Improving the productivity of the U.S. construction industry is a long-standing issue and the subject of numerous studies. The 1983 report of the Business Roundtable entitled More Construction for the Money (BRT, 1983) identified an array of obstacles hindering productivity:
Adversarial relationships between owners and contractors, management and labor, union and open-shop workers, business and government;
The lack of accurate information about the industry, its projects, and its labor supply;
Poor safety performance;
Undertrained foremen and poor job-site management;
A lack of training and education for the workforce;
Disinterest in adopting new technologies and a slow pace of innovation;
The lack of management systems;
Collective bargaining agreements and labor practices; and
Government regulations, including building code administration.
The same Business Roundtable report presented 225 recommendations for overcoming the identified obstacles and for saving at least $10 billion annually (1983 dollars) (BRT, 1983). The majority of recommendations involved improving various aspects of project management, including planning, communications, supervision, and personnel and manpower practices. The report also concluded:
Only if the owners who pay the bills are willing to take the extra pains and pay the often small cost of more sensitive methods will they reap the benefit of more construction for their dollars. (BRT, 1983, p. 14)
A 1986 report of the National Research Council (NRC) entitled Construction Productivity: Proposed Actions by the Federal Government to Promote Increased Efficiency in Construction, concluded that research and development (R&D)1 “can help improve productivity, and that construction-related R&D investments have been inadequate in the United States” (NRC, 1986, p. 55).
In 1995, the National Science and Technology Council (NSTC) published a report entitled Construction and Building: Federal Research and Development in Support of the U.S. Construction Industry. The authors envisioned a “competitive U.S. industry producing high quality, efficient, sustainable, and hazard resistant constructed facilities” (NSTC, 1995, p. 2). They posited that by making technologies and best practices available for general use by the construction industry, it would be possible to construct better facilities and improve the health and safety of the construction workforce. Five of that report’s proposed goals were as follows:
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2 Obstacles to Improving Construction Productivity Improving the productivity of the U.S. construction industry is a long-standing issue and the subject of numerous studies. The 1983 report of the Business Roundtable entitled More Construction for the Money (BRT, 1983) identified an array of obstacles hindering productivity: • Adversarial relationships between owners and contractors, management and labor, union and open-shop workers, business and government; • The lack of accurate information about the industry, its projects, and its labor supply; • Poor safety performance; • Undertrained foremen and poor job-site management; • A lack of training and education for the workforce; • Disinterest in adopting new technologies and a slow pace of innovation; • The lack of management systems; • Collective bargaining agreements and labor practices; and • Government regulations, including building code administration. The same Business Roundtable report presented 225 recommendations for overcoming the identified obstacles and for saving at least $10 billion annually (1983 dollars) (BRT, 1983). The majority of recommendations involved improving various aspects of project management, including planning, communications, supervision, and personnel and manpower practices. The report also concluded: Only if the owners who pay the bills are willing to take the extra pains and pay the often small cost of more sensitive methods will they reap the benefit of more construction for their dollars. (BRT, 1983, p. 14) A 1986 report of the National Research Council (NRC) entitled Construction Productivity: Proposed Actions by the Federal Government to Promote Increased Efficiency in Construction, concluded that research and development (R&D)1 “can help improve productivity, and that construction- related R&D investments have been inadequate in the United States” (NRC, 1986, p. 55). In 1995, the National Science and Technology Council (NSTC) published a report entitled Construction and Building: Federal Research and Development in Support of the U.S. Construction Industry. The authors envisioned a “competitive U.S. industry producing high quality, efficient, sustainable, and hazard resistant constructed facilities” (NSTC, 1995, p. 2). They posited that by making technologies and best practices available for general use by the construction industry, it would be possible to construct better facilities and improve the health and safety of the construction workforce. Five of that report’s proposed goals were as follows: 1 The term R&D included investigations and studies dealing with technology, management, administration, cost control, and other nontechnical subjects (NRC, 1986, p. 55). 19
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20 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY • Fifty percent reduction in delivery time; • Fifty percent reduction in operation, maintenance, and energy costs; • Fifty percent less waste and pollution; • Fifty percent more durability and flexibility; and • Fifty percent reduction in construction work illnesses and injuries (NSTC, 1995). Some of the obstacles to improved productivity identified in the 1983 Business Roundtable report and listed above persist, while others have been mitigated through changes in the operating environment. A key message of the present report is that advances in available and emerging technologies offer significant opportunities to improve construction efficiency substantially in the 21st century and to help meet other national challenges, such as environmental sustainability. Chapter 2 focuses on four long-standing obstacles to construction productivity that are most relevant to the task of the NRC’s Committee on Advancing the Competitiveness and Productivity of the U.S. Construction Industry: limited use of automated equipment