Construction Lost as Much as $40B on Poor Productivity in 2022
Date Posted: October 17, 2023
Posted In: Discussion, Workforce,
From Construction Dive: U.S. contractors wasted between $30 billion and $40 billion in 2022 due to labor inefficiencies, and it appears to be getting worse, according to a new survey from FMI Corp.
Nearly half of respondents (45%) said they saw declining labor productivity on their job-sites in the last 12 to 18 months, compared to 23% who claimed improvements. The report describes labor as “the largest, riskiest, yet most controllable variable cost” in construction and said that these problems could worsen in coming months.
The report emphasizes construction’s already thin labor margins, and respondents estimated the industry could have saved $25 billion of the wasted funds with improved management practices.
Dive Insight:
FMI, a Raleigh, North Carolina-based consulting and investment banking firm with clients in the built environment, said that high-performing companies can increase productivity through intense planning, reliable budgeting and documentation and buy-in from all stakeholders. These also happen to be many of the principles championed by lean construction methods.
On top of wasted money on productivity, construction faces a well-documented shortage of workers compared to demand. Estimates put the industry’s current need at half a million.
“We’re all impacted by the labor shortage, there’s no getting around that. The solution will be in how to do more with less,” said Keyan Zandy, CEO of Dallas-area contractor Skiles Group. “In a nutshell, you need the right people working together, sharing ideas and solutions, and making strategic decisions.”