“The Alarming Cost of Labor Productivity Losses in Construction” by Dr. Sarah Buchner published in Construction Executive
"The Alarming Cost of Labor Productivity Losses in Construction" featured in Construction Executive Magazine
“Skilled construction professionals have mastered the art of balancing construction’s four M’s–money, manpower, machines and materials. Despite advances in capital management, machines and materials, managing construction labor is still a people challenge. This industry relies on manpower to turn blueprints into tangible structures, operate machines and interpret documents. Inefficiencies in labor are the leading cause of recurring waste on construction projects, and the impact continues to grow.
DECLINE IN LABOR PRODUCTIVITY
Labor productivity, crucial for the financial health of labor-intensive contractors, is declining. A University of Chicago examination of Bureau of Economic Analysis data found the value that each additional worker added to construction was 40% lower in 2020 compared to 1970. Polls support this trend: Nearly 50% of construction professionals believe labor productivity has declined in the past decade. A recent McKinsey study on labor productivity in construction shows that over the past two decades, construction labor productivity has remained stagnant—at 1% annual growth—contributing to high costs and project delays.
This decline suggests underlying systemic issues in planning, communication and collaboration—all of which are crucial for efficient project execution. Furthermore, 79% of contractors believe they could improve labor productivity by at least 6% with better management practices. This improvement could lead to a 50% increase in profitability, highlighting the direct connection between effective labor management and financial success.”
About Construction Executive
Construction Executive is the magazine for the business of construction. As the leading source for news, market developments and business issues impacting the construction industry, CE’s articles are designed to help owners and top managers run a more profitable and productive construction business.