Productivity back on the front burner
Before the Great Recession, educational workshops and magazine articles frequently addressed jobsite productivity. I said at the time that productivity had replaced safety as the most popular topic on meeting agendas for plumbing and mechanical contractors.
Not that productivity is more important than safety, of course. But years of effort to make jobsites safe allowed many contractors to turn their attention to making their processes more efficient.
This attention was well-deserved. While work was plentiful, so was competition and contractors had to be more productive to win jobs. In many cases, contractors were forced to be more efficient to perform the work with fewer people because competition for talent was fierce, too.
Now, as the construction industry emerges slowly from the downturn, productivity is moving back to the front burner, according to the 2013 U.S. Construction Markets Overview from industry consultant FMI.
“Never before has a strategic commitment to improve productivity been more important,” FMI notes. “Many of FMI’s clients are proving that like safety, sustainable improvements in productivity are possible.”
Unfortunately, rising contractors’ costs for labor, materials, insurance and fuel add up to one reason productivity improvements are so critical. Another is that owners, construction managers and general contractors are putting the squeeze on prices, realizing that supply exceeds demand for the services of trade contractors.
Some building owners realize, however, that they may not be getting the lowest overall project cost by simply taking the lowest bid. They’re seeking less contentious and more collaborative ways to reduce project costs. According to a survey conducted by FMI this year, owners involving trade contractors earlier in the project is one approach being used to lower costs. Considering alternative materials is another.
“Realizing that construction is not a commodity, owners seek to take advantage of the contractors’ knowledge and experience by getting them on board earlier,” FMI notes. “When the market ultimately turns around, there will likely be fewer contractors chasing more work, and collaborative relationships will be more important than ever.”
Trade contractors are finding other ways to become more productive on their own. Prefabrication of building systems - and even entire bathrooms and mechanical rooms - is a growing trend among trade contractors.
With prefabrication, contractors can control labor productivity better and reduce many field variables such as overtime, which have a negative impact on productivity.
A more intriguing trend shows more trade contractors dealing directly with building owners. Trade contractors surveyed by FMI say their productivity is highest when they work directly for the end-user, only moderate when working for general contractors who perform some of the work themselves and worst when working for a construction manager who subcontracts all the work. The problem with many construction managers is that they don’t understand how to manage and schedule labor, or how this lack of coordination affects the productivity of trade contractors.
“As a result, many trade contractors are selling directly to end-users on projects where a large portion of the scope is in their trade or area of expertise,” FMI reports. “For the scope that is outside their trade, they simply hire and coordinate the other necessary trade contractors. While there is certainly a role and value good general contractors and construction managers offer, there are many advantages to having the true builders working directly with the customer.”
Other trends forecast by FMI for 2013 carry a less direct impact on productivity. Finding talent for management and supervisory positions will challenge many contracting firms. As demand for construction increases, the problem will get worse due to the number of people who left the industry during the recession and baby boomers who retire.
Some contractors are addressing the shortage with internship and training programs for project and field managers. Others are identifying and fast-tracking young talent within their companies to develop them for senior management positions.
At the other end of the generational divide, FMI predicts a large number of business owners will stay with their contracting companies and work well beyond the age when they had hoped to retire. This will be due to a number of factors, including a limited number of buyers and the equity required to sell the company to one or more employees.
Indicators are pointing up in 2013 for residential and nonresidential construction. Contractors who meet these challenges and improve their productivity will be in the best position to take advantage of the upswing.