October 30th, 2017Posted in: What Makes us Itch
This is one of those terms you learn while wasting time on the web.
For those of you who don’t know, a Klazomaniac is a person WHO CAN ONLY SPEAK BY SHOUTING.
And that’s how I feel every time I find myself talking about how broken and outdated the construction industry is.
Imagine, paying to have a horse-drawn buggy designed then awarding the building contract to the lowest bidder and expecting to get a state-of-the-art automobile.
Imagine, ordering a steak in the finest of restaurants and being charged extra to have it cooked.
Imagine, booking a flight for your holiday and discovering after you’ve taken off that the captain doesn’t know how many layovers will have to be made, let alone if you’ll arrive at your final destination.
If you can’t imagine any of these scenarios, it’s because any industry that would operate so haphazardly would soon be out of business.
Now, consider the current state of the construction industry – alongside a couple of plugs for what is possible — courtesy of the McKinsey Global Institute, circa February 2017.
» The construction industry employs about 7% of the world’s working-age population and is one of the world economy’s biggest sectors.*
» Construction has evolved at a glacial pace over the last half century, garnering last position in Europe and second to last in the United States, according to MGI’s digitization index. That translates into least productive, by the way.*
» Labor-productivity growth in construction has averaged only 1% a year over the past two decades, compared with growth of 2.8% for the total world economy and 3.6% in manufacturing.*
» For every 4 tradespeople retiring from the construction industry, the latter is only able to attract 1 new employ.
» Almost every construction project suffers from overruns in cost and time. (Boy, am I tired of hearing this – it makes me feel like yelling!)
» If construction productivity could catch up with that of the total economy – and it can – this would boost the sector’s value by an estimated $1.6 trillion dollars globally, adding about 2% to the global economy.*
» Parts of the industry (aka, interior build outs) could move towards a manufacturing inspired mass-production system, in which the bulk of a construction project is built from prefabricated components off-site, in a factory. Examples of firms that are moving in this direction suggest that a productivity boost of five to ten times is possible.*
In summary, we’ve had the technology to reinvent the construction industry for some time now. Owners would be the main beneficiaries of improved productivity, and could bank on:
- Superior schedule reliability
- Cost certainty
- A better-quality product, as the current model is based on expensive labour and cheap materials.
What’s the catch? The catch is that real transformation cannot happen until all players in this complex system decide to move.
So, the question is, how to get things moving? For starters, we could emphasize upfront planning and design. You cannot design to an old model and expect forward-looking results. Secondly, in the opaque marketplace of contracting, where contractors and trades are more focused on trying to improve their margins through change orders and contract loopholes than through improved productivity or better integration and smarter use of technology, we should ask the obvious: is the lowest bid an effective model for measuring the value of what you will receive?
If the lowest bid is based on an antiquated model or method of construction, does the lowest bid have any bearing on what you could actually buy?
Once the project is built and the trades have washed their hands of it, what does the lowest bid leave you, the owner, with — an antiquated facility that can’t adapt to change?
If that’s the case, we can guess at who’ll be yelling next.
*Quoted from McKinsey & Company’s 2017 report, “Reinventing construction through a productivity revolution.”