Business

Why The Construction Industry Does So Badly On Productivity Metrics (and How to Fix that)

HR & Payroll Software

The construction industry  is the largest worldwide employer. It’s a pillar of the economy as nearly $ 10 trillion is spent annually on construction. All things being equal, that could rise to over $ 16.6 trillion by 2025. This is the sector that creates the icons and landmarks that become the very representation of the cities where they are located.

However, the construction industry has its unpleasant truths too. The sector is often accused of being rooted in the past with an aversion to modern techniques. While the degree of truth of such accusations can be debated, it’s impossible a deny that the sector suffers from a serious productivity issue.

Globally, the construction sector has not managed to grow its labor productivity by even  1% yearly over the past two decades according to McKinsey. Other reports suggest that productivity growth in the industry is less than half of the growth of the rest of the industrial sectors. Whichever way you slice this particular pie, the numbers don’t make for great reading.

Considering the size of the workforce it employs, this is a massive problem that needs an urgent fix.  The industry also suffers from massive project delay issues, cost overruns, and poor profitability. All of these symptoms are either directly or indirectly  causes of low levels of productivity.

Before going into solutions, it is important to identify the root cause of the problem. Experts opine that some of the major reasons for the poor performance of the construction industry in productivity metrics are:

  • Focusing on finance alone as a key indicator of performance and making decisions on critical productivity measures solely based on budgets.
  • Increasing compliance and legal challenges posed by the oversight of an ever more regulated framework
  • Poor balance productivity and safety compliance at the worksite (not sure what this means)
  • Lack of focus on quality assurance leading to waste due to rework
  • Inconsistent and inefficient asset management leading to over-provisioning or non-availability of assets when needed

To make some allowances for the industry, many of these problems become much harder to solve when you consider that construction projects tend to be complex, long-running, multi-agency efforts that span sites and (sometimes) geographies.

So now the million-dollar question: How to solve the challenge of productivity loss in the construction industry?

Let’s focus on one aspect here.

As with many sectors, digital tools can help the construction sector plan, manage, collaborate, and control projects better by bringing in more connectivity, transparency, agility, responsiveness, and speed to the operations.

Let us examine some of the key ways digital solutions can help the construction industry do better on productivity metrics:

Track Projects Efficiently

With digital project management tools, it becomes easier to handle the end-to-end project management of complex projects. Everything from workforce allocation and collaboration to equipment schedules and budgets can be monitored, tracked for progress, and driven to successful completion. With accurate reporting and forecasting, all the stakeholders get more transparent, real-time visibility into project activities and schedules. This helps to control financial and resource constraints that often impact construction productivity metrics significantly.

Eliminate Delays and rework

Construction project management is low-hanging fruit for applying the power of technology and there are many opportunities. For instance, construction projects must often deal with dynamic requirements. Initial plans and scope may require changes as per the needs of customers or due to other factors while the project is in progress. By automating bureaucratic approval processes, digital solutions empower project managers to have new change orders approved by relevant stakeholders faster. New estimates, resource allocation plans, and raw material provisions can be approved for use faster and ultimately eliminate delays in project completion even with changes in requirements. Digital tools also allow all teams to work with the same version of the truth. This enables better collaboration, prevents clashes, and reduces rework and on-site wait times.

Better Asset Management

One of the biggest areas that can impact productivity is the performance of construction equipment and assets used for every project. This is a complex task when you factor in the large portfolio of owned and rented assets. If a necessary piece of equipment is unavailable where required when required, work could come to a standstill. Obviously, over-provisioning equipment is not possible given the need for financial prudence. But with complex, multi-site, and multi-vendor operations, how can construction companies know exactly what equipment they do possess, what is its current state, how is it being utilized, where is it currently, etc.? Digital solutions can keep track of asset status and performance pro-actively. Smarter tracking of equipment and asset health can help extend equipment life, save replacement costs, and ensure availability. By centrally managing asset sharing, usage, and performance data, construction companies can keep track of their assets and minimize disruptions.

Facilitate Automation

With powerful digital platforms enabling end-to-end management of construction activities, it is now possible to drive automation across different facets of a construction project. On-site as well as back-office activities can be automated to bring about an improvement in productivity. Some of the examples include automated attendance and payroll, time management, project progress tracking, and reporting. Through automation, staff can be redeployed for more critical roles and help improve work quality.

Streamline Compliance

Digital solutions empower the automated tracking of construction activities in areas like payroll and people management. Compliance can become easier, more structured, and complete. With accurate timekeeping, tracking, and audit, monitoring of tax and other legal statutory compliances, construction companies can address activities that have traditionally been effort-intensive.

Ensuring better planning, smoother collaboration, disruption-free construction asset availability, and transparent reporting of key progress metrics can play key roles in driving up productivity for the construction industry. Through the careful application of technology solutions, construction companies large and small can do better in these crucial areas. Get in touch with us to know more.