Construction and the Productivity Gap

by Elisa Meyer on 2018-06-04 1:04pm

It should be no surprise to those connected to the construction industry that the industry is seeing a shortage of skilled labor. We’ve told you about it over, and over, and over.

But in lieu of more skilled labor coming out of the woodwork (see what I did there?) there must be another solution that the industry can look to. McKinsey Global Institute’s 2017 report, Reinventing construction: A route to higher productivity, asks that very question, examines the construction industry’s productivity problem, and proposes answers to it.

“Clients are looking for higher-quality and more cost-efficient solutions grounded on more productive technologies and methods. Engineering and construction companies able to bring such value-enhancing solutions to clients will likely enjoy better margins.”

- McKinsey Global Institute

We’ve seen countless other industries and economic sectors morph into more efficient, more productive, or more convenient forms in record time (I’m looking at you, Amazon Prime). But the construction industry is one of the least digitized sectors in the world, and it shows. This is especially problematic in light of the shortage of skilled construction workers and the housing shortages faced in many cities. We will have a tough time meeting the demand for infrastructure if the construction industry does not adapt and capitalize on productivity-boosting technology.

‘In a sample of countries analyzed, over the past ten years, less than one-quarter of construction firms have matched the productivity growth achieved in the overall economies in which they work.”

- McKinsey Global Institute

Those who have implemented new technologies in construction can attest to the difference in productivity that they saw  A Dodge Data & Analytics study found that, after implementing technological project management solutions:

  • 84% of respondents saw improved communication between the field and the office
  • 71% saw improved control over project costs
  • 64% more effectively managed equipment, maintenance needs, and efficiency
  • 59% believed field productivity was improved through data collection

So the question is, if technology is such an asset which allows us to save time and money, why aren’t we using it more in construction?

The Solution

Construction firms are already rethinking design and engineering processes and utilizing new materials that are emerging. These include cross-laminated timber, which can be built to a project’s specifications and cut assembly time, and prefabricated standardized building components, which are built offsite and improve employee safety while minimizing weather-related delays. These solutions have increased efficiency, but they haven’t completely closed the gap on the labor shortage.

The Benefits

Technology such as cloud-based project management has the potential to put smaller companies into position to compete with bigger companies, by eliminating waste, miscommunication, outdated plans, lost emails, and paper, paper, PAPER. And by removing all these roadblocks to productivity, time and money are saved.

Digital technology has much to offer to the construction industry, starting with cloud-based apps for document storage and retrieval, use of tablets rather than paper to access up-to-date plans, and using email or messenger apps instead of in-person meetings. Specifically, these solutions may offer the following benefits:

  • Use of tablets on job sites to access cloud-based plans minimizes time and money spent printing changes to plans.
  • Many clouds and apps allow an owner to revoke access to documents or plans once that person no longer needs access.
  • Most apps today sync automatically, meaning everyone always has the most up-to-date version of the project plan.
  • Software bundles and “suites” are cheap, especially when the cost-saving benefits are realized.
  • Detailed notes which the entire team can review allows you to skip long meetings.

Where to Start


So, now that you’re convinced, how should you get started implementing new technology? First, realize that this will be a gradual shift that will take some time. There are several ways to dip your toe in the water without turning the whole company upside down:

  • Try out an app or technology suite, and to use it for just one project - this will also allow you to compare cost and time using new technology, to projects managed the old-fashioned way.
  • Find out which products your competitors are finding success with and see if you realize the same benefits.
  • Take advantage of free trials offered by software and apps to see out if the design and functions offer what you need.

Once you’ve found the right technological tools for your company, start implementing them gradually and training employees (and subcontractors) to use them. General contractors can contractually require subcontractors to use certain cloud software or apps to ensure that everyone is on the same page.

Once you find the right program, and your team realizes the benefits of a technological approach, you’ll be wondering why you didn’t do this sooner.


Elisa Meyer is a researcher and writer for At Your Pace Online, where she writes education for construction, real estate, mortgage lending, and more.