4 steps to boost productivity in the construction industry
By improving performance internally, you’ll improve performance in the field
Success in construction is measured by tangible productivity. From laying a simple foundation for a new house to erecting architectural marvels that seem to challenge the laws of physics, every day a construction site ends with visible, measurable progress toward a defined goal.
However, the job site would be a much less efficient place without a team dedicated to defining, monitoring and measuring these goals. The internal operations staff are the backbone of every project. The back office, yard and warehouse teams plan, manage and analyze every project from start to finish. Without them, no project could even be undertaken, much less successfully completed.
The construction industry works hard, but the sector’s annual productivity has only increased by 1% in the last 20 years. Compared with a 2.8% growth in the world economy and 3.6% in manufacturing, these numbers clearly reveal that the industry is lagging behind. So why has the productivity of the construction industry trailed behind other sectors for decades?
The industry’s slow adoption of technology is partially to blame for this productivity lag. While many industries have reaped the benefits of new innovations, construction has been hesitant to fully embrace the opportunities. Yellow legal pads once worked well to manage projects but in today’s digital world, this underinvestment in technology directly impacts operational and project management.
A lack of internal operations management leads to disorganization, enterprise-wide inefficiencies and inevitably reflects on the business’ bottom line. Only 25% of projects are completed on time, and those delays cost money. Equipping internal operations staff with the technology to manage projects more profitably, efficiently and accurately has been identified as the number one crucial factor in completing projects on time and within budget.
Construction leaders have begun to realize that those who are willing to embrace new technologies see the most long-term success. They understand the right technology and software solutions fundamentally improve business operations.
To help industry leaders improve their internal operations, I suggest the following four-step process.
Step 1: Supply chain analysis
The supply chain is more than just buying an item from a vendor, it’s the internal movement of equipment and consumables to work sites. Everything that moves, whether procuring from outside vendors or in-house transfers, should be carefully monitored. Consider the whole loop from needing something to acquiring it and then deploying it. We’ve seen it take two weeks to get an item back from the field; this process should be measured in minutes or hours, not in days.
Step 2: Cost review
Construction companies need to know the true costs of their projects so they can pass those costs on to their customer in the next billing cycle. This includes the cost of the tools used and the cost of moving them to the site and back. They need to develop solid processes that are supported by interconnected, accurate job cost and billing systems for each team updated in real-time. Interconnectivity makes all teams more cost-effective because they’re collaborating in the moment.
Step 3: Data analytics
With interconnectivity, the management team has instantaneous, comprehensive and accurate information to make vital decisions and improve performance in the field and the back office. If you want to push your thinking, ask yourself, “What piece of data do I need to change my business?” Without reliable performance data, a company is flying blind.
Step 4: New technology adoption
New technologies relevant to the construction industry are growing rapidly, and they are changing how quickly companies can rise to the top. Look at all the new technologies that can support internal operations, warehouse, yard and worksite operations. Every aspect of a construction company needs to be interconnected, and well-established technologies like cloud-based software and Bluetooth low energy resource location monitoring systems are essential to managing the overwhelmingly complex and time-consuming details involved in construction projects.
By improving performance internally, you’ll improve performance in the field. When all aspects of the company work in sync, you reduce waiting time and phone calls, warehouse and yard operations keep up with the speed of the project, and all processes are streamlined so every request is fulfilled quickly and accurately. The Colorado construction industry is worth $17 billion dollars and putting a lens internally undoubtedly boosts productivity externally. It is time for our industry to catch up.