Boosting Building Sector Productivity: The Missing KPI

Boosting Building Sector Productivity: The Missing KPI

Are you frustrated with the sluggish pace of progress in the construction industry? Do you ever wonder why, despite the rapid advancements in technology, we’re still struggling to improve productivity in the building sector? Let’s delve into the issue of poor productivity in the construction industry and explore potential solutions that can help us move forward.

The grim reality

Construction productivity in 2022 was actually lower than it was in 1990, as reported by the Australian Contractors Association (ACA) in their November 2022 report, “DISRUPT OR DIE, Transforming Australia’s construction industry.” The report makes a staggering claim: “Improvements to the industry’s productivity performance could save Australia $47 billion annually.” That’s a massive sum, and it begs the question: Why are we falling behind?

One of the key culprits, as highlighted in the ACA report, is our relentless focus on selecting the lowest price at the tender box. This short-sighted approach has turned the industry into a race to the bottom, where quality and innovation often take a backseat. The ACA proposes 10 recommendations to enhance productivity, including shifting from the lowest cost to the lowest life cycle cost, reducing tendering costs, embracing more technology, and reducing work hours for staff. These are all valid points, but one issue keeps resurfacing: the poor adoption of technology.

Learning from History

However, before we jump on the technology bandwagon, let’s take a step back and learn a valuable lesson from history. Remember the iconic Empire State Building? It was a towering achievement of its time, completed in just over 14 months back in 1931. Today, we struggle to get planning approval in the same timeframe, despite our vast technological advancements. So, perhaps the problem lies not in the tools themselves but in how we use them.

A recent presentation on the ‘Digital Twin’ emphasised that new technology should be ‘faster, cheaper, and better,’ not costlier. This prompts us to re-evaluate our approach to productivity. Instead of solely focusing on the tools, we need to focus on the people using them and the processes they follow.

Defining Improved Productivity

A quick Google search shows that improved productivity is all about achieving greater output from the same amount of input. In other words, it’s about doing more with less. Today this definition rings truer than ever in the context of the construction industry.

The Henry Ford Paradigm

Let’s dig deeper into history and examine the ground-breaking work of Henry Ford. According to Simon Winchester’s book, “Exactly: How Precision Engineers Created the Modern World,” Ford made two major contributions to productivity that transformed the manufacturing industry.

Firstly, he re-designed the motor car to be cheaper, faster, and better by using technology to reduce weight, improve reliability, and simplify design. Secondly, and perhaps less commonly known, he revolutionised the production line. While assembly lines existed in canning works and other factories before Ford, his innovation lay in improving the precision and quality of components above current standards. Before Ford’s time, car manufacturing was still tied to the meticulous craftsmanship of carriage making, often requiring skilled labour to fit and finish parts individually. Ford set a new standard for quality, demanding precision and consistency for all parts, from the first car to the millionth. This relentless focus on quality had a profound impact on productivity and delivered results that were cheaper, faster, and better.

Implementing Quality as a Key Performance Indicator (KPI)

So, how can we apply the lessons from Ford’s legacy to the building industry? One crucial point to consider is our industry’s key performance indicators (KPIs), which are currently limited to price and time. While these metrics are essential, they overlook a critical factor: quality. In manufacturing, quality is the defining KPI because it directly impacts the longevity of products and companies. The NSW Building Commissioner is taking steps to introduce a quality KPI to the industry through a rating system, and this is a step in the right direction.

Implementing a Quality KPI in the building sector requires a two-fold approach. First, we must recognise that technology alone won’t magically transform productivity. The tools are only as effective as the people who wield them. Thus, changing outdated business processes is essential. Second, we need to integrate the Quality KPI into a project’s measure of success. This means aiming for ZERO defects—every defect should be viewed as an opportunity for improvement, not a problem to administer.

Unlocking Value through Quality

Consider this: On a sample project, there were a staggering 27,105 defects or snags, with 77% attributed to poor workmanship and 16% to incomplete work. If we assume that each defect takes 4 hours to address (1 hour to record, 1 hour to close, and 2 hours to fix), that’s approximately 100,000 hours of lost productivity. At $150 per hour, we’re talking about potential savings of up to $15 million for the project.

The technology exists to capture and analyse this data effectively. For instance, the OmTrak Siteworks App simplifies the process of managing defects and can help identify areas for improvement. However, to unlock this value, we must shift our mindset from merely administering defects data to actively using it to enhance productivity.

Disrupt the Status Quo

If you’re interested in learning how to leverage technology to truly boost productivity and implement the missing Quality KPI in the building industry, don’t hesitate to reach out to the OmTrak team. Together, we can disrupt the status quo and pave the way for a more efficient and prosperous construction sector.


DISRUPT OR DIE, Transforming Australia’s construction industry © Australian Constructors Association, November 2022
Exactly: How Precision Engineers Created the Modern World – Simon Winchester