Construction and the Productivity Puzzle

28 August 2019

Economic growth and an increase in productivity go hand in hand, and a highly productive workforce is desired to grow business. It’s a fact. That same ethos is as true for companies as it is countries – which is why it is necessary for governments to address low productivity levels across a sector. Construction, when looked at through the lens of productivity, is a major concern for the UK, with a high number of inefficiencies clear for everyone to see.

Construction productivity levels – where do we stand?

Underwhelmingly low levels of productivity in the Construction industry is a common theme in countries all over the world. According to recent figures from the ONS, the UK – known as the ‘productivity puzzle’ in economist circles, referring to a situation where productivity has stalled but the economy has still grown – is 5th out of the 7 countries in G7, with a productivity gap of 15.4% compared to some of the highest performing sectors.

Longer working hours have also been stated as a factor negatively impacting the productivity levels within our industry. In a study carried out by UK based Expert Market, the UK ranks fairly high in terms of the longest average working hours, but outside the top 15 for Productivity Per Person Per Hour, while countries like Luxemburg and Norway, who ranked outside the top 10 for average working hours, come out on top for Productivity Per Person Per hour.

Causes for Low Productivity in Construction

The lack of performance from the Construction industry is a serious cause for concern across the world’s economies. Whilst productivity has remained flat or, in some cases, declined slightly over the last 25 years, manufacturing has doubled. Reasons behind the slump vary throughout the industry, but cash – or the lack of – is a common theme.

Just under a fifth (1 million) of all SMEs in the UK operate in the construction industry. And with profit margins notoriously low, the initial investments in technology will often be out of reach or not viable, despite the proven impact on productivity. What’s more, in a labour-intensive industry, paying employees is expensive, and with construction experiencing a skills shortage, costs are only likely to increase.

How can we overcome Low Productivity?
Steps to improve the current productivity situation are endless and Integrating currently available technological solutions is a crucial starting point.

Technology, such as BIM (Building Information Modelling) is designed to dramatically improve the planning and delivery of a development, avoiding problems that would potentially derail a project if it had come to light once well underway.
Additionally, the use of modular and prefabricated construction provides a big opportunity to boost productivity. Having everything built off-site and transported to the project when needed allows for greater efficiency and a clear standardisation of parts. Buildings developed using this method will, in turn, have longer lifespans, due to parts being easily interchangeable and replaced.

Prefabrication reinforces the need for more consideration to be focused on the planning and development part of projects. Delays often caused by traditional methods of construction can prove to be costly, both in time and money, so the more work that can be done to avoid these situations, the more productive a project – and the entire industry – will be.

The construction industry is one of the biggest in the world, and in several ways, its influences outweigh the economic figures. Much of the population relies on construction to build and maintain the infrastructure we use daily, and given its importance, the priority should be on attaining the highest levels of productivity in construction. The solution, at least to an extent, is about implementing new technologies and digitising. But for that to happen there needs to be a clear commitment from companies to make investments now, to tackle low productivity in the future.