and information technologies, attracting and retaining skilled workers and recent graduates, the lack of effective performance measures, and a lack of research. LIMITED USE OF AUTOMATED EQUIPMENT AND INFORMATION TECHNOLOGIES Automated Equipment Manufacturing and other industries have realized significant improvements in productivity through automation and greater use of information technologies. Seeking to apply these lessons to construction, large Japanese construction companies invested significant resources to automate and integrate some construction-related tasks in the 1980s and 1990s. They attempted to completely automate and integrate processes and technology, using modularization, just-in-time delivery, robotics, rigid supply chain management, and innovations in connections and assembly methods (in Appendix C, see the subsection entitled “Japan”). Integrated automatic systems composed of numerous robots and other automated components were used to construct steel and reinforced-concrete high-rise buildings, among other tasks. In this Japanese experience, the costs of buying and using some of these technologies were much higher than the costs of using existing practices. As a consequence, robotics and other types of automated systems were not adopted by the industry and are used infrequently. In the United States, the construction industry still relies heavily on manual methods of placement and assembly. The lack of automated technologies can be attributed to a range of factors, including: • Building codes that allow little room for experimentation or innovation in construction technologies; • The unsuitability of conventional manufacturing processes for construction materials; • The operating environment of construction projects (exposure to rain, wind, debris, dust, and so on), which is hostile to automated machinery; • Conventional design practices; • Significantly smaller product batch sizes as compared with those of industries such as manufacturing; • The high investment up front and maintenance costs of automated equipment; and • Increased labor costs for operators and maintenance crews of automated equipment. Despite these obstacles, some advances have been made in construction equipment, in materials- handling systems, and in the development of secondary components, such as windows, or the in-factory
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OBSTACLES TO IMPROVING CONSTRUCTION PRODUCTIVITY 21 production of prefabricated structures. Examples of the types of activities for which available, automated equipment and other technologies can be used on construction projects include the following: • Excavation and earthmoving operations. “Stakeless” earthmoving refers to the use of automated construction equipment (e.g., bulldozers) that can be remotely operated and can use global positioning systems (GPS) and onboard computer technologies. Such equipment can be effective in the excavation and compaction of soils and in paving, because such work areas are often exposed and spread out. Some studies estimate that automated construction equipment can reduce costs and improve productivity by 50 percent for excavation and earthmoving tasks (Purdue University, 2009). Such technologies are being used by large contractors. • Trenchless technologies. These include a large family of methods used for installing and rehabilitating underground utility systems with minimal surface disruption and destruction resulting from excavation. • The placement and finishing of concrete and masonry. Programmable pumps, automated horizontal distributors, and conveyor systems can be effective in the conveyance of concrete. Once the concrete is in place, a variety of technologies are available to perform vibrating, leveling, screeding, cleaning, cutting, and finishing activities. Mobile bricklaying and robotic masonry block installation machines can provide accurate and efficient placement of masonry units, minimizing common risks to worker safety and health while maintaining production. • Fabrication and erection of structural steel. Remotely controlled handling of structural steel provides accurate and efficient movement of steel into place. When welds are needed, automated systems are available to produce high-quality welds at an efficient pace for some types of construction. • Fabrication and installation of concrete and steel pipe. Directional boring equipment is available for installing underground utilities without digging a trench. When large diameter concrete pipe is to be placed, automated pipe-laying systems are available to reduce greatly the exposure of workers to trench cave-ins. Orbital welding allows for the efficient and accurate welding of pipe, resulting in better quality and fewer unsatisfactory welds. • Painting and coatings. Automated technologies can be used to apply paint and coatings to work spaces and areas that may be inaccessible to workers. Such equipment can lessen workers’ exposure to unsafe work conditions and hazardous materials and concurrently improve the quality of the application. • Finishes. Wallboard, prefabricated partitions, millwork, and other finish materials can often be manipulated and installed using automated equipment. Such equipment allows for accurate and efficient installation without exposing workers to heavy lifting and ergonomic impacts. • Site inspection and surveying. Remotely controlled site inspection and surveying equipment can provide accurate information about work spaces and areas that are often inaccessible to workers, such as bridge decks and framing, confined spaces, and deep excavations. In addition to enhancing worker safety, these technologies can provide more accurate information about site conditions, such as the inside of pipes and containment structures. To date, available automated equipment, prefabricated components, and other innovations have been used primarily by large construction companies on industrial and infrastructure projects. Their widespread use by contractors for commercial projects has been hampered by a number of factors, including the costs to own, lease, or operate automated equipment; the limited availability of some automated equipment; and conventional design practices that typically do not consider the use of automated equipment during preproject planning.
