Construction – A Track Record of Productivity Decline
Public and Private Sector Real Property Owners as well as their supporting Contractors and AEs continue to lag with respect to construction software technology and training and the adoption of efficient collaborative construction delivery methods. These facts have made the construction singularly unproductive vs. other sectors for the past several decades.
Over 80% of construction contractors still use pen and paper (50%+) and/or spreadsheets (30%+) for critical tasks such as construction cost estimating and quantity takeoffs. Only 35% use some type of task specific construction software!
More distressing, is the lack of awareness and usage of collaborative construction delivery methods such as Integrated Project Delivery – IPD (for new construction projects) and Job Order Contracting - JOC (for renovation, repair, maintenance projects ).
Time to Move Away FROM Antagonistic, Competitive Construction Delivery Methods TO Collaborative Teams
Traditional design-bid-build and low-bid are inefficient and antagonistic. Owners, Contractors, and AEs are pit against one another from concept thru warranty. The result is that between 70% and 90% of projects exceed the original planned cost and that the overrun commonly varies between 50% and 100% of budget. Construction also suffers from 57% of effort on non-value added activities compared with 26% within manufacturing. Causal factors such are largely related to ineffective coordination, basically the construction delivery method.
Performance-based construction delivery methods with shared risk-reward, as well as well-defined roles, responsibilities, deliverables, and metrics from day one is the ONLY path to success. These LEAN best management practices have been proven in the manufacturing sector, and a relative small percentage of Owners and Contractors in construction. IPD, JOC, SABER and similar LEAN construction project delivery methods have been practiced for over two decades.
Move Away from Poor Use of Data Based Paper and Spreadsheets
Independently produced documents and spreadsheets produced by cost estimators, AEs, lead to major cost increased associated with data capture and reuse, resolving multiple formats/terms/data structures, and errors, omissions, extra work, and claims inherent to the process.(2, 3)
Supporting technology and training has also been readily available. More specifically, construction cost estimating and project management software solutions for JOC, SABER, IDIQ, etc. have existed for over a decade. These solutions embed best management practices and workflow as well as robust construction cost databases. They provide contract, project, and document management, as well as productivity and control features such as visual estimating / QTO, automated estimate comparison, and so much more!
Technology can help grow contractor business, while also enabling owners to get more projects completed on-time and on-budget.
So, why do so many Owners and Contractors stick with spreadsheets?
1. Failure to perform due diligence. Simply researching the internet or talking with peers would be a step in the right direction.
2. Contractors (some) are not inclined to share information with Owners and/or work within a win-win environment of shared risk-reward.
3. Resistance to change. “My way is the best way”.
4. You can’t manage what you don’t measure. You can hide behind a spreadsheet. Using spreadsheets means there is virtually no accountability. It’s extremely difficult to review larger or multiple trade estimates within a spread sheet, if not impossible.
5. “First cost” vs. “total cost” mentality. Some see software as expensive vs. spreadsheets. In reality, one mistake on one estimate will pay for multiple software licenses. The cost of technology is insignificant vs. project costs.
In summary, whether you’re an Owner, Contractor, Subcontractor, AE, or Oversight Group, failing to invest in the right software, information, business process, and training will be detrimental to your business and/or organizational mission.
Technology continues is exponential rate of change. Cloud computing, a disruptive technology, is currently causing fundamental changes in how we work each and every day, yet many of us remain unaware. \
Collaboration, transparency, metrics, and continuous improvement will be the norm.
Are you ready?
Related Articles/Additional Sources:
1. “Discussion on U.S. Construction Labor Productivity Trends, 1970-1998”, J. Constr. Engineering and Management, ASCE.127: 427-429.)
2. “Labor-Productivity Declines in the Construction Industry: Cause and Remedies (Another Look), 2013, Teicholz, Paul, AECBytes
3. “Cost Analysis of Inadequate Interoperability in the U.S. Capital Facilities Industry”, 2004, NIST
4. “Long Term Impact of Equipment Technology on Labor Productivity in the U.S. Construction Industry at the Activity Level.” Journal of Construction Engineering and Management, 2004 130, no. 1:124-133,