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Construction: how to turn 36 seconds into $5.4 billion US

“Fundamentally, construction is about generating value. A good final product for the client and users, and an efficient process for contractors, so they can earn money.”


July 11, 2020
By Anthony Capkun

“The building management team have the greatest influence on efficiency, and thereby on how much money is earned,” says Hasse Neve (right) who, together with Professor Søren Wandahl (left) and others, is behind new research that shows how to change productivity development in the construction industry. Photo: Anders Trærup.

July 11, 2020 – A team of researchers from Aarhus University (Denmark) claim they have—for the first time ever—linked 40 years of productivity data from the construction industry with the actual work done, and the results show productivity has been declining since the 1970s.

“This is a clear and cut business case and a helping hand for decision-makers in the construction industry; if the country’s contractors are to make more money, they need to optimize processes,” said Hasse Neve, carpenter, M.Sc. in Engineering, Ph.D. and researcher in construction industry productivity at Aarhus.

“Since 1972, we’ve continuously gotten less and less out of every hour of work. Construction sites have simply become less and less efficient because more time is spent on non-value-adding work,” said Neve. “Ultimately, this means that we spend more and more working hours on a single construction job. Therefore, our contractors do not earn as much money on construction as they could.”

To illustrate the value the construction industry could generate were more time spent on value-adding work, Neve has calculated what just 36 more seconds per hour (for builders) spent on generating value could mean for the construction industry’s gross domestic product in Canada and the U.S.: 5.4 billion dollars annually.

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Neve emphasizes it is primarily the construction management—not the builders—who are responsible for, and can influence, how a building site operates and, by extension, whether work is carried out efficiently.

In the study, the research team used national productivity statistics from the construction industry and work-sampling studies (observational studies of the work performed) from the U.S. and Canada. The studies were carried out between 1972 and 2010.

(The reason no Danish or European data were used is simply because not enough work-sampling studies have been completed in Denmark and Europe.)

“Although there is a degree of uncertainty, this shows what a society could earn by simply spending one percentage point more time on value-adding work on construction sites. But the vast majority of sites can be optimized even more, thus the numbers could be huge,” Neve insists.

“Fundamentally, construction is about generating value. A good final product for the client and users, and an efficient process for contractors, so they can earn money.”



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