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22 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY Information Technologies Major industries other than construction have improved their productivity through the use of information technologies. These include modeling techniques and processes that integrate design, production, and operations activities (interoperability). In the automotive industry, for example, designers first develop virtual models and digital databases for vehicles, complex projects that involve numerous interrelated systems, a variety of materials, and a range of designers, engineers, suppliers, and constructors. Virtual models are used to identify potential design and engineering problems and to fix those problems before any actual product assembly takes place. The virtual models are directly linked to databases containing “intelligent” information (i.e., data that will change in response to changes in the virtual models). Some of the benefits of these models are better data for real-time decision making, improved design quality, shorter delivery times, and the reduction or elimination of rework after assembly has begun (Jones, 2009). A variety of software applications and information technologies have been developed to support interoperability (also called Building Information Modeling, BIM) within the construction industry. Among these are the following: • Virtual design models. These models are used to visualize and plan for architectural, structural, mechanical, and site components. Three-dimensional virtual models can be used to detect potential design omissions so that they can be fixed before actual construction begins. This is important because the total costs of a project and the time to delivery can increase significantly when design errors or omissions must be fixed in the field. • Energy models. These models are used to optimize the design for heating, cooling, ventilation, and lighting within a building. • Construction and scheduling models. These models provide for the efficient sequencing of project-related activities, work crews, equipment, materials, and supplies. • Cost estimating models. These models can be linked to various building components, offering the opportunity for consideration of the cost implications of using different materials, equipment, and construction techniques in the planning stage. They can also be used in a later phase of a project to respond to changing conditions. For example, if a project is running over budget, such a model could be used to determine whether less expensive materials or other components could be substituted to save money. • Ingress and egress models. These models allow a designer to populate a building virtually in order to plan for the most efficient activity flows, use of space, equipment placement, and evacuations during emergencies. • Supply chain management technologies. Examples include radio-frequency identification (RFID) tags to track materials as they leave suppliers’ premises or to locate them on-site. • Laser scanning. Laser scanning for existing structures is used to create virtual models that can be used for life-cycle management. BIM has been used for industrial projects for some time. A growing number of architectural and engineering firms are developing interoperable applications for other types of projects. However, the use of BIM applications varies significantly among architects, engineers, general contractors, and subcontractors (Jones, 2009). The applications and technologies are only rarely integrated across all phases of a project, and thus their benefits are not fully optimized. In addition, barriers remain in developing fully operable systems, including legal issues, data-storage capacity, and the ability to search thousands of data items quickly to support real-time decision making. The lack of interoperability within the capital facilities sector of the construction industry has been estimated to result in $15.8 billion in inefficiencies and lost opportunities every year (NIST, 2004).
