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Friday, June 6, 2008
Labor Productivity in Construction
Jun 6 2008 12:44PM | Permalink | Email this | Comments (6) |
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Last week, I attended a 1-day conference by Hyphen Solutions in Irvine, Calif. The focus of the conference was to look at ways builders could improve the efficiencies of their supplier relationships so they can control costs. The typical way builders do this is by asking suppliers to cut costs, but that seems a horribly erratic way of achieving improved efficiency.
Ken Pinto, national purchasing program manager for Standard Pacific, displayed a chart that showed how productivity in construction labor has declined over time, which I've shown here. That, to me, was a real eye opener. While the chart is a little old -- the last year measured was 2004 -- the point is substantial. In comparison to every other sector of the U.S. economy, our little section of the world is becoming less productive. Hard to control costs and become more efficient when that is happening.
Prof. Paul Teicholz discusses this effect, including possible solutions in this article, which is the source for the chart. He goes into detail, but the main reasons for this inefficiency are:
- The design-bid-build model breaks apart the construction process and doesn't allow for improved efficiencies across phases.
- Introduction of new technologies are not coordinated. CAD doesn't speak with estimating, doesn't speak with accounting, doesn't speak with construction. (This is beginning to change.)
- Too many small vendors and suppliers so there is not a coordinated investment in capital that benefits everyone.
- Little investment in R&D.
- Workers are generally low paid so it's easier to throw workers at a problem than technology.
His solutions? (1) Improved use of technology, (2) Adoption of Design-Build business model, (3) Government support of R&D for construction, and (4) Additional worker training.
Reader Comments
at 6/14/2008 5:06:47 PM, john lenhart said:
why would lower productivity numbers surprise anyone in the home building industry? is this not the result of the wages we pay? we have forced out any hope of skilled workers in the future and limited ourselves to an industry that will employ the illegal immigrants.
at 6/16/2008 2:47:22 PM, djt said:
Cheap labor = no investment in productivity enhancing equipment. There are more productive ways to design and build homes. But the steady level of investment, management practice, and training investment to get there is too easily undercut by the builder next door willing to employ people illegally, or without safety gear or without following labor rules or paying taxes. There is also strong resistance inside the industry to change, except when the change happens to a tiny isolated item like a nailgun. Imagine this: a framer expects improvements in nailguns every year from manufacturers of nailguns; yet they appear to have no interest in delivering a better frame to their customer - perhaps one that is more thermally efficienct, uses less material, is straighter, or is stronger in resisting natural forces. He wants a better tool, but won't invest, think, or try to do for his customer what the nailgun manufacturer did for him.
at 7/23/2008 3:06:02 PM, Ed Caldeira said:
It’s amazing to me that there is so little industry attention paid to operational excellence. At PCBC a few weeks ago there were very few seminars on operations. Operations get scant attention in our beloved PB and Giants magazines, probably because the publisher is listening to the reader interests. The first builders that figure out how to get it right are going to make a killing, or at least be able to sell homes at market prices and still make a profit. More on me at FirstTimeQuality.com/bio
at 7/29/2008 1:20:00 PM, Paul Deffenbaugh said:
I agree with you, Ed. PB and Housing Giants could do more than they are on operations. In our business, we call it customer satisfaction, though -- not reader interest. :)
at 8/5/2008 6:13:13 PM, Fletcher Groves said:
Ed and I recently discussed the lack of attention operational matters receive. He and I approach our work from different perspectives, but we share many of the same concerns. My concerns were expressed in Bill Lurz's post on the demise of TQM. Ed and I - and others - look forward to the day when quality and customer satisfaction are tablestakes. Not easy or insignificant. Simply the prerequisites for being in this business. Besides product innovation, what will be left with which to create a sustainable competitive separation? Productivity.
at 8/14/2008 11:58:28 AM, new construction illinois said:
this blog is really informative! ____________ ekpoconcrete.com
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