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Respondents also cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order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
Industrial Facilities | Nov 16, 2022
Industrial building sector construction, while healthy, might also be flattening
For all the hoopla about the ecommerce boom and “last mile” order fulfillment driving demand for more warehouse and manufacturing space, construction of industrial buildings actually declined over the past five years, albeit marginally by 2.1% to $27.3 billion in 2022, according to estimates by IBIS World. Still, construction in this sector remains buzzy.
Wood | Nov 16, 2022
5 steps to using mass timber in multifamily housing
A design-assist approach can provide the most effective delivery method for multifamily housing projects using mass timber as the primary building element.
Giants 400 | Nov 14, 2022
Top 60 Airport Terminal Contractors + CM Firms for 2022
Hensel Phelps, Turner Construction, Walsh Group, and Holder Construction top the ranking of the nation's largest airport terminal contractors and construction management (CM) firms for 2022, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Nov 14, 2022
4 emerging trends from BD+C's 2022 Giants 400 Report
Regenerative design, cognitive health, and jobsite robotics highlight the top trends from the 519 design and construction firms that participated in BD+C's 2022 Giants 400 Report.
Contractors | Nov 14, 2022
U.S. construction firms lean on technology to manage growth and weather the pandemic
In 2021, Gilbane Building Company and Nextera Robotics partnered in a joint venture to develop an artificial intelligence platform utilizing a fleet of autonomous mobile robots. The platform, dubbed Didge, is designed to automate construction management, maximize reliability and safety, and minimize operational costs. This was just one of myriad examples over the past 18 months of contractor giants turning to construction technology (ConTech) to gather jobsite data, manage workers and equipment, and smooth the construction process.
University Buildings | Nov 13, 2022
University of Washington opens mass timber business school building
Founders Hall at the University of Washington Foster School of Business, the first mass timber building at Seattle campus of Univ. of Washington, was recently completed. The 84,800-sf building creates a new hub for community, entrepreneurship, and innovation, according the project’s design architect LMN Architects.
Giants 400 | Nov 9, 2022
Top 50 Data Center Contractors + CM Firms for 2022
Holder, Turner, DPR, and HITT Contracting head the ranking of the nation's largest data center contractors and construction management (CM) firms for 2022, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Nov 8, 2022
Top 110 Sports Facility Architecture and AE Firms for 2022
Populous, HOK, Gensler, and Perkins and Will top the ranking of the nation's largest sports facility architecture and architecture/engineering (AE) firms for 2022, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Nov 8, 2022
Top 60 Sports Facility Contractors and CM Firms for 2022
AECOM, Mortenson, Clark Group, and Turner Construction top the ranking of the nation's largest sports facility contractors and construction management (CM) firms for 2022, as reported in Building Design+Construction's 2022 Giants 400 Report.
Industry Research | Nov 8, 2022
U.S. metros take the lead in decarbonizing their built environments
A new JLL report evaluates the goals and actions of 18 cities.