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OBSTACLES TO IMPROVING CONSTRUCTION PRODUCTIVITY 23 ATTRACTING AND RETAINING SKILLED WORKERS AND RECENT GRADUATES The typical image of the construction workforce is that of people working in the field on a construction project: equipment operators; concrete workers, ironworkers; carpenters, electricians, drywall installers, masons, and other craftspersons; project managers and foremen; and manual laborers. However, the planning, design, construction, and operation of capital facilities and infrastructure also involve many skills and disciplines not typically thought of as applying to “construction work”: planners, architects, engineers, interior designers, furnishing and materials suppliers, and project owners. Attracting and retaining skilled craftspersons and foremen, engineers, and project managers are long-standing issues within the construction industry. The challenge of workforce recruitment is rooted in the image of the industry: To the casual observer, construction work appears to be physically exhausting, low-tech, dangerous, and tedious (BRT, 1983). The construction industry is, in fact, one of the most dangerous industries for workers in the United States, with the fourth-highest rate of fatalities in 2005 (after agriculture, mining, and transportation) and the second-highest rate of nonfatal injuries and illnesses (after transportation) (CPWR, 2007).2 In 2007, the death rate of construction workers from work-related causes was nearly three times that of full-time workers in other industries. In 2005, construction workers experienced about 76 percent more days away from work owing to injuries or illnesses than did workers in other industries (NRC, 2009). Nonetheless, these numbers represent significant improvements in construction safety. Between 1992 and 2005, construction-related fatalities declined by more than 22 percent overall. The rate of injuries and illness also appears to have dropped significantly, possibly by a factor of two, although measurements are difficult because of the segmented nature of the industry. The driving force behind these improvements were project owners that demanded improvements of their contractors and changed the culture from one which accepted that “Construction is inherently dangerous—accidents happen” to one in which there is a belief that “Zero accidents are achievable” (NRC, 2009). The owners’ efforts were aided by improved equipment and research conducted by the National Institute for Occupational Safety and Health and others (NRC, 2009). The low-tech image of the construction industry is a deterrent to the recruitment and retention of skilled workers and of recent graduates in engineering and project management who are essential to the successful development of capital facilities projects (see the discussion in Appendix E). A shortage of skilled workers in construction is particularly problematic for the future. The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) has projected that 780,000 new construction jobs will be created between 2006 and 2016 (BLS, 2007), a pace of about 1 percent per year.3 The demand for construction workers will be driven in part by demands for energy, transportation, clean drinking water, and safe wastewater removal, and for new buildings to support commerce, education, recreation, and a growing population. By 2030, the U.S. population is projected to grow by 30 million people (U.S. DOC, 2009), all of whom will require shelter, workplaces, schools, and the services provided by infrastructure systems: power, water, connectivity, and mobility. Unless enough skilled workers and recent graduates can be attracted to and retained by the construction industry, or unless new labor-saving technologies are used by a majority of large firms, it will be difficult for U.S. companies to meet future demands for construction projects efficiently. 2 Hazards for construction workers include working at heights, in excavations and tunnels, on highways, and in confined spaces; exposure to high levels of noise, to chemicals, and to high-voltage electric lines; and the use of power tools and heavy equipment. Significant health risks include hearing loss, silicosis, musculoskeletal disorders, skin diseases, and health effects associated with exposures to lead, asphalt fumes, and welding fumes (NRC, 2009). 3 This compares with declines of 1.1 percent per year for jobs in manufacturing and 0.6 percent per year for utilities, and increases of 0.7 percent and 0.4 percent per year for wholesale and retail trade, respectively (BLS, 2007).
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24 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY LACK OF EFFECTIVE PERFORMANCE MEASURES Metrics and performance measures are enablers of innovation for industries and for individual companies. The importance of metrics to improved productivity is captured in the often-repeated phrase “You can’t improve what you don’t measure.” One method used by industries to measure changes in productivity and efficiency is to set benchmarks by collecting data for various facilities, processes, and practices. In the automotive industry, for example, an annual report by Harbour Associates measures various automotive plants using statistical sampling techniques. The resulting statistics and metrics are made available to all automobile manufacturers so that they can compare the efficiency of their plants and processes with the efficiency of their competitors and see where they need to improve. Through this benchmarking program, General Motors, for instance, was able to cut the number of hours that it took to produce a vehicle by 30 percent between 1998 and 2006. Similar levels of improvement have been achieved at other companies. The Harbour report has become a source of performance measures and benchmarks for vehicle manufacturers around the world. Construction firms do not have a single source of metrics for comparing the efficiency of their projects and processes, or for assessing their competitive position. Various data are gathered by a number of public- and private-sector organizations to measure construction productivity at the industry, project, and task levels. However, the definitions and measures for productivity vary. Some of the conflicting findings about the direction of construction productivity among industry-level, project-level, and task- level data may also be related to the accuracy of industry measures, in particular to the inflation indexes used to measure industry real output (see the section entitled “Introduction” in Appendix D). As noted in Chapter 1, there is no single, official index or measure for the productivity of the construction industry. Factors