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.”
![Poor productivity cost U.S contractors as much as $40 billion last year](/sites/default/files/inline-images/Poor%20productivity%20cost%20U.S%20contractors%20as%20much%20as%20%2440%20billion%20last%20year.png)
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Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order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 | Jun 26, 2019
Katerra launches apprenticeship program to help develop the future of construction
The program offers nationally recognized, portable construction trade credentials.
Building Tech | Jun 26, 2019
Modular construction can deliver projects 50% faster
Modular construction can deliver projects 20% to 50% faster than traditional methods and drastically reshape how buildings are delivered, according to a new report from McKinsey & Co.
Contractors | Jun 15, 2019
Turner tops off new classroom space at Middle Tennessee State University
The building includes a “command center” for training students to interact with emergency personnel.
Contractors | May 24, 2019
Two versions of a hard hat for the future are ready for production
Clayco worked with a Georgia college to design a hard hat with greater comfort and adaptability.
Contractors | May 20, 2019
SoCal’s oldest GC bounds into second century
C.W. Driver succeeds by sticking to core markets and practices.
Codes and Standards | Apr 25, 2019
Report: Contractors invest $1.6 billion in workforce development annually
ABC members increased training spending 45% from 2013, according to a new report.
Resiliency | Apr 22, 2019
Turner Construction doubles down on jobsite efficiency
The company targets a 50% cut in greenhouse gas emissions and water use from construction activities by 2030.
Building Tech | Apr 19, 2019
Skender, Z Modular reach agreement to fabricate multifamily housing components
Factory to open soon on the southwest side of Chicago.
Contractors | Apr 15, 2019
Do you have a fear of getting 'Uber'd'? Join the club
Exacerbating the AEC talent shortage is the coming mass exodus of baby boomers as they reach retirement age.
Contractors | Apr 15, 2019
Suffolk launches Smart Lab in Los Angeles
The lab will identify, test, and scale new technologies to help advance the construction industry.