Innovation
Thomas C Schleifer, Ph.D.
The construction industry has changed at its core. Most of the labor force that delivered construction services to the nation has retired and taken their unique level of expertise, productivity, and efficiency with them. Those of us left behind are charged with recreating our industry. We need to determine how we will deliver a renewed level of productivity, and efficiency to a legacy industry that tends to become “stuck in its ways”.
Resistance
When a trend is firmly in place resistance is counterproductive and costly. I’m reminded of the sixties when I saw signs on the counter in stores and restaurants that read, “We do not accept credit cards”. Those stores are gone. (Survivors adapt.)
- In the seventies, many large companies were resisting transferring their files onto computer. They weren’t sure about this whole thing. What if the computer breaks and our files get wiped out. Maybe we should maintain paper files also. Resisting the computer age cost millions of man-hours and dollars.
- In the nineties it was the internet; good for communicating and searching but what about putting company information on there? Who knows where it goes?
- And then at the millennium there was a powerful computer to carry in our pocket. A “cellphone” that many resisted for years or tagged along reluctantly.
Adaptation
Adaptation requires innovation – Innovate: to make changes: do something in a new way which in construction usually involved tools and process. However, adapting to the change in construction’s labor pool profile means innovating on multiple levels: Planning, Personnel’ Procurement, Process, and Productivity
Planning
Growing our business and securing its future can no longer depend on winning the low-bid contest for future jobs. With a diminished labor pool, our capacity to complete work within contract requirements has been diminished. We can best adapt to this new reality by focusing on our company’s expertise and only chasing work we are confident we can complete on time and on budget. In other words, our reputation for quality and consistency will become our engine for growth. Adapt to this new industry reality by planning to become preferred rather than a low bidder.
Personnel
Poaching employees from competitors with higher wages is resistance. There are some innovations in personnel that will help us adapt to this new labor pool profile:
- Lobby government to establish industry positive immigration regulations and to make community college construction trade programs and independent trade schools affordable to qualified applicants. Our collective industry might consider subsidizing these programs if necessary.
- Aggressively recruit and welcome women into the trades. Police departments across the country adopted this tactic many years ago with positive results. The present National Association of Women in Construction includes 120 chapters and more than 4,000 members. However, women make up only about 9% of the construction industry’s workforce, compared to 75% of the education and health services industry. If together we could raise that participation rate from 9% to 19% imagine how far that would go in adapting to a shrinking labor pool.
- Leverage the collective energy of trade associations in a new direction. Contractors actively participate in trade associations but rarely participate in their mission. Trade associations can support community colleges, lobby for industry friendly immigration regulations, and design and administer trade specific apprentice programs.
- In the union environment establish positive relations with them. They specialize in supplying personnel to our industry and are well suited for the present task.
Procurement
With a limited labor force getting the work is no longer the simple tried and true process of competitive bidding for jobs available in your local market.
- Without the traditional availability of an ample labor supply, construction professionals must adapt by taking a more critical look at their internal capacity to deliver the prospective job on time and on budget.
- We can no longer assume that the labor supply can fill the demand. The traditional method of hiring trades people as needed must be reversed to fitting jobs to capacity.
Process
Forward-thinking firms are now embracing the process of connected construction where various project teams use technologies that support collaboration and information-sharing to improve workflows and productivity. Disparate construction teams must begin to collaborate throughout the project lifecycle to improve efficiency. Our cost challenges depend on it.
Productivity (Output per man hour of input)
With fewer man hours of input available to the industry only innovation in tools and process can sustain or increase present levels of productivity. Construction tech funding hit a record high of $2.1 billion in 2021 – a 100% increase from the previous year. Recent Innovations that turbo-charge productivity include: CAD – Computer-Aided Design, BIM – Building Information Management, Prefabrication, Robotic Total Stations, AI and Machine Learning, Workforce Management Software, 3D printing, AR, VR, and the Metaverse, Advanced Takeoff and Estimating Tools, Sensor Data that monitors site conditions, tracks materials, improves worker safety, to name a few.
Adaptation begins with innovation which implies change which is uncomfortable. I suggest rather than thinking of adaption as change, think of it as “getting in sync” with what has already changed.
Next week how and why the industry is changing in other fundamental ways.
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