Low transparency at the root of construction productivity issues

The building industry has been struggling from flat productivity for decades. The underlying challenges stem from inadequate planning, opacity in the market and poor communication between the industry players, among others. Digital technologies are suggested to aid the industry in the growth struggle.

Many industries have been able to multiply their productivity throughout the past decades. For years, construction has lagged behind this growth. Whereas the productivity in manufacturing has nearly doubled, construction productivity has been close to zero during the past two decades. The labour productivity in building has been growing 1 percent per year on average, compared to the annual total world economy growth of 3,6 percent or the growth of 2,8 percent in manufacturing.

According to McKinsey, construction productivity could be improved even by 50 to 60 percent. This could be done for example by reshaping regulation, design and engineering processes, improving onsite execution and utilising digital technology. McKinsey estimates that the lagging productivity in building industry costs the global economy as much as $1,6 trillion per year.

Construction productivity during 1990-2018 in Finland

Digital leap is still awaited

At the heart of the growth problems is the fragmented market resulting in low transparency and poor communication. Difficulty to operate in the opaque market leads to poor management and execution, inadequate planning and lack of innovation, among others. According to Aalto University’s research on construction productivity, poor communication between designers and builders is one of the biggest factors causing inefficiency. The projects focus too much on the end result than the activities to carry out the necessary processes. The proportion of efficient working time illustrates the issue well: construction workers spend 30% of their time on value-adding tasks.

Corresponding problems were raised in the public building sector, discovers HEAL and Saint-Gobain’s study on healthy learning environments. The research shows that decision-makers have to make choices with inadequate information. Closer collaboration and seamless information sharing would smoothen up the design, engineering and execution processes and help decision-makers understand the bigger picture and make better choices.

Digital solutions for construction to increase transparency

Digital solutions have been essential in accelerating growth in most industries, yet digitalisation has not provided the expected results for construction. Building remains as one of the least digitalised industries in the world holding the second last place only followed by hunting and agriculture. Studies suggest that implementing new digital technologies could give significant help for the building industry in its productivity puzzle.

Having identified the industry problems, HEAL’s key focus is to bring alive the potential of digitalisation to develop ways to increase transparency and open collaboration in construction. At the core of the operation is to derive better ways of working with the use of innovative digital technologies.

 

Sources

Aalto University, Solving the construction industry productivity puzzle with digital situation awareness, 2019
McKinsey, The construction productivity imperative, 2015
McKinsey, Reinventing construction through a productivity revolution, 2017
McKinsey, Improving construction productivity, 2017
McKinsey, Imagining constructions digital future, 2016

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