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By TBH Director, Meiske Sompie
The construction industry has long grappled with a persistent productivity problem that has hindered its growth and efficiency.
Despite being one of the largest sectors in the global economy, accounting for about 13% of worldwide GDP, construction has struggled to achieve productivity gains comparable to other industries.
Over the past two decades, labour productivity growth in construction has averaged only 1% annually, significantly lagging behind the 2.8% growth seen in the total world economy and the 3.6% in manufacturing. This productivity gap has far-reaching consequences, leading to project delays, cost overruns, and an inability to meet the growing demand for infrastructure and housing.
In this article, TBH Asia Director Meiske Sompie, discusses the root causes of this problem and how improvement can be achieved.
Worldwide productivity forecasts
Over the next 15 years, the global economy is predicted to experience a significant expansion, with its current value of US$4 trillion set to skyrocket to US $14 trillion.
This tremendous growth will be powered by diverse economies, with China expected to contribute US$1.5 trillion, a sizable chunk. However, the fastest-growing economies during this period are predicted to be the Philippines, Vietnam, Indonesia, and Malaysia.
Each of these countries has unique factors that will influence their construction and infrastructure needs and capabilities, and key development areas such as transportation (roads, railways, airports, seaports), energy generation, urban development, sanitation, water supply, and waste management.
India, recently confirmed as the world’s most populous country, will also have a massive impact on the global economy. With a population of over 1.3 billion, India has a vast labour pool and a burgeoning middle class, which is expected to drive its economy forward.
India’s government actively encourages foreign investment and ease of business, creating a favourable environment for businesses to grow and thrive.
The government’s focus on attracting foreign investment and easing business operations will likely stimulate construction activities, particularly highways, railways, and energy facilities, all of which will be critical to support the expected industrial growth and urban expansion.
Singapore, as a highly developed economy, is exploring how technology can be used to boost productivity levels.
As a world leader in technology and innovation, Singapore – where TBH’s Southeast Asian business is headquartered– is well-positioned to take advantage of technological advancements in artificial intelligence, robotics, and automation, which will increase productivity and lead to more efficient construction practices, reduced labour costs, and improved project timelines.
The ability to integrate innovative technologies and effectively plan and execute large-scale infrastructure projects productively, will be crucial in realising the potential of this simultaneous global economic growth.
Broader Global Challenges Affecting Productivity
The world right now is undergoing a period of rapid change that is sometimes referred to as the Fourth Industrial Revolution. While exciting, this also poses various challenges to companies in every industry.
Political instability, economic downturns, pandemics, war, and labour shortages are just a few examples of broader global challenges that can affect productivity. These geopolitical shocks can disrupt the supply chain, cause economic turmoil, and leave businesses struggling to adapt to the rapidly changing environment.
Inflationary pressures and price escalation are also significant concerns that impact the bottom line. These supply chain disruptions can lead to delays and severely impact the availability and timely delivery of goods and services.
Skilled labour shortages are also a growing problem, making it challenging for companies to find qualified workers to fill open positions. To attract and retain workers, organisations must offer increasingly competitive salaries, provide staff with training opportunities, and work to ensure a positive and safe work environment.
While some measures can mitigate these effects, such as tenting or enclosing work areas, the impact of extreme weather events cannot ever be totally eliminated.
Boosting Productivity with Technology
An Australian construction industry report ‘Disrupt or Die’ found the gap between the productivity of the sector and that of other industries has grown significantly over the past 31 years. The report noted that despite technological advancements and the availability of digital tools to workers, the industry has failed to innovate and adapt as quickly as others.
This information is nothing new to insiders. The construction industry all over the world is known by many for being one of the worst performers when adopting digital technologies. This resistance can stem from a lack of awareness about the benefits of digital tools or concerns over the disruption caused by new ways of working. Either way, it has been a significant factor in the lagging productivity rates seen globally in the last decades.
