been better from the start.

But it gets worse: the result of these miscommunications is costing the U.S. construction industry $17 billion per year.

How much is it costing you?

Thankfully, many of the issues we’ve just gone over have practical solutions.

That means you can increase productivity in your own work, thus helping to solve the problem of productivity in construction.

What can you do to increase construction productivity?

Take advantage of construction management software.

If you’re wasting valuable hours searching for important project data every week, there is a solution.

Finding the right home for your data can save you more than five hours of work per week, as we saw in the report above.

What’s the solution? Using a construction management software.

There are plenty to choose from: whether it’s a planning software, a scheduling software, a CRM, or a combination of all three!

Best of all, these kinds of software help improve communication between your team and owners.

For example, a construction CRM lets everyone see the status of new projects, collaborate on design, and access important data whenever it's needed.

With a CRM like Copper, you’ll also see all of your conversations with a client imported directly from your Gmail account, giving you peace of mind knowing that each interaction is saved.

Copper also allows your contacts to book your Google Calendar (more GCal tips here) directly instead of emailing back and forth to find a good time. That makes meetings with owners and stakeholders even easier to plan.

Use prefabricated components.

Too much time is spent on designing and constructing non-standard buildings and elements.

That’s why using prefab construction is a great way to boost your productivity.

Elements are designed and constructed in one place, which removes much of the time wasted in traveling from site to site. And, with the construction being done in a manufacturing-style system, you could increase productivity by five to 10 times!

But what if prefab construction doesn’t fit into your sector?

Another way to increase productivity is by using repeatable design elements and saving those to a standard design library.

That way, you can use the same elements in design and get faster at creating them on-site through repeated practice.

Use new technology to streamline design and better explain it to the client.

The MGI Digitization Index studied 22 different industries to test for the digital assets used in different aspects of each business.

It ranked construction second-to-last, lagging behind in almost all aspects of digital assets and usage.

This results in a productivity loss of 1.4% per year for construction professionals.

productivity loss in construction.

If you want to buck this trend, it’s time to start using digital tools for design. These kinds of tools allow you to create 3D models and even use VR to review designs and quickly find errors.

Using the digital tools that are available to you will increase productivity in several areas.

First, digital construction modeling tools like SketchUp allow you to see the whole picture, letting you and your team quickly weed out design errors that may not have been noticeable until after construction.

Second, these kinds of tools allow you to share designs with stakeholders and owners, giving them a clear view of what the final product will be.

This allows owners to see details they may not have considered before. Then, they can make changes while still in the design stage instead of getting change orders during the construction process.

Optimize your supply chain process.

So much time can be wasted in the supply chain. While you can’t always prepare in advance for problems with your supplier, you as the contractor do have a significant amount of power over the planning stages.

When you’re planning your project, it’s essential to map out when you’ll need to order new supplies throughout the whole project.

Find out beforehand how long it takes for these materials to be delivered, and how much demand there is for these materials. That way you won’t be surprised by shipping delays and backorders.

Take your supply chain planning to the next level by using real-time analytics solutions such as bar codes, RFID tags or even GPS devices on your materials and see exactly where they are at any given time.

Another way to optimize your supply chain is by keeping up with latest trends in design and construction in order to anticipate the demand changes earlier. For example, watch design topics on social media to see what the new trends are and prepare in advance.

Also, make sure you keep your inventory list updated constantly. Using inventory software such as Sortly that can be shared with your crew is a great way to make sure everyone knows what material is available and what needs to be ordered.

sortly construction productivity tool.

Finally, always give yourself plenty of margin for ordering and receiving materials, and keep in mind variables such as holidays or bad weather. Never wait until you need something to order it: plan ahead to make sure you have the right materials when you need them.

Create workflows for each project.

A construction project has many moving pieces. You need to coordinate hiring out subcontractors, meeting with officials for inspections, and keeping stakeholders updated—and that’s not even including having to keep tabs on your own crew!

When organizing so many different people, having a clear workflow in place is an essential part of project planning.

Best of all, this is something you can do right in your CRM. This will allow you to see the availability of your team and who’s doing what at a glance. You’ll also be able to see all of the tasks under a given project, and sort them by priority.

Your CRM can give you a clear view of potential schedule problems and make deadlines clearer for all those involved.

All of this leads to a smoother work process, saved time, and better relationships with your clients.

Gather data and analyze to improve.

Where do you store your construction data?

If you’re taking advantage of a construction management software or a CRM, you’ll be able to see data such as:

  • Percentage of over- and under-budget projects
  • Cost of over-budget projects
  • Number of change orders and disputes that had to be resolved
  • Time spent on each construction task

This kind of data is essential to analyzing your current state of productivity—and identifying areas where you need to improve.

Improve productivity in construction and reap the rewards.

As we saw, productivity in construction is in a challenging time—and you could be raking in some serious benefits by improving your personal productivity before and during the project.

For example, if you want to reduce the amount of design errors and change orders, take advantage of construction technology like design modeling and management software.

To improve your productivity on the job site, try using prefab construction techniques, or including repeatable design elements. And don’t forget to optimize your supply chain process.

Finally, use your CRM to store important data and plan out efficient workflows for each project, streamlining your process and saving you time and money.

Are you ready to reap the rewards of productivity?