Construction productivity is on the rise, but there's room for improvement

SPECIAL TO CONTRACTOR RALEIGH, N.C. The results of FMI's latest survey on contractor productivity indicate that 54% of respondents think that productivity has improved in the past few years, while only 47% reported improved productivity when the question was asked two years ago. The survey examines contractor practices that affect productivity and makes recommendations for improvement in productivity

SPECIAL TO CONTRACTOR

RALEIGH, N.C. — The results of FMI's latest survey on contractor productivity indicate that 54% of respondents think that productivity has improved in the past few years, while only 47% reported improved productivity when the question was asked two years ago. The survey examines contractor practices that affect productivity and makes recommendations for improvement in productivity management.

Scott Kimpland, FMI director and author of the survey, said, "When we look at the potential impact that a 5% to 10% labor cost savings could have on profitability and the fact that less than 30% of contractors have a formal plan or strategy to improve productivity, it is surprising that more contractors have not made productivity a higher priority in their business."

Key findings of FMI's 2007 Contractor Productivity Survey indicate that:

  • 54% responded that productivity had improved either slightly or substantially in the past several years;
  • 80% of respondents believe they could save a minimum of 5% of their annual field labor costs through better management;
  • Aging field management continues to be a concern in the industry;
  • 78% of the field managers in the surveyed companies are older than 35, and more than half of them are older than 45;
  • 45% of respondents had between 1% and 24% Spanish-speaking workers;
  • 46% of respondents plan three or fewer days in advance of their needs;
  • Daily goal setting was being used only about 26% of the time.

In 2006, the firms surveyed made an average investment of $54,270 in various initiatives to improve productivity compared to their average investment of $70,035 for safety improvement, according to the survey. While contractors continue to accept significant labor overruns on their projects, they do not appear to be making the necessary investments in people and processes to improve productivity.

The survey says that 9% of responding companies have a greater than 50% Spanish-speaking field workforce. While the higher percentages are distributed in the West, Southwest and Southeast, Hispanic labor is increasing as a percent of the construction workforce across the country. Given this trend, contractors that are strategic enough to develop strategies to attract and retain this segment of the workforce will have a huge competitive advantage, FMI noted.

To understand the significance of this trend, the consulting firm noted statistics from its presentation on "Mega Trends" in the construction industry:

  • Latinos are the largest minority group in 14 of 24 states west of the Mississippi, as well as Florida and all the Northeastern states, and they are the largest U.S. minority overall.
  • Most of the 1.4 million Latino construction workers (70%) were born outside the United States.
  • Of all Latino workers, about 75% are Mexican or Mexican-American.
  • Latino workers make up 11% of the U.S. workforce but hold 20% of the construction jobs in the country.

The greatest external challenges to productivity improvement noted by respondents are:

  • Poor quality of plans and specs;
  • Poor coordination by owners, general contractors, and/or construction managers;
  • Unrealistic schedule demands;
  • Slow responses from other members of the team (designers, customers, general contractors and/or construction managers); and
  • Lack of available and qualified craftspeople.

Increasing communication and coordination is the key to all the concerns on FMI's list with the exception of finding more qualified craftspeople to do the work. The quality of the labor force is not only a concern for individual contractors but for the industry as a whole. As the construction industry enters the "war for talent," strategies that focus on attracting, training and developing the workforce appear to be wise places in which to invest.

To obtain a copy of FMI's 2007 Contractor Productivity Survey Results, contact Phil Warner, FMI's marketing coordinator, at 919/785-9357 or at [email protected].

FMI provides management consulting, research, training, and capital services for the construction industry. Its Website is www.fminet.com