Construction industry (2/2): What to do about productivity

The previous article explained how, as yet, productivity in the construction industry is not especially impressive.

Main reasons for the industry's poor performance include extensive regulation, dependency on public-sector demand, high fragmentation, and insufficient investment in skills development and innovation.

Now we will see what might improve the situation.

Illustration

The Reinventing construction: A route to higher productivity report by McKinsey Company suggests higher productivity in this sector could be achieved by the following measures:

  • changes in regulation and adjusting the contractual framework to make the industry dynamics more suitable for productivity growth
  • improvements in procurement and supply-chain management as well as onsite execution
  • introducing solutions based on digital technology as well as adoption of new materials and advanced automation

Mass construction will bring a massive productivity boost

Mass manufacturing can be an inspiration. It is not hard to imagine construction projects that are based on the use of standardised and prefabricated components. Up to now, this approach has been adopted only to a limited extent; potentially, however, a productivity boost of five- to tenfold is possible.

There is evidence that some countries are becoming more active and want to help the construction sector achieve higher levels of productivity. They are changing regulations in order to stimulate development.

Contribution of new technology

One thing that can reinforce these efforts is demand, which is, generally speaking, on the rise. Moreover, the number of both players and projects is increasing in many parts of the world.

The cost of technology and digital tools is falling, which means productivity-enhancing tools are becoming more accessible. And since labour costs will go up, adoption of productivity-enhancing technologies will be much more welcomed.

-jk-

Article source McKinsey & Company - global management consulting firm
Read more articles from McKinsey & Company

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