U.S. contractors lost between $30 billion and $40 billion in 2022 due to poor labor productivity, according to a new report from FMI Corp. The survey focused on self-performing contractors, those typically engaged as a trade partner to a general contractor.
The productivity problem seems to be getting worse, the report says. Almost half (45%) of respondents to a survey conducted during the summer saw declining labor productivity, with only 23% noting improvement.
“Labor is the largest, riskiest, yet most controllable variable cost,” the report says. “Managed well, labor productivity can significantly improve bottom-line margins. Managed poorly, labor overruns, or exceeding labor budgets, can wipe out contractor profitability.”
Respondents say 11% to 15% of field labor costs are wasted or unproductive, but better management practices could reduce labor spending by 6% to 10%, or $15 billion to $25 billion. That level of improvement would result in a 50% to 100% boost to profitability.
Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order
inefficiencies as key concerns.
Related Stories
Contractors | Oct 1, 2020
Molly McShane named CEO of The McShane Companies
Molly McShane named CEO of The McShane Companies
Coronavirus | Sep 28, 2020
Evaluating and investing resources to navigate past the COVID-19 pandemic
As AEC firm leaders consider worst-case scenarios and explore possible solutions to surmount them, they learn to become nimble, quick, and ready to pivot as circumstances demand.
Coronavirus | Sep 24, 2020
The Weekly show: Building optimization tech, the future of smart cities, and storm shelter design
The September 24 episode of BD+C's "The Weekly" is available for viewing on demand.
Products and Materials | Sep 23, 2020
A new portable restroom is designed for mobility
Lendlease invented the H3 Wellness Hub, which can include natural lighting and UV bacteria control.
Healthcare Facilities | Sep 10, 2020
Easing the oncology journey: The role of urgent care
Oncology patients are better served when they’re connected to the right staff.
Airports | Sep 10, 2020
The Weekly show: Curtis Fentress, FAIA, on airport design, and how P3s are keeping university projects alive
The September 10 episode of BD+C's "The Weekly" is available for viewing on demand.
Contractors | Sep 1, 2020
Construction spending dips 1.2% in July 2020; most building sectors see decline
Of the 16 nonresidential subcategories, 10 were down on a monthly basis.
Contractors | Sep 1, 2020
Maryland County to build six schools in P3 arrangement
Prince George’s County, Md., is the first jurisdiction in the nation to use public-private partnership for school construction.
Contractors | Aug 31, 2020
Officials to release new data showing the impacts of the coronavirus on the United States’ construction workforce
Data will be revealed during virtual media event on Wednesday, September 2 at 1 P.M. EDT.
Giants 400 | Aug 28, 2020
2020 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms
The 2020 Giants 400 Report features more than 130 rankings across 25 building sectors and specialty categories.
