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Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order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
Multifamily Housing | Dec 12, 2017
Call for technical experts: Dog wash station design
The editors of Multifamily Design + Construction magazine need your expertise.
Multifamily Housing | Nov 29, 2017
First Porsche, now Aston Martin: Sports car maker co-develops Miami condo tower *UPDATED
The 391-unit Aston Martin Residences will feature seven penthouses and a duplex penthouse, all with private pools and terraces overlooking Biscayne Bay.
Industry Research | Nov 28, 2017
2018 outlook: Economists point to slowdown, AEC professionals say ‘no way’
Multifamily housing and senior living developments head the list of the hottest sectors heading into 2018, according a survey of 356 AEC professionals.
Continuing Education and Life Time Learning | Nov 22, 2017
A new vocational center in Colorado hones high school students' woodworking and construction skills
The MILL National Training Center will extend its curriculum to vets and businesses in 2018.
Multifamily Housing | Nov 15, 2017
6 noteworthy multifamily developments: artists housing, tech lofts, resort-style senior living
These recently completed projects represent emerging trends and design innovations in the multifamily sector.
Contractors | Nov 13, 2017
CBRE completes acquisition of Heery International
The deal is expected to expand the real-estate firm’s project management capacities in several U.S. sectors.
Multifamily Housing | Nov 8, 2017
No place like home: LA’s The Six provides permanent supportive housing for veterans
The 52-unit development gives hope and dignity to homeless or disabled veterans and others in need.
Giants 400 | Nov 7, 2017
Top 25 transit construction firms
Skanska USA, Webcor Builders, and AECOM top BD+C’s ranking of the nation’s largest transit sector contractors and construction management firms, as reported in the 2017 Giants 300 Report.
Architects | Nov 6, 2017
How to start a negotiation: Begin as you mean to continue
How you start a negotiation often will determine where you end up, writes negotiation and mediation expert Brenda Radmacher.
Giants 400 | Nov 2, 2017
Top 80 industrial construction firms
Walbridge, Jacobs, and Fluor top BD+C’s ranking of the nation’s largest industrial sector contractors and construction management firms, as reported in the 2017 Giants 300 Report.
