How to Immediately Improve Productivity and Profitability

You are not going to eliminate all your inefficiencies overnight. For one thing, improving efficiency is a journey, not a destination. In other words, there is always room for improvement. For example, new technology is designed to improve efficiency, however, there are inexpensive steps virtually every contractor can take that will produce very quick results. Quick-hitting actions are an essential part of the larger, long-term effort of improving productivity. First, in order to create a sustainable improvement process, people need to experience immediate rewards for their efforts. Far too often, improvement programs are too large and grandiose and take too long to bear fruit. In this situation, those individuals involved in the effort start to become frustrated and return to their old, comfortable way of doing things. Success is critical because nothing encourages people to keep trying something new more than success. The second important issue is that the immediate cost savings can be used to fund additional investments in the ongoing improvement effort, including possible training programs or technology.

productivity.jpgThe opportunity for improvement is enormous, the Construction Industry Institute estimates that 57 percent of the activities on a project add no value and are not needed. Another 23 percent add no value but are needed. Only 20 percent of the activities on a project actually add value. Value added activities are activities that contribute directly to the construction of the project. For example, hanging light fixtures or installing a generator are value added tasks. An example of a non-value added task but needed would be delivering material to the project. Obviously, the material is needed on the site, but the activity is not directly related to constructing the project. While the material must be delivered, the delivery process needs to be as efficient as possible. When a delivery truck sits for hours waiting to be unloaded, that is not efficient. Finally, there are the non-value added activities that are not needed. A perfect example is moving material at the site. Studies indicate that the average piece of material is moved 4.5 times before it is installed. Every time you move material you are wasting time and increasing costs. From the worker’s perspective, it’s also a disaster because a worker is more likely to get hurt moving material than when installing it.

Most contractors are interested in improving their productivity but far too often they make some common mistakes that hinder that effort. One common mistake is focusing on the value added activities. There is always room for improvement, but the amount of potential improvement from the value added tasks is limited because they currently only represent 20 percent of the project’s total effort. Further, the value added tasks have been worked over many times, therefore, they are already reasonably efficient. Most of the waste in construction occurs between the tasks, not in performing the tasks. For example, Clemson professor Roger Liska’s research reveals that construction workers lose 20 percent of their efficiency waiting for materials, information, equipment, or supplies. In other words, the task cannot be performed because the worker doesn’t have what he or she needs to perform the task. Instead of focusing on the worker’s performance, what is needed is the determination of why the workers didn’t receive what was needed to perform the task. It is important to understand that far too often non-value added activity negatively impacts value added tasks.

Eliminating waste starts by examining every task that is not directly involved in building the project, such as hanging light fixtures, installing conduit, etc. The examination starts with a series of questions. Do we need to do this task to construct the building? If it’s not needed, why are we doing it and how can we eliminate it? If the task is neede