Building better productivity
Construction lags behind manufacturing when it comes to productivity. It’s a decades-long issue but the acute housing shortage, twinned with a widening skills gap is driving change
Report from – Damien Carr
In a report published by McKinsey Global Institute in February, construction-related spending accounts for 13% of world GDP, yet workforce productivity growth has averaged only 1% a year over the past two decades.
‘Reinventing construction: a route to higher productivity’ is the culmination of research conducted with institutions around the world, including the Royal Institute of Chartered Surveyors and in comparing construction’s performance against manufacturing’s 3.6% growth in productivity, it paints a stark picture for the industry.
The increased complexity of projects and a highly fragmented industry, which leads to lack of investment in skills, innovation and technology are among the root causes of this low productivity, which if solved, says the report, could increase the industry’s global value to $1.6Tn, the equivalent of 2% of global GDP.
Of course, none of this is news to anyone involved in construction; the industry is littered with government-backed reports and reviews calling for improvements in efficiencies that stretch back to the Simon Report of 1944. Not all of those reports have ended up gathering dust in filing cabinet either. Take 1998’s Egan Report, which arguably sowed the seeds of the UK government’s BIM Level 2 Mandate.
Highlighting some of the fundamental principles that underpin BIM, it called for a greater client focus, integrated project processes and teams and for leading public sector bodies to become best-practice clients. It formed the basis of the government’s Government Construction Strategy 2011-2020 and Construction 2025, the latter published in 2013 and has helped to promote the roles of digital technologies and offsite construction as agents for efficiency.
Nevertheless, the efficiency problem remains and has been made more acute by a looming skills gap driven by an aging workforce and the question mark over EU labour following Brexit, as described in Mark Farmer’s Modernise or Die report.
So what can construction teams do now to improve efficiency and productivity? Building4Change, caught up with Don Ward, Chief Executive of Constructing Excellence and Simon Cross, Director of BRE SiteSmart, who sits on the Construction Leadership Council.
First of all how would you measure productivity in construction?
Don Ward (DW): Productivity is a measure of output/input or efficiency, rather than a measure of quality, effectiveness or value and in that sense we risk focusing on the wrong issues. Nevertheless, if we need a measure, then it would be earned value/person-hours, expressed as £K/person-year to enable sector and international comparisons. However, ultimately we do need to focus on measuring outcomes, in terms of economic impact on the rest of the economy. We also need a more holistic look at analysing productivity that takes into account an increased used of offsite manufacturing.
Simon Cross (SC): Construction productivity can be measured at macro and micro scale, the former at asset value (output achieved) for the sector and the latter as how much to a specific project asset. At macro scale productivity is typically £ generated per man hour, and at micro scale it could be £ to construct versus m2 covered for a building. The micro scale units will depend on the type of project, building or infrastructure, and are a measure of how much cost to build, rather than value created.
What is stopping companies from improving productivity of their workforce?
DW: A thoroughly flawed process – from procurement to delivery – that lacks integration, collaboration, a holistic project-level and whole life view. All this impedes the uptake of digital, automated and offsite approaches.
SC: Constructors typically lack capital investment, they are stuck in a cycle of low margins leading to low capital. Often contractors work at less than 1% margin. Raising capital is therefore very hard. Low capital leads to low investment in new technologies and skills. Traditional projects are built on packaged prices with contractors and subcontractors, and the nature of these business models and contract types is not always collaborative.
Can and should companies improve the way they engage their supply chain?
DW: Yes this is essential throughout the supply chain. It starts with the clients and their initial appointments of consultants and Tier 1 contractors, with the latter adopting the same principles in procuring subcontractors and materials. Hastily arranged one-off subcontracting arrangements bought on lowest tender price are not supply chains. Surely the sector is now close to a tipping point to make this breakthrough via for offsite approaches enabled by digital adoption, fuelled by client appetite.
SC: Yes, collaboration with joint risk mitigation is key to delivering a project well. Early engagement with the right form of contract creates a better plan, and a better opportunity of success.
How can BIM best aid the productivity on site?
DW: Eliminate or at least reduce the duplication of data and information by providing one source of the truth for all project participants. The use of BIM both requires and enables better integration and collaboration of the project team, so the benefits extend far beyond this into facilitating lean approaches and eliminating waste in all its forms.
SC: BIM can be used across the supply chain as a flow of good information for decision making. Moving through the BIm levels will enable increased design and construction data sharing, aiding better decision making and collaboration between parties.
What types of data collected on site provide meaningful information for improving productivity on existing and future projects?
DW: Safety, accidents, incidents; productive versus waiting time; site waste data. Much of this is collected by BRE’s excellent SiteSmart toolkit.
SC: A full range of information can be collected: build/capital cost; speed/programme reduction; productivity; quality/defects; health& safety; in-use energy performance; material usage and waste
What key lessons can construction learn from manufacturing?
DW: Establish a reliable predictable process and then continuously improve it by engaging the workforce and supply chain. Target automation and digital wherever possible, and move towards offsite production wherever possible because it delivers better safety, better quality, better reliability/predictability, and speed. And with critical mass, cost savings will also follow.
SC: Advanced manufacturing and driven productivity in the manufacturing substantially over the past 20 years. Adding value has been achieved through new technologies and automation, better standards and design, new business models, including sales, operations and technical. Improving skills for project management, lean design and delivery.