As a result of the necessity to improve project outcomes, financial performance, and productivity at large, many countries in Asia have significantly improved their productivity by investing in digital training and development programs. This has impacted millions of people’s lives, helping to lift many out of poverty in recent decades.
Technologies such as data analytics, construction management software, and mobile apps are increasingly being utilised within the industry to not only streamline operations but also enhance the efficiency and accuracy of tasks.
The integration of Building Information Modelling (BIM) and the use of digital twins are becoming more commonplace, providing a more detailed and dynamic overview of projects, which helps in reducing errors and improving project delivery times.
Singapore especially has been proactive in addressing the digital skills gap and promoting technology adoption in the construction industry. The Productivity Innovation Project (PIP) incentive scheme co-funds up to 70% of the costs for technology adoption and innovations that improve productivity at construction sites.
Integrated Project Controls for Better Productivity
McKinsey estimated a potential increase in annual global economic output by $1.6 trillion if the construction industry’s productivity was to catch up with the total economy. This demonstrates the global scale at which productivity improvements could impact economic output and efficiency.
There is no simple solution to improving productivity in construction – but a considerable amount of time, money and tension could be saved if unnecessary delays and costs were eliminated by implementing a more effective combination of people, technology, and processes.
Integrated Project Controls are “the tools, systems, and processes” that help make a project get completed on time, within budget, and at the required quality.
Integrated project controls provide a unified framework for monitoring and controlling projects throughout their lifecycle to prevent budget overruns, scheduling delays, and costly mistakes that could derail a project.
A few key ways integrated project controls can improve productivity on construction projects are:
Data-Driven Decision Making
Inadequate planning for the procurement and logistics of materials and equipment can result in delays as teams wait for critical resources to become available.
By using digital tools, real-time project data and analytics, project managers can make informed decisions based on facts rather than assumptions.
Tools like project management software (e.g., Primavera P6, Microsoft Project, Cost X) can help with detailed time and cost planning and scheduling, identifying critical paths, and optimising resource allocation.
Effective Planning and Scheduling
When projects lack thorough upfront planning, they are more susceptible to schedule slippage which affects performance. For instance, failing to conduct detailed site analysis and design reviews can lead to discoveries of unforeseen site conditions or design flaws during construction that can necessitate lengthy rework and adjustments that delay progress.
By creating detailed project plans, schedules, and budgets right from the start, Integrated Project Controls allows for better coordination, resource allocation, and sequencing of activities, leading to more efficient execution and minimising delays and rework.
Real-Time Monitoring and Control
Data from sources such as cost management, scheduling, risk management, and progress tracking can be integrated to provide real-time visibility into project performance, enabling proactive identifying and resolving of productivity lags before they escalate.
Scope and Change Management
Changes to scope can be evaluated for their impact on productivity, cost, schedule, and resources, allowing for informed decision-making. This minimises scope creep, which is a major productivity drain in construction projects.
Risk Mitigation
By identifying potential risks early and developing mitigation strategies, projects can avoid costly delays, rework, and disruptions that hamper output.
Improved Collaboration and Communication
An integrated approach ensures everyone is working towards the same goals, reducing conflicts, rework, and miscommunication that can impede productivity.
TBH’s IPC Methodology
The construction industry can significantly benefit from adopting Integrated Project Controls (IPC) to enhance project performance and cost efficiency.
By challenging outdated management practices and encouraging proactive decision-making, Integrated Project Controls allow for early detection of risks and course correction before they escalate into major impacts on cost and schedule.
TBH’s method of integrating people, processes, and technology ensures that projects are delivered efficiently, on time, and within budget, thereby enhancing overall productivity and project success. This proactive approach allows teams to identify areas for improvement and execute corrective actions regularly, ensuring continuous workforce productivity and the ability to handle challenges as they arise
For more information on TBH’s Integrated Project Controls services get in touch with us using the form below.
About Meiske Sompie
Meiske is a qualified and experienced Project, Program, and Portfolio Specialist with more than 20 years of experience in providing advisory services in Planning and Control, Governance & Delivery framework and Project Management.