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Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order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, 2011
Mitsubishi commissions electric power manufacturing plant in Memphis
Greenville, S.C.-based design and construction firm O’Neal Inc. is providing design, engineering, procurement, and construction services for Mitsubishi Electric Power Products.
| Apr 12, 2011
BIM Grows Up: Separating Hype from Reality in a 3D World
While BIM adoption still lags in both design and construction, some enterprising owners, architects, and contractors are unlocking the potential of this dynamic technology.
| Apr 12, 2011
Metal cladding: Enhancing design with single-skin panels, MCMs, and IMPs
Single-skin metal panels, metal composite panels, and insulated metal panels can add both aesthetic and functional value to your projects, if you use them correctly.
| Apr 12, 2011
American Institute of Architects announces Guide for Sustainable Projects
AIA Guide for Sustainable Projects to provide design and construction industries with roadmap for working on sustainable projects.
| Apr 5, 2011
What do Chengdu, Lagos, and Chicago have in common?
They’re all “world middleweight cities” that are likely to become regional megacities (10 million people) by 2025—along with Dongguan, Guangzhou, Hangzhou, Shenzhen, Tianjin, and Wuhan (China); Kinshasa (Democratic Republic of the Congo); Jakarta (Indonesia); Lahore (Pakistan); and Chennai (India), according to a new report from McKinsey Global Institute: “Urban World: Mapping the economic power of cities”.
| Mar 22, 2011
San Francisco ready to test hiring law
San Francisco's new construction law, billed as the nation’s toughest local hiring ordinance, establishes strict requirements for how many work hours on city-financed projects must be completed by city residents, starting with 20% this year. It also requires that a set percentage of hours be performed by low-income workers. The requirements apply to municipal construction projects worth more than $400,000 within 70 miles of the city.
| Mar 15, 2011
Passive Strategies for Building Healthy Schools, An AIA/CES Discovery Course
With the downturn in the economy and the crash in residential property values, school districts across the country that depend primarily on property tax revenue are struggling to make ends meet, while fulfilling the demand for classrooms and other facilities.
| Mar 11, 2011
University of Oregon scores with new $227 million basketball arena
The University of Oregon’s Matthew Knight Arena opened January 13 with a men’s basketball game against USC where the Ducks beat the Trojans, 68-62. The $227 million arena, which replaces the school’s 84-year-old McArthur Court, has a seating bowl pitched at 36 degrees to replicate the close-to-the-action feel of the smaller arena it replaced, although this new one accommodates 12,364 fans.