CONNstruction - Winter 2017 - 7

newsandviews

Being Productive
By Don Shubert
CCIA President

Recently, the McKinsey Global Institute published a thought-provoking report titled, "Reinventing
Construction: A Route to Higher Productivity." The premise of the report is that productivity in the construction
industry is decreasing, and addressing the root causes
is going to be instrumental in meeting the world's infrastructure needs.
The report looks at construction globally and indicates
that the industry trails productivity growth in other sectors of the economy. It shows that there has been no
growth in construction productivity in Germany and
Japan, and that it has fallen by one-sixth in France and
Italy. Productivity has also fallen by half in the United
States since the 1960s.
Construction productivity is affected by many factors
and can be measured in a variety of ways. Many different assessments can be conducted on it, depending
on which individual construction industry market sector
is being examined. The analysis in the report is very
broad, encompasses the entire globe. It includes all
sectors of the construction industry, from the simplest
residential homes to sophisticated facilities such as
nuclear reactors.
The significance of the analysis is realized when the
institute calculates that if the construction sector productivity were to catch up with that of the total economy,
it would boost the sector's value added by $1.6 trillion.
This would add 2 percent to the global economy. It is
the equivalent of meeting one-half of the world's infrastructure need. One-third of this opportunity rests in
the United States.
According to MGI, there are many reasons for the
sluggish productivity growth in the industry. The industry

is extensively regulated, it is very dependent on public
sector demand and the market is highly cyclical. The
report states that informality and sometimes corruption
distort the market. Construction is also highly fragmented. Contracts have mismatches in risk allocations
and rewards, and often owners and buyers find it hard
to navigate an opaque marketplace. The Institute concludes that all of this results in poor project management
and execution; insufficient skills; inadequate design
processes; and underinvestment in skills development,
R&D, and innovation.
Many observers and industry participants may agree
with the report's findings that the evolution of contracting has not been conducive to productivity increases.
However, most will also quickly point out that the commercial construction sector in the United States is making significant progress improving productivity.
McKinsey Global proposes that productivity can be
improved by doing seven things:
1) reshaping regulation
2) rewiring the contractual framework
3) rethinking the design and engineering process
4) improving procurement and supply chain management
5) improving onsite execution
6) infusing digital technology, new materials, and
7) advancing automation; and reskilling the workforce
Doing all seven, they say, will all have major impacts.
The consultants also suggest moving to mass production
and prefabricated, standardized components.
There are a variety of activities underway in the U.S.
commercial construction industry that addresses each
of these areas. Initiatives such as alternate project delivery, ConsensusDocs®, offsite prefabrication, 3D-5D
modeling, laser scanning and GPS and machine controls, are being deployed to improve productivity and
performance.
Contractors are implementing technology at an
increasingly rapid pace. More and more companies
are pursuing and implementing innovative means and
methods to deliver projects as they respond to project
owners' desire for lower costs and schedule certainty.
If McKinsey Global is right in their findings, and the
United States could have the largest impact on closing
the global gap in construction productivity, the good
news is that the race to embracing new technology is
going to help get us there.
With this surge in technology, the construction industry may be on the verge of a productivity revolution. The
results could be far more substantial than we think.

CONNstruction / WINTER 2017 / 7



Table of Contents for the Digital Edition of CONNstruction - Winter 2017

Being Productive
The AGC of Connecticut Foundation: Serving the Industry’s Needs Through Charitable Giving
Productivity, Costs and the Future of Machine Control
Diving Into Unmanned Aerial Systems
Looking to the Future: How Technology will Disrupt and Improve the Construction Industry
Improve Operational Efficiency, Mitigate Risk, and Foster Growth with a Defined IT Strategy
2017 AGC/CT Industry Recognition Awards & Dinner
2017 CRBA Annual Fall Dinner Meeting
2017 Diggers Mixers Fixers: Jim Langlois Memorial Golf Outing
YCF Fall Membership Meeting
Index to Advertisers/Advertiser.com
CONNstruction - Winter 2017 - Intro
CONNstruction - Winter 2017 - cover1
CONNstruction - Winter 2017 - cover2
CONNstruction - Winter 2017 - 3
CONNstruction - Winter 2017 - 4
CONNstruction - Winter 2017 - 5
CONNstruction - Winter 2017 - 6
CONNstruction - Winter 2017 - Being Productive
CONNstruction - Winter 2017 - 8
CONNstruction - Winter 2017 - The AGC of Connecticut Foundation: Serving the Industry’s Needs Through Charitable Giving
CONNstruction - Winter 2017 - Productivity, Costs and the Future of Machine Control
CONNstruction - Winter 2017 - 11
CONNstruction - Winter 2017 - Diving Into Unmanned Aerial Systems
CONNstruction - Winter 2017 - 13
CONNstruction - Winter 2017 - 14
CONNstruction - Winter 2017 - 15
CONNstruction - Winter 2017 - Looking to the Future: How Technology will Disrupt and Improve the Construction Industry
CONNstruction - Winter 2017 - 17
CONNstruction - Winter 2017 - 18
CONNstruction - Winter 2017 - 19
CONNstruction - Winter 2017 - 20
CONNstruction - Winter 2017 - Improve Operational Efficiency, Mitigate Risk, and Foster Growth with a Defined IT Strategy
CONNstruction - Winter 2017 - 22
CONNstruction - Winter 2017 - 23
CONNstruction - Winter 2017 - 2017 AGC/CT Industry Recognition Awards & Dinner
CONNstruction - Winter 2017 - 2017 CRBA Annual Fall Dinner Meeting
CONNstruction - Winter 2017 - 26
CONNstruction - Winter 2017 - 2017 Diggers Mixers Fixers: Jim Langlois Memorial Golf Outing
CONNstruction - Winter 2017 - 28
CONNstruction - Winter 2017 - Index to Advertisers/Advertiser.com
CONNstruction - Winter 2017 - 30
CONNstruction - Winter 2017 - cover3
CONNstruction - Winter 2017 - cover4
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