that contribute to this situation include the lack of adequate data, the lack of consensus on appropriate measurement techniques, and the lack of consensus on the value of these measures. The BLS, for example, bases productivity measures for many industries on labor productivity as the ratio of the value of output produced for sale to labor hours worked. Although data for the labor hours worked in construction are available, the BLS does not produce productivity measures for construction because there is no consensus on how to determine the output for sale (e.g., square feet of office space, number of residential units, miles of road paved). Productivity-related data for construction are also collected by the U.S. Census Bureau, which conducts an economic census every 5 years. The census includes data for value of construction work (defined as value of construction produced for sale) and value added by industry (defined as value of construction minus the costs related to subcontracts and materials used). The U.S. Census Bureau also publishes the monthly Construction Reports Series C30, which contains several measures of construction, including the value of construction put in place (defined as a measure of the value of construction installed or erected at the site during a given period) by type of construction (e.g., commercial, industrial). Using these two federal databases to measure industry-level productivity is difficult because the BLS data are categorized using the North American Industry Classification System (NAICS), but the U.S. Census Bureau’s data are not. Project-level metrics can be used to measure how an individual project compares with other, similar projects (e.g., other school buildings, other oil refineries, other power plants) in terms of total cost, delivery time, labor hours, or other factors. Project-level data are a function of individual components (e.g., materials, systems), processes (e.g., type of contract, type of project delivery system), and tasks. Some project owners and contractors collect this level of data, but the information is not always shared with competitors, making it difficult to establish benchmarks for the entire industry. One venue where project-level information is shared is the Construction Industry Institute (CII). CII collects project-level data from its member companies as part of its benchmarking and metrics program. Participating CII members have access to that database, which they can use to benchmark their projects against other companies (the data are “scrubbed” to delete company and project names). CII allows nonmember companies access to these data at a nominal fee. Similarly, the private-sector firm
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OBSTACLES TO IMPROVING CONSTRUCTION PRODUCTIVITY 25 Independent Project Analysis (IPA) collects proprietary, project-level data that can be used by clients willing to pay for it. Task-level metrics are leading indicators and are commonly used by contractors and subcontractors who must evaluate the efficiency of their workforces on a daily or weekly basis and make adjustments so that problems on active projects can be detected and corrected quickly. Tasks refer to specific construction-related activities, such as the placement of concrete or the installation of mechanical systems. Most task-level metrics include explicit measures of output for specific tasks and the labor hours required to complete the task. CII also collects task-level data for participating firms. These metrics are collected for actual projects and undergo validation checks to improve their accuracy. Such data are available to nonmember companies for a fee. Estimation manuals containing task-related data are published for sale by the R.S. Means Company. These manuals often focus on how much of a given output is produced by a work crew in an 8- hour period. The estimates are based on data collected for construction projects in various cities across the country and are not considered to be as accurate as task-level data collected by individual construction firms (see the discussion in Appendix C). Owners, contractors, and subcontractors are most likely to use these estimation manuals when they do not already have data based on their own projects. LACK OF RESEARCH The U.S. construction industry does not have an industry-wide research agenda that identifies or prioritizes research areas with the most potential for improving its productivity, its competitiveness, or its efficiency. This lack is in contrast to the case in other developed countries. South Korea, for instance, has a national technology research program focusing on construction automation. The European Union has several construction management and technology initiatives under way with the purpose of driving innovation. Sweden, Japan, Canada, and the United Kingdom also have major ongoing initiatives for construction-related research (see Appendix C). Whether these strategies will result in a greater share of the global market is not yet known, but if successful, they will likely make foreign construction firms more competitive with U.S. firms when bidding for both domestic and international projects. Estimates of the total amount of money being invested in construction-related research in the United States are difficult to come by owing to the fragmentation of construction-related research. Basic and applied research are being conducted by a few large owners, a few large construction companies, construction suppliers, equipment manufacturers, universities, professional societies and industry organizations (e.g., CII, the Construction Users Roundtable), and some government agencies (e.g., National Institute of Standards and Technology, the Department of Defense, the National Institute for Occupational Safety and Health and the National Science Foundation). A 1994 study reported that all key construction industry stakeholders combined invested in R&D at a rate that was equal to 0.5 percent of the value of construction put-in-place (CERF, 1994). This would translate to about $5.5 billion in 2005. To put this amount in perspective, private-sector investments in R&D for manufacturing, an industry roughly 2.5 times the size of construction, were 25 times higher, at nearly $143 billion, in 2006 (NSF, 2008). The level and fragmentation of construction research funding also means that few organizations can single-handedly take on research projects that involve more than a few million dollars. The lack of an industry-wide strategy to coordinate and prioritize research activities quite likely means that those research dollars and resources that are available are being suboptimized.
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