53% See Construction Productivity as Flat or Declining

Special to CONTRACTOR RALEIGH, N.C. Management consulting firm FMI released in October the results of its latest survey of contractor productivity, FMI 2004-2005 Contractor Productivity Survey Results. While the report found several positive trends in construction productivity, it revealed that 53% of the companies responding to the survey report that their productivity has been flat or decreasing

Special to CONTRACTOR

RALEIGH, N.C. — Management consulting firm FMI released in October the results of its latest survey of contractor productivity, “FMI 2004-2005 Contractor Productivity Survey Results.” While the report found several positive trends in construction productivity, it revealed that 53% of the companies responding to the survey report that their productivity has been flat or decreasing over the past five years.

Contractors relay those gloomy results even though 81% of those surveyed say they could save more than 5% of their annual field labor costs through better management of productivity.

The survey results represent responses from a cross section of the construction industry, including general contractors, mechanical contractors and other subcontractors ranging in size from $15 million annual revenue to more than $100 million. The report notes that the construction industry has no industry-accepted metric for productivity.

“The industry measures and tracks safety performance using several standard metrics like EMR, accident rate, incident rate, etc.,” the report states.

Many companies in the survey do not track man-hours per unit or units per man-hour data; 36% of the contractors say their job cost reporting is just adequate or poor and only about half the contractors say their field managers know where they are relative to estimated or targeted production rates.

“Only one out of every four field managers appears to be communicating a quantifiable and measurable production goal to their crew prior to starting work every day,” according to the survey.

Given the lack of hard data from contractors, many of the answers are educated guesses. The questions, however, gauging the opinions and experience of industry executives highlight several important practices that affect productivity improvement.

“It seems that the industry has a belief that they can save their way to prosperity,” said Scott Kimpland, an FMI director and author of the report. “That particular mindset might explain why our industry has not been able to change overall performance significantly.”

Kimpland drew comparisons to the industry’s investment in safety improvement during 2003. The survey found that most companies say they invested significantly more to improve safety than productivity in 2003. Given the positive trends in safety improvement in recent years, Kimpland noted it is likely that similar investments in productivity would yield significant gains.

Investment in productivity is lacking. Data on spending on productivity vs. dollar volume, for example, show that contractors billing between $26 million and $50 million a year, spend about $30,000 a year on productivity.

“In most cases, companies invested less in productivity improvement than they did in the boss’s new company car,” the report notes.

One of the positive trends indicated in this year’s survey results is a notable increase in the use of pre-job planning. “FMI’s 2003 Survey of Construction Productivity” found that only 33% indicated that they had a formal and consistent pre-job planning process as compared to the latest report, which indicates that 47% of respondents engage in a formal pre-job planning process. FMI said that it considers planning less than three days ahead to be reactive managing.

“Eighty percent of the higher performers indicated that their field managers planned a minimum of five days or more ahead of time,” the report said.

Overall, the results of the survey indicate the importance of leadership and planning at all levels of the organization from the CEO to field managers. A comparison of companies that report significant productivity improvement with those that have had poor productivity trends in the past five years points to several best practices. For instance, those that had high productivity improvement say 64% of their project managers are doing a great job compared with only 26% for all respondents.

A copy of “FMI’s 2004-2005 Contractor Productivity Survey Results” can be obtained by contacting Phil Warner, FMI marketing coordinator, 919/785-9357, or by e-mail at [email protected].