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Why construction productivity sucks and how it might be fixed

We are living through an inflationary hard cost environment. In speaking with one of our cost consultants the other week, he was predicting that overall we could see another 9-10% increase next year here in the Toronto area. Now, who knows what will ultimately happen. But this is top of mind for everyone in the industry and it will continue to impact how and what we build.

One of the challenges with construction — and this is will documented — is that unlike the manufacturing industry, which has seen sustained productivity improvements over the years, the construction industry has seen relatively little productivity growth over the last half century. In fact, you could argue that it’s been mostly negative in recent history.

The obvious thought is why not just apply what we’ve been doing in manufacturing to construction. There is, of course, a long standing tradition of trying to do this, with varying degrees of success. But at the end of the day, building a house remains different than building something like a car.

Probably the key difference is that every construction site has unique constraints and conditions and so the process is constantly changing. Whereas the innovations that Henry Ford pioneered were centered around interchangeable parts and a well-defined process that could be repeated millions of times to generate the exact same output.

From what I can tell, there seems to be two ways in which we can think about improving productivity. One, we can try to be more Ford-like and drive standardization. This means more off-site factory construction and more standardization. This is the typical “pre-fab” approach and companies like R-Hauz, as well as many others, are already successfully doing this. The trade-off is less design flexibility.

The second option has to do with better software and hardware. What if we had significantly better “digital twins” for our buildings such that we could see and experience it in 3D before it is physically built? I’m thinking strap on VR goggles and do a walkthrough with the team. This could allow us to pinpoint all of the issues before they actually happen on the job site.

In parallel to this, what if we had far better on-site automation and robotics to then execute on the above digital twin? Think 3D printing concrete instead of using traditional forms. This is all happening and being worked on, but it doesn’t seem to be at a point where it is changing our industry. But it is exciting to think that it may one day.

Photo by Di on Unsplash


  1. In Argentina we deal with a 50% inflation, construction is a way of protecting savings from the depreciation of the Argentinian Peso. On the other hand, materials have a higher acceleration in price increments than worker’s salaries. This makes new technologies implementation more expensive and slow. The effects of inflation can be seen in my country if you are interested.


  2. Matt

    It feels like there’s something to be done around labour productivity on site too. The stereotype of three construction workers standing around watching one working exists for a reason. When I worked summers doing concrete work, it felt like we were often waiting around for materials to arrive on site, or other trades to finish, or a task to complete that only one or two people could work on at once. A major benefit of assembly lines is that all workers are continuously active.

    Perhaps digital twins will be able to better help with identifying these bottlenecks. Maybe it’s less of an issue on high rise developments where work is a bit more predictable (I genuinely don’t know). Or maybe there’s a culture shift needed to have someone in charge of identifying these slow-downs and planning accordingly.


  3. Misa

    I am a logistics doctoral student doing research looking at material efficiency in construction. Some valid points mentioned in the article, I will also add that construction supply chains are much more dynamic than other sectors the economy. For isntance, manufacturing supply relationships are stable enough to be optimized yielding efficiency gains. Construction is a project based industry, when the project is done the workforce and materials are relocated. As a results supply chains are transient, continusly being created, modified and terminated. It would be like if a car factory suddenly to changed its physical location.


    • doug pollard

      perhaps yet another reason why factory production could assist in controlling that aspect of construction difficulty

      The next issue is, of course, having enough factories


  4. doug pollard

    It seems like a bit of a Catch 22. All the above comments about supply chain and site inefficiency etc. are valid (I once saw construction referred to as the last of the craft industries. As well, the comments about robotics standardization, off-site construction and modularization are also valid. To make the necessary industry transformation requires huge upfront investment and in its current state of low profits and productivity, the industry does not readily invite this readily and so it lumbers on it its old ways. Further setbacks include the demise of Katerra which did get its investment money and which did start such a transformation and is now bust! I suppose construction needs its own Elon Musk who thinks building a highrise is as exciting as transforming the car industry and building rockets and shooting for Mars.


  5. Pingback: The productization of housing is set to start in San Jose – BRANDON DONNELLY

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