Worldwide, the construction industry employs about 7% of the world’s working-age population. It is one of the world’s largest economic sectors; yet, it is at or near the bottom on productivity growth. In fact, its productivity has averaged 1% per year for the last two decades, versus the other industrial sectors within Manufacturing that average 3.6% per year.
The Obstruction for Construction
While other industrial sectors are working towards a digital transformation, the construction industry seems stuck in the past. Construction is the least digitized industry -- ranking last in the world. Multiple factors converge to limit productivity growth in construction, such as:
- It is heavily regulated.
- It depends on public-sector demand.
- It often relies on informal arrangements.
- It has inexperienced owners.
- It lacks transparency.
If you add to these factors such challenges as poor project management, insufficiently skilled workers, and inadequate investment in research and innovation, you can begin to understand the hurdles facing the construction industry. The industry has two distinct sectors, which complicates productivity. Large-scale organizations that engage in heavy construction have higher productivity growth than the second sector – specialized trades.
Fragmented specialized trades are typically smaller businesses that act as subcontractors to large-scale organizations. They are geographically specific and, with the growth of the construction sector, harder to find. They may also provide specialized services into residential or small commercial markets. The challenges facing the two sectors may be the same, but their ability to address them is not. Each sector must internalize changes, so they become a part of the company's DNA.
3 Ways to Boost Productivity
McKinsey suggested seven ways to increase productivity in construction. Some changes relate to external forces such as government contracts and regulations that are outside of an organization’s control. Other changes were addressed to the industry, such as transparency and industry-wide structure. The last set of suggestions was aimed at the company level, where efforts to increase productivity can begin today.
Collaboration. Construction experts should be involved from the very beginning. They can spot areas where the design adds to the cost or suggest a building technique that saves money. More than that, collaboration can lead to:
- Fewer changes and rework
- On-time delivery
- Within budget delivery
- Higher profits
- Less wasted materials, money and manpower
Collaboration leverages pooled knowledge to improve job quality and to increase knowledge sharing among employees.
#1: Re-skill the Workforce
Large numbers of construction employees were laid off during the housing crisis of 2008. Few of them returned. With construction picking up, the industry is experiencing a labor shortage. Combine the loss of workers with an aging workforce, and you have an industry struggling to attract and retain employees.
Construction work is labor-intensive. In 2019, the average age of a construction worker was 42.6. Given the physical demands of the industry, more workers are likely to retire in the upcoming years. How can a company attract and retain workers?
Diversify. Construction has a public relations problem. Children of baby boomers were raised to view college as the only route to success. Few were encouraged to enter trades, even if their parents worked in them. Although the GenZers may not share that mindset, they are more interested in online employment and the emerging gig economy. The construction industry needs to look beyond the traditional and consider diversifying into female and minority candidates.
Develop. Career growth and development are essential to young workers. They want a clear path to gain the knowledge and experience to grow in their job. Pairing newer workers with more experienced employees can be a way to provide hands-on guidance and to develop mentorships.
New employees are more open to technology. They are willing to use smartphones or tablets to access information on how to perform a task. Remember, the young workforce or digital natives grew up using technology. Incorporating technology not only improves the bottom line, but it also serves as a way to attract younger workers.
#2: Embrace Technology
Embracing new construction technology is not a choice; it is a business imperative. It improves work efficiencies. It can improve worksite safety. Technology can make learning more accessible and help with career growth and development for employees. Ultimately, these changes will improve the bottom line.
Robotics can help construction workers. Advances in automation, prefabrication, and modular building can remove workers from hazardous construction tasks. Working together, employees and robots can create a safer workplace. Technology tools such as building information modelling and lean construction processes can help organize and schedule tasks. They can even identify potential problems before they arise, saving on cost overruns or lengthy delays.
Technology can help companies operate more effectively away from the construction site. Having digitized information eliminates the need to carry plans and papers with you. The data is available through a tablet or smartphone. No more delays while someone tries to find that plan or those instructions. Technology can make the workday flow more efficiently.
#3: Improve the Design Process
Most construction, especially for large projects, begins with a conceptual design. No individual who is responsible for building the design is present. The primary contractor receives the plan to fill in the details, typically without consulting any subcontractors. If lucky, subcontractors may see the plans before beginning work.
What happens when the reality of the construction site conflicts with the design? Most likely, the project is delayed while the conflict is addressed, or the cost of the project increases to cover the changes in construction. Sometimes, both happen. Those are the two most common complaints – late delivery and over budget.
This approach to the design process has proven costly across industries. Whether it is cars or technology, the earlier in the process a problem is discovered, the less it will cost to fix. Waiting until you’ve already started the project becomes a costly mistake. How can you change the process?
One Way to Begin
Whether it's accessing design plans or a manual on the latest automation tool, employees need a centralized system to help them find what they need. A knowledge management system (KMS) enables employees to access the latest design plans for an upcoming project. With proper controls, a KMS ensures a single point of truth, meaning employees, contractors or suppliers can be sure that what they are viewing is the latest. There aren't multiple copies of the design floating around.
Similarly, a KMS becomes a repository for on-the-job training. Whether it is reading a document or viewing a video, employees have access to the information needed to do their jobs 24/7. In construction, seeing is often a better option for learning a new skill. With a KMS, an employee can view a video multiple times. They can even stop it to watch steps more carefully.
Deploying a KMS is the perfect way to begin the move towards better productivity. It is needed across an enterprise, and it's capable of meeting different needs simultaneously. Starting now means you will be prepared for changes in the design process and workforce shortages. It means you are in a better position to respond to external factors that may change your business model. For more information on how a knowledge management system can improve productivity, contact Gutenberg Technology.
I’m attending the World of Concrete event Feb 4-7th in sunny Las Vegas, NV and would love the opportunity to meet and talk about your Digital Transformation journey, challenges and opportunities!
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