Five Ways to Improve Productivity at the Construction Site
In the current environment, contractors are hard pressed to find ways to gain a competitive advantage and improve slim profit margins. In any given geographic area, construction labor, material and equipment costs are essentially the same. One of the few opportunities to improve the bottom line is to increase productivity.
Increasing productivity benefits a contractor in several ways:
- Projects are completed more quickly
- Project cost is lowered
- The contractor can submit more competitive bids
- The project can be more profitable
Some studies indicate that a third of waiting periods result from factors under management's control. By improving management practices, a construction company can therefore reduce waiting time significantly. Let's take a look at a $1 million construction project, for which direct labor costs typically account for about $400,000. Labor that is unproductive half the time costs the construction company $200,000, with nothing to show for it. If a construction company could improve its management practices, it could see one-third of that $200,000, or $66,667, drop straight to its bottom line. Or it could lower its bids and win more projects.
Besides long periods of waiting, there are many other drains on productivity at the construction site, including:
- Poorly planned materials management
- Cleaning up the job site
- Materials waste and theft
- Substance abuse
- Redoing substandard work and completing client punch lists
But just to say we need to do better planning isn't good enough. You also need to develop a measurement for determining how accurate the current planning process is, plus develop a realistic benchmark for improvement.
Supervisor training should be specifically related to how to improve productivity at the job site. Supervisors must be trained to look at the job not on a day-to-day basis, but as a work process with many discrete steps that must be completed over an extended, if limited, period of time.
You should also explain what productivity means to all employees and show them how increased productivity leads to fewer hassles and greater profits. Once you have identified new, more productive ways of doing something, make sure everyone involved understands the change and why it is being implemented.
Productivity training should always stress that the most productive workplaces are always the safest and produce the highest quality work, since accidents and rework are major drains on productivity.
In implementing new technology, construction companies should learn from the mistakes made in other industries. Too often, companies have attempted to implement new technologies and equipment literally overnight, leading to a cataclysm of change that disorients and discourages workers. We suggest that construction companies take a gradualist approach, introducing first the new software or equipment that will have the most immediate positive impact. Make sure the training that you provide in new technologies not only details how to use the technology, but also how the company and the workers will benefit from it.
This brief review of how to improve productivity may make the task of improvement seem daunting to the average general contracting company. Typically construction companies enlist construction productivity consultants to help them improve. The consultant has a wealth of experience in the construction industry to draw upon in addressing the specific needs of the company, as well as a methodology for identifying and addressing the barriers to increased productivity. The consultant understands both the best industry practices and the current construction technologies that can improve productivity. Perhaps most important, the consultant can provide the supervisor and crew with the training that will yield the greatest productivity improvements.
About the Author
Michael P. Rollage is a principal in McCrory & McDowell, a Pittsburgh accounting and consulting firm, where he heads the firm's construction industry practice. He has more than 30 years of experience in the construction industry, including more than a decade as a controller and CFO for two major construction companies.