At the current trajectory of productivity and slow workforce growth, the construction industry is facing a staggering $40 trillion shortfall in output. McKinsey’s recent report highlights this troubling reality, and despite the urgent demand for growth, productivity improvements have grown by a mere 10% from 2000 to 2022. In stark contrast, the manufacturing sector has surged ahead with a 90% increase in the same period, raising critical questions about why construction remains flatlined.
We’ll explore key findings from the report, why cutting corners with technology is harmful, how to successfully scale productivity initiatives across portfolios, and how STACK will help you get there.
The Stagnation in Construction Productivity: Why Are We Flatlining?
The consequences of stalled productivity are troubling. To meet the projected demand by 2040, construction growth needs to double. But how can companies achieve this growth while facing resource constraints? Contractors are attempting to hurdle many challenges such as:
- Labor shortages that are squeezing the workforce make it difficult to meet project timelines. There is increasing pressure to complete projects with the same or fewer people on the jobsite.
- Underbidding and mismanagement of risk that have become endemic in the industry, leading companies to prioritize winning bids over accurately pricing projects. This creates a race to the bottom where risk isn’t adequately compensated, limiting profitability and stifling innovation.
- Misaligned priorities. Many construction companies prioritize hitting deadlines at all costs, even if that means sacrificing productivity. When end products are contracted or dependent on timelines, the fear of delays often outweighs the potential benefits of improved processes.
Why Cutting Corners on Technology Will Backfire
While we know technology adoption significantly boosts productivity, scaling tech solutions effectively across portfolios remains a challenge for some construction companies. Many adopt “shiny object” tech like drones or monitoring tools but fail to invest in foundational training and workflows that ensure sustainable improvements. Would you hand a young, inexperienced laborer the keys to a 100-ton excavator without training and expect high-level productivity? Of course not. Yet companies adopt technology solutions without the necessary upskilling to ensure their workforce can use them effectively.
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How to Effectively Implement and Scale Productivity Initiatives Across Portfolios
Construction companies need a systematic and portfolio-wide approach to effectively scale productivity. Here are key strategies for driving change:
- Adopt Production Metrics
Focus on measuring productivity in rate metrics like cubic yards poured, volumes excavated, or drawings reviewed to track operational success. This will align performance goals with real outputs rather than just hitting deadlines. - Shift from Individual Projects to Portfolios
Productivity initiatives shouldn’t be confined to one project at a time. Success lies in scaling improvements across an entire portfolio of projects to create lasting change. - Move Beyond Shiny Tech
Prioritize technology that integrates workflows, improves scheduling, and streamlines processes rather than chasing the latest trend. Scenario planning around solutions that offer high impact will drive real productivity improvements. - Standardize Your Data
For tech to deliver real productivity gains, data standardization and alignment across all phases of the construction lifecycle are essential. Without data hygiene, tech tools remain isolated silos of information, creating more chaos than value. - Pricing Risk Correctly
Capture value and reinvest in better practices. The key is to build productivity into the financial equation. Companies should reframe risk management as a value driver and make it a chargeable service. Instead of competing on who bids the lowest, they must compete on who can manage complexity most effectively.
- Invest in Upskilling and Apprenticeships
Construction companies need to invest in systematic tech upskilling and Employees need both technical training and soft skills to adapt to new tools and processes effectively. - Strengthen the Foundation Before Scaling
Productivity gains depend on having robust processes, streamlined workflows, and capable people in the right roles. Companies need to ensure they have these foundational elements in place before trying to scale advanced technologies or production methods.
How STACK Empowers You to Maximize Productivity
Streamlined Document Control: STACK offers robust document management features, ensuring all project-related files are organized in one place. This eliminates miscommunication and ensures every team member has access to the most up-to-date project documents and reduces delays.
Enhanced Field Collaboration: 100% cloud-based and supported across multiple devices, STACK keeps the field and back office aligned. Real-time updates ensure that everyone is on the same page, minimizing rework and miscommunication.
Standardized Workflows: Create consistent processes across projects by automating routine tasks and standardizing (or customizing!) workflows. Achieve higher operational efficiency and reduce the time spent on administrative tasks.
Faster Data Access & Decision-Making: STACK dashboards provide at-a-glance metrics and analytics, empowering you to make fast, informed decisions. This visibility allows for proactive management, helping prevent costly delays.
Unlimited Document Sharing Without Hidden Costs: Contractors can share unlimited files with stakeholders without worrying about unexpected charges, which promotes better collaboration and smoother communication throughout the project lifecycle.
Support for Training and Upskilling: STACK is incredibly user-friendly and comes with extensive free training resources, enabling teams to quickly adopt new processes and get the most out of the platform without significant downtime.
The path forward requires a focus on scaling productivity initiatives and building operational excellence across portfolios. Less chaos and fire drills will allow your teams to focus on adding value rather than constantly reacting to problems. You’ll create financial space for reinvestment in upskilling and ensure predictable project delivery, improving credibility with clients.
