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Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order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
| Apr 12, 2013
Chicago rail conversion puts local twist on High Line strategy
Plans are moving forward to convert an unused, century-old Chicago rail artery to a 2.7 mile, 13 acre recreational facility and transit corridor.
| Apr 11, 2013
AIA selects recipients of its 2013 Small Project Awards
The American Institute of Architects (AIA) has selected the ten recipients of the 2013 Small Project Awards. The AIA Small Project Awards Program, now in its tenth year, was established to recognize small-project practitioners for the high quality of their work and to promote excellence in small-project design.