Industries Ripe for Change #2: Improving Productivity in Construction
The construction industry is ripe for revolution. Ever since the financial crisis, productivity in the UK has flatlined - and the construction industry has been one of the worst affected sectors.
Not only did the collapse of Carillion in early 2018 shake the industry, but advancements to technology, the housing crisis and uncertainties presented by Brexit mean that the sector has reached a critical moment. Navigating these changes and obstacles is not an easy task, but, as a result, conversations surrounding trust and productivity have come to the forefront.
Bam Design managing director Andrew Pryke stated that “In this industry, 50% of projects finish over time and over budget.” So how will we move forward into a future where productivity is on the upward trend again and stakeholder relationships are improved?
The construction industry has a reputation for resisting change, but why is this? It is perhaps because the stakes are higher than most other industries. Everything has to be done in a way that you know works. This is not only because of the huge financial risks involved in construction projects, but also health and safety risks that must be taken into consideration. The consequences of faulty construction can lead to lost lives - think Grenfell tower. So, by necessity, the industry is risk averse and slow.
Change does comes at a cost, but the cost of better industry-wide productivity should never involve risking lives or compromising the wellbeing of people. Outdated processes and inefficient industry practises are what are eating up budgets - and those are the corners that need to be cut.
The Contributing Factors to the Construction Productivity Slump
- Skills Shortage - There has been a chronic skills shortage along the supply chain. This problem has only worsened with the EU referendum and the plunging value of the pound causing many EU workers to return to their home country. And, with Brexit on the horizon the country is likely to lose more talent.
- Paper Industry - The industry lacks a widespread use of integrated business systems and is still heavily reliant on paper-based systems to manage work. Each company will have their own system to manage jobs - meaning that information has to be duplicated between different parties along the chain of work, which is time-consuming and leads to errors.
- Poor data management - The industry is awash with data, but often companies don’t have immediate access or the right tools to do anything with it. IFS global industry director of engineering, construction and infrastructure Kenny Ingram remarks that Carillion’s collapse “happened for all sorts of reasons, but partly perhaps because they didn’t have the right information to make decisions early enough.”
- Poor information management - This is often as a result of poor data management but also can also be a result of lack of sufficient systems in place leading to information being mismanaged, emails being lost, reports being sent to the wrong recipients etc. This incurs a more immediate and widespread risk.
Overcoming Productivity Hurdles
According to a recent study, 25% increase in productivity could almost double the UK average profit margin of construction companies. The issue is critical to the economy, but what can be done to solve it?
- Apprenticeship schemes - The industry needs to re-engage with young people to offer more attractive careers in the industry.
- Improving diversity quotas - The gender pay gap in the construction industry is one of the worst in the UK. By encouraging more women to join the construction workforce, the industry could dramatically reduce the labour shortage.
- Embracing new technologies - The adoption of new technologies, such as integrated workforce management systems, will help the industry to significantly streamline the various stages of any one job. Using systems with analytics and reporting tools built into the dashboard allows for the end-to-end visibility of any one project. It is also a way to provide better management of data.
- Better communication - Better communication between parties means a higher likelihood of carrying out the job in the most efficient way. Using an integrated workforce management system is one way to access all contractors and levels of management in real-time throughout a project’s lifecycle.
- Better data management - Having someone who is responsible for inputting data in a particular convention and analysing that data would mean companies can keep on top of their progress and spot mishaps as they occur. Rearranging the data in spreadsheets could improve data management allowing stakeholders to spot trends earlier.
- Offsite and modular methods - The use of offsite and modular methods could help to provide badly needed housing stock at a quicker and more economical rate. These methods are more economical as the scale of production increases with government targets to build large numbers of homes. By preparing building units in controlled factory conditions you can better adhere to health and safety standards whilst avoiding the detrimental effects of weather on site which can often slow the process down. These are not a panacea and can’t be used in all scenarios, but may help to keep cost and time down in some projects and therefore have a positive impact on productivity.
Short term cost savings should not detract from long-term value. This comes into apprenticeships, social value and construction projects that stand the test of time. This is vital if we are to move into a more sustainable future for construction. The key for the industry is not only embracing new technologies, but entering this era of digital transformation with a comprehensive strategy in place so that everyone is informed along the chain.