Study: Increased productivity could add $5.4B annually to US, Canadian construction industries

Dive Brief:

Researchers at Aarhus University in Denmark have put a price tag on how much the construction industry's lack of productivity is costing U.S. and Canadian contractors — about $5.4 billion annually according to a study published in the Journal of Construction Engineering and Management.
When compared to other industries, the study points out, construction has lost productivity during the last 40 years and by increasing direct-work time — craftsmen efficiency — by just 36 seconds per hour, the sector could gain billions of dollars. While the data is based on construction in North America, the report authors said their research could be applied to Europe and Scandinavia as well.
The results, the researchers said, provide a rationale for investment in methods that can increase efficiency and effectiveness like lean construction's Last Planner system, location-based scheduling and integrated project delivery.

Dive Insight:

The researchers used data from 1972 to 2010, but according to Jochen Teizer, a co-author of the study, there is no reason to believe that since that time the industry has seen significant gains in productivity despite the rising popularity of lean construction methods. Lean construction principles emphasize streamlining design and construction processes in order to maximize efficiency, create the most value for the owner and deliver projects within the established schedule and budget.

"Data does not change that quickly," Teizer told Construction Dive.

However, more contractors are incorporating lean practices, and that is a positive sign, he said, and shows that the construction industry is "ripe for change."

In 2016, the Lean Construction Institute sponsored research that showed the benefits of lean as well. Dodge Data & Analytics conducted the study and found that the more lean-intensive the project the greater the likelihood that it would come in ahead of schedule and under budget. Some of the lean practices that brought project team benefits were:

Co-location of project participants — e.g. general contractor, designers, subcontractors — in a single, big room.
Target Value Design, which prioritizes owner value.
Prefabrication and modularization.
Continuous estimating.

But basic lean theories alone will not solve the problems that the industry faces.

"To me," Teizer said, "lean is a theory that has yet to be implemented with the right tools [such as] building information modeling (BIM); information technology, including sensing and data mining; and, eventually, automation and robotics."

The construction industry is also on the losing end of the data crunch because some productivity increases the industry has seen through prefabrication, for instance, are often included in the manufacturing sector's numbers rather than construction's, he said.

Ultimately, Teizer said, a shift towards increased efficiency and productivity relies not only on practices like lean or on new technology but on organizations' willingness to change, even just a little.

"Small improvements, as our article states," he added, "can have a big impact. Construction still has lots of potential."