Today’s building projects are more complex than ever with the vast majority of projects experiencing chronic cost overruns and schedule delays. A recent report published by McKinsey & Company reveals that most large construction projects “take 20 percent longer to finish than scheduled and are up to 80 percent over budget.” According to another study conducted by the “Economist” over 90% of all global infrastructure, projects are either over budget or late.
Such findings make it clear that the U.S. construction industry is at a critical tipping point – everyone involved in construction today is aware of the inefficiencies associated with construction when undertaken in the traditional, onsite, way. Many people have started to think about what changes can be made to the actual construction process, and how it can be made less costly, less prone to delays and change orders, and more efficient and more productive.
What most folks do not consider, however, is that the pre-construction process may be even more inefficient than the construction process.
At Deluxe, we realized that fixing the inefficiencies in the construction process, without giving equal weight to a thorough re-examination of the pre-construction process, would only achieve a partial solution – and that was not good enough.
So we took it upon ourselves to undertake an exhaustive review of the pre-construction process and identify the inefficiencies and friction that could be removed in order to find ways to enhance, improve, and streamline the pre-construction phase so that our clients can benefit from improvements across the entire construction spectrum.
To better understand what needs to be improved, though, we need to understand the issues facing the industry which have brought us to this point.
The Loss of Labor Productivity
Over the past 50 years, productivity in construction has fallen significantly with a loss of 19%, while all other non-farm production has increased by 153% during the exact same period. A lack of skilled workers, combined with a lack of incoming talent, has negatively impacted construction adding time and cost too many projects.
As a result of the “Great Recession,” more than 1.5 million construction workers left the industry, with less than half of them returning to the workforce. On top of that, fewer millennials aspire to join the construction industry, leading to fewer young workers replacing the older workers as they retire. Until more high school graduates and young adults entering the workforce start choosing the construction trades, the industry will continue to experience severe labor shortages.
This labor shortage is also vulnerable to political conditions. Recent estimates suggest that 30% of the U.S. construction workforce is comprised of undocumented immigrants, and in California and Texas that number grows to 40%. This supply of labor has been significantly curtailed and will likely continue to fall under current government policies.
With modular construction through Deluxe, a shrinking workforce is less of a concern. Our technology and streamlined process minimizes the need for large construction teams onsite.
Wasteful Construction Practices
While issues with labor are clearly causing a crisis in construction, it is not the only culprit. Construction is primarily labor and materials, and the way we deal with materials in the construction process is also highly inefficient and wasteful. The construction industry is the world’s single largest consumer of natural resources and materials. In the U.S., construction and demolition generate 40% of all solid waste, with much of it going into landfills.
Consider the way in which buildings are typically constructed and it should come as no surprise that so many materials are wasted. Imagine a typical construction worker – up on a scaffold, nine stories in the air, on a rainy, windy day, who he needs an 8-foot stud. Instead of going all the way down to the ground, hunting for the right one in the mud and going all the way back up, he sees a 12-foot stud, likely brought there by another construction worker for later use. So our typical construction worker simply grabs that near-by 12-foot stud, saws four feet off of it, and throws the “waste” into a dumpster.
This kind of practice contributes to the fact that 40% of materials brought to a job site are wasted and is frustrating for the owner who paid for those materials, but how much can you blame the worker? The fact is that the traditional method of onsite construction practically encourages waste.
This is yet another endemic problem facing the construction industry that Deluxe has addressed with its modular building process. With Deluxe, there is no trek down to the mud on the ground. That's because our steel-framed modules are built in our state-of-the-art, indoor facility with all necessary materials and tools always easily in reach.
At Deluxe we have re-imagined each phase of the construction process to achieve remarkable results, saving clients nearly 50% of the time and 20% of the costs of conventional, on-site construction.
Topics: Modular Construction