Imagine you are standing on the top deck of our newly framed building, looking out over the project and beyond. It appears everything beyond the fence line is zipping by at 10x speed. I am a techno-nerd working in an industry whose productivity has improved little in the last 60+ years and has declined by 1.5% between 2005 and 2015 . Why is the construction industry lagging so far behind?
Construction Schedules, the trade workforce, and profits are shrinking while technology costs are climbing. The projects that I am involved in have an average duration of 18 months, and I can be working on eight projects at once. They all start and stop at different times. Once a project begins, upgrading the technologies is usually avoided because if one company on the project upgrades, all others need to also. So, when do you introduce new tech? Usually, when the next project starts or there is a catastrophic failure at a corporate level. We have all heard of companies where one nasty email had them replacing servers and scrambling to retrieve lost files.
Loosely using Moore’s Law, that the power of computers will double every two years, as a general rule of thumb for technology improvement and comparing this to productivity improvement across industries, it is easy to see how the first has affected the second. Not in the Construction industry, however. If a doctor sees our industry’s improvement pattern on an EKG, she will declare the patient dead.
Why isn’t the productivity rate of the Construction Industry improving?
Our mindset is a primary limiter to growth. The “we don’t have time for science experiments” attitude or the “failure isn’t an option” perspective on implementing new technology. The truth is that we do have time, and failing is always an option. I get it; 18 months is a short amount of time, and that changing direction even slightly on a construction project of this length can be disruptive. When that project team moves on to the next 18-month long project and still does not make changes, they will have missed three years of advancement when they complete the second project. I am not saying that we are not making changes. I am saying that we do not make them often enough. And from what I see in the industry, we do not fully capitalize on those changes when we make them.
The perception that technology replaces tasks. Advanced technology does not improve production rates by itself. According to McKinsey Global Institute, “productivity improvements do not result from information technology alone but from a combination of IT with process, organizational, and managerial changes, including an embrace of data-driven decision making and a focus on interoperability between IoT systems – all of which take time to implement.” In simple terms, we need to apply technological advancements as productivity enhancers rather than a complete change to the operation.
Let us be realistic; how much time did we save when we implemented email, cell phones and digital document management software? The companies that accept that new technologies are just tools that, when used correctly, will improve processes and success will move ahead of the companies that do not.
We do not have money to invest. What we do not have is money to waste. Profit margins are so slim in the construction industry that investing large amounts of money into technologies is not feasible for most companies. Construction companies fall into four categories; Innovators, Early Adopters, Early Majority, and Late Majority. Innovators invest the most in technologies, where the Late Majority do all that they can not to fall years behind. Most companies fall within the Early and Late Majorities. With little to no money invested in productivity-enhancing technologies, they will never be more productive than their competition.
What is there we can do to become more productive?
We need to look at our culture. A tool, which technology is, is only as useful as the people that use it. Companies need to evaluate their culture honestly. If the company is averse to change, they need to find out why and address those fears. Companies need to be more fluid with the adoption and integration of technology. It may be disruptive at first, but adding new productivity tools will lead to better productivity if done right.
Our people need encouragement to use technology to improve. Management cannot stand in the way, simply because they do not understand the tech. Senior Management understands the reason behind the task and knows the proper outcomes and what to avoid. Management needs to teach employees how to properly accomplish their duties and not rely solely on the “easy button” technology appears to provide. Similar to what I did with Grammarly when writing this article. The tech may know grammar, but it does not understand the message.
Let us invest in R&D. This is a lot easier said than done, but I think most companies can do it. This money is an investment. For example, if I spend six months and $6,000 on a software pilot that saves a project team 60 staff-hours during that time, I may lose a few dollars. If it costs $12,000/year for the software and I can apply it to the eight projects I have each year, I am saving 960 staff-hours. That is like paying someone $12.50/hour to do the work you would be paying an Assistant Project Manager, Boston $29/hour to do, a savings of $15,840 just in salary.
A final bit of advice.
Invest in your people and culture. Build an organization that embraces technology. Hire people that want to innovate and push the boundaries. Let your future leaders chart the path for your organization with the guidance from Management.