By Steve Rizer
Although productivity in the non-residential construction sector continues to improve, the rate of improvement is slowing, according to the results of a new survey released by FMI, which provides management consulting and investment banking to the engineering and construction industry. More than half of the professionals responding to the survey reported improvement, but most of them indicated only a slight change.
“The early effect of the recession on the nonresidential construction sector included significant productivity improvement,” FMI stated. “Downsizing has resulted in retaining the most experienced and best-trained personnel who are the most capable of working more efficiently and harder. However, this initial productivity spike has begun to wear off over time. While productivity does continue to improve, the rate of improvement is slowing.”
About 80 percent of respondents believe they can save at least five percent of their annual field labor cost through better management. These results are similar to a 2008 study that FMI conducted. To that end, one of the largest areas for improvement is planning at the field-manager level. Seventy percent of survey respondents who are experiencing improved productivity plan field resources at least five days in advance. Only 40 percent of those who said productivity has decreased plan that far ahead.
“Another bright spot is the increasing use of new technologies like building information modeling [BIM] and lean construction practices,” according to FMI. “Forty-two percent of respondents who have used prefabrication on projects have experienced improved productivity by 10 percent or more. Additionally, although only 35 percent of all respondents have employed integrated project delivery, 19 percent of them are reporting significant improvements in productivity.”
Last year proved to be a challenging one for labor-intensive firms, the report states. “Many took on a healthy dose of low-margin backlog to keep revenues up and are now faced with trying to execute the work productively. During the good years, estimated productivity rates were relatively conservative and margins were strong. This tended to cover up weak project-management practices and productivity inefficiencies. In today’s market, many firms are realizing that their success was less about solid project management and good productivity and more about unique market conditions.
“As we enter 2012, contractors that self-perform must realize they are in the labor-management business and must work smarter to be more productive. The leadership, management, project management processes, and field-management practices that were successful in the past will simply not be good enough to ensure success in the future. Contractors must be willing to challenge and change their expectations relative to how they manage and execute their work.”
As challenged economics and depressed put-in-place statistics seem likely to remain well into 2012 and potentially beyond, contractors must cope with the reality that they must make the most of the work they are able to secure, FMI stated. “Productivity improvement offers the greatest opportunity to increase the bottom line while revenue figures remain lower than in years past. While a group of respondents has adopted what FMI views as productivity best practices with the result of improved productivity, it is clear that, even among those respondents, there is more room for improvement across the industry.
“Emerging techniques and practices, such as BIM and IPD [integrated project delivery], offer the potential for improved productivity through greater planning, coordination, and collaboration. That said, the benefits derived from the underlying blocking and tackling of better planning and processes are achievable with or without implementing BIM or working on projects using IPD methods. Productivity improvement requires a comprehensive plan and the necessary commitment of time and resources. For the contractor willing to make that commitment, the benefits far outweigh the investment.”