Productivity Is Down. Now What?

The construction industry is largely based on a simple system: estimates. In fact, it is so simple it might even be slightly unnerving. Imagine if you asked your heart surgeon for a quote and the doctor said, “I think we could knock out that blockage in about seven hours.” The more discomforting feeling would come if the doctor underbid the project just to keep the nursing staff busy and then didn’t finish the job on time because they ran out of materials.

However, the construction business uses the system of estimation to create budgets and productivity rates. These rates are established from some historical record and ultimately create the basis for crew sizes and field goals or targets.

It is common to hear that a crew’s productivity is down. This should hardly be shocking since the budget was simply an “estimate” and not an “accurate.” When we hear that productivity is down, what does that even mean? When we analyze this decrease in productivity, is the root cause the on-site crew’s inability to get out of their trailer recliner, or was it something further upstream?

Often, we see the downstream effect of productivity losses in the form of margin erosion, direct cost overruns and missed deadlines. It is also easy to focus on the immediate reasons for failing to efficiently use labor and equipment properly — lack of information, lack of people, supply chain issues, poor engineering/design, poor coordination, etc. These barriers make up the lion’s share of complaints from field leaders, which may or may not have credibility.

However, the inadequacies of some drawings and poor timing of information are the equivalent of a football commentator exclaiming, “If the quarterback hadn’t fumbled in the end zone, the other team wouldn’t be up by a safety.” Root cause identification and real operational tactics and strategies are the right measures to take. Put another way, “Why was productivity decreased? Why were drawing errors not addressed? Why was the supply chain not examined?”

Proper planning sounds trite and somewhat remedial, however, too many firms think they are planning their projects, but are actually just sending their teams to the field and hoping for the best outcome. They know the barriers that will inevitably manifest themselves, but have a sense of misguided optimism that shadows them. A quick litmus test for your organization would be:

• Framework — Does your firm have a series of processes and firmwide tools that every project utilizes on a routine basis?
• Structure — Does your structure complement these processes, or does your operational framework require team members who are overworked, or equipment that is overutilized to require the Goldilocks mentality? (i.e., everything is just right and perfect on this project)
• Performance scoreboard — Can the team see the scoreboard, and do they know the score without questioning the integrity of the scorekeeper?
• Installation — Are installation guidelines being created by the teams, and are they being referenced throughout the estimating process?
• Real-time feedback — Can team members see their performance, and do they frequently receive constructive feedback to help move the needle?

These questions are meant to serve as an internal checklist and help answer the burning questions of productivity inefficiencies. For instance, consider the common refrain of, “We never have our materials when we need them.” On the surface, it may look like the person handling the material procurement and deliveries is asleep at the wheel. However, ask yourself these questions instead:

• Do the field leaders have a process for planning their day, week and project proactively?
• Is this process and framework consistent across the field?
• Do the field leaders have the right support from the office?
• What are the expectations and guidelines for purchases and deliveries?
• How far ahead are purchases, both large and small, being made?

At first blush, the issue may have been attributed to a weak warehouse/yard when, in fact, it may have been the field’s inability to plan. Furthermore, there may not yet be a process in existence to help the field plan effectively. Hence the root cause lies in the firm’s failure to provide the right productive infrastructure. Similar questions should be asked about the other contributing factors:

• “We can’t ever finish on time.” Are resources moved too quickly toward the end of a project? Is there a strategic approach to closeout?
• “Our subs never show up when we need them.” Do you have a real coordination plan to prepare subcontractors? Do your field leaders set up the trades to be successful or do they call with little to no lead time?
• “Our estimators never give us enough time.” Does your firm have a process after a project to evaluate production and productivity rates? Does your firm allow for field input in the budgeting process?
   

Unfortunately, there are plenty of productivity detractors that can impact project performance. This is only compounded by a firm’s body of work and multitude of projects. It is also easy to be distracted by the noise and focus on the wrong things.

Most importantly, as markets shift, now is the time for a call to action on the drivers of superior productivity.

Too many organizations are willing to pad estimates with unrealistic values under the auspice that there will be a detractor or barrier. What happens when the market is saturated with competent and not-so-skilled competition, and there is no more tolerance for a bid safety net?

The call to action is posted — how will you drive operational effectiveness in your firm?