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Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order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
Big Data | Jan 5, 2018
In the age of data-driven design, has POE’s time finally come?
At a time when research- and data-based methods are playing a larger role in architecture, there remains a surprisingly scant amount of post-occupancy research. But that’s starting to change.
Multifamily Housing | Jan 4, 2018
Shigeru Ban’s mass timber tower in Vancouver gets city approval
The 232-foot-tall Terrace House luxury condo development will be the tallest hybrid wood structure in North America.
Contractors | Jan 4, 2018
Construction spending in a ‘mature’ period of incremental growth
Labor shortages are spiking wages. Materials costs are rising, too.
Contractors | Jan 2, 2018
Construction jobs increase in 40 states between November 2016 and November 2017
"There were robust construction gains in most parts of the country as the economy continues to expand," said AGC’s Stephen Sandherr.
Green | Dec 22, 2017
Green builders can use ‘big data’ to make design decisions
More and more, green project teams are relying on publicly available “external datasets” to prioritize sustainable design decisions, says sustainability consultant Adele Houghton.
Reconstruction & Renovation | Dec 21, 2017
Interactive map includes detailed information on historic New York City buildings
The New York City Landmarks Preservation Commission launched a new, enhanced version of its interactive map, Discover NYC Landmarks.
High-rise Construction | Dec 20, 2017
Another record year for high-rise construction
More than 140 skyscrapers were completed across the globe this year, including 15 supertall towers.
Game Changers | Dec 20, 2017
Urban farms can help plant seeds for cities’ growth around them
Urban farms have been impacting cities’ agribusiness—and, on some cases, their redevelopment—for decades.
Public Health Labs | Dec 19, 2017
10 takeaways from SmithGroup’s ‘lab of the future’ initiative
The LAB2050 initiative digs into the scientific trends, technologies, and economics that will shape tomorrow’s research laboratory environments.
Contractors | Dec 18, 2017
HITT Contracting names next generation of leadership
Executive Vice President Kim Roy has been named CEO.
