3 possible solutions to lagging productivity in the construction industry

From 2000 to 2022, productivity in the global construction industry improved only 10%, just one-fifth the rate of the overall economy, according to an article by McKinsey & Co. executives.

Lagging productivity will be an increasing problem as the industry confronts a skilled labor shortage in many markets, along with the impending retirement of a large cohort of workers. In the U.S., job vacancies in construction doubled between 2017 and 2023.

3 productivity solutions for the construction industry

The management consulting firm has three recommendations for the industry to improve productivity:

1. Embrace upskilling.

The industry needs to foster more skill-building and create attractive career paths for potential workers. This can be accomplished through technology-supported learning journeys, apprenticeships, and project academies.

Partnerships with universities, community colleges, and high schools could make more young people aware of the advantages of a construction career, while helping them develop skills.

2. Nurture a supplier ecosystem.

Supplier ecosystems can foster stability, so that owners and partners operate with transparency, credibility, and stability. Construction companies can accelerate learning and improve how they work by improving ties with suppliers. Owners typically set up these partnerships and it is important that they act as role models for the desired way of working.

3. Reform project management.

The traditional project delivery model consists of a lack of integrated systems thinking, prioritization of short-term cost management over long-term outcomes, poor communication, rigid planning systems, and tight budgets. These factors discourage managers from trying new things that could benefit future projects.

To address these challenges, project teams can follow the lead of manufacturing and shift focus to production rate metrics, such as meters welded, volumes excavated, and drawings reviewed. This would allow teams to be more experimental, while also enabling them to spot small problems before they become big ones.

Construction companies could also work with project owners, including governments, to spread risk, particularly on complex projects and when delays are clearly due to matters out of their scope.