An analysis of construction productivity differences between Canada and the United States

Comparisons of industry sectors in advanced economies since the 1960s show that the construction sector has lagged in productivity growth rates, especially in the United States. Although the US and Canadian economies are highly integrated, Canada’s experience differs in key ways. Analysis of these differences offers insight into fundamental construction productivity drivers. Three levels of analyses of construction productivity in the US are provided in this study. The first analysis compared international levels of labour productivity growth. The second compared construction productivity between the US and Canada, and the third analysed cost estimating data from RS Means estimating manuals to measure the changes in labour and partial factor productivity in the US from 1995 to 2009. Statistical significance testing indicates that labour productivity remained nearly constant in the building sub-sector and that partial factor productivity has improved at an annual compound rate of 0.66%. This supports previous findings that US construction has stagnated but is still improving in Canada, with wage differentials and training systems as potential drivers of this difference. While growth rates of productivity seem to decline with higher absolute levels of productivity, there is no evidence that high absolute productivity levels preclude significant growth.     

The measurement of productivity in the construction industry

Productivity in the use of resource inputs is of critical importance to the construction industry. This paper is intended to discuss the relative merits of the most commonly used measures of productivity for the purpose of assessing the productive and allocative efficiency of construction in the 1980s.

The paper concludes that the total factor productivity method is the ideal against which the other approaches should be judged. Both average labour productivity and average capital productivity suffer from serious problems in assessing the efficiency of contracting operations. However, under certain circumstances, either can provide an adequate alternative measure.

Of the two main single-factor measures of productivity, capital productivity appears to be superior in most aspects to average labour productivity as a means of assessing the overall financial management of a construction firm. Notwithstanding the problems associated in contracting activities and also the difficulties inherent in obtaining suitable data, capital productivity is recommended for most circumstances when total-factor productivity measures cannot be applied.     

Did the late-2000s financial crisis influence construction labour productivity?

The late-2000s global financial crisis has wrought dramatic impacts on the construction industry. However, the issue of whether the crisis influenced the behaviours of the construction industry has not been addressed yet. This research presents an econometric approach to investigating the effects of the recent global financial crisis on construction labour productivity. By employing the error correction model and panel regression methods, the direct and indirect effects of the financial crisis on the changes in Australian construction labour productivity are explored at national and state levels. Neither the direct nor the indirect effects appear statistically significant. The results indicate that the direct effect of the financial crisis drives up construction labour productivity at the national level, while the indirect effect diminishes productivity. The effects of the financial crisis on the state construction labour productivity vary from state to state. The financial crisis influenced construction labour productivity directly and significantly in the northern and eastern regions, while the direct effects appear not significant in the other states and territories. The indirect effects of the financial crisis on productivity are statistically significant in three regions: the Australian Capital Territory, the Northern Territory and Western Australia. By comparison, the model with the financial effects fails to provide more accurate simulating results. As such, this research concludes that the influence of the late-2000s financial crisis on Australian national and state construction labour productivity is limited.     

Exploring the sources of labour productivity growth and convergence in the Italian regions: some evidence from a production frontier approach

This paper investigates labour productivity growth and regional convergence patterns in Italy over the time span 1982–2000. Starting from some evidence of spatial polarisation within Italian economy, the analysis aims at exploring the sources of this tendency. To this end, an approach based on data envelopment analysis (DEA) production frontiers is employed which allows to decompose labour productivity growth into efficiency change, technological progress and capital deepening, looking then at the relative contribution of each component to regional convergence. Moreover, some measures of human capital and public capital are used as augmentation factors of the conventional inputs. The study leads to the conclusion that polarisation is mainly due to regional differences in efficiency change.     

Analysis of the impact of craft labour availability on North American construction project productivity and schedule performance

The North American construction industry has experienced periods of craft shortages for decades. While this problem has received significant attention from researchers, less attention has been given to quantifying the impact of availability of craft labour on project performance. The primary contribution of the current work to the body of knowledge is the quantification of the relationship between craft labour availability and project performance, as measured by project productivity and schedule. Data from 97 construction projects completed in the U.S. and Canada between 2001 and 2014 were collected from two industry databases. The primary analysis shows that projects that experienced craft shortages underwent substantial and statistically lower productivity compared to projects that did not. The analysis also shows a significant growth in schedule overrun due to the craft labour shortages among the same population of projects. Further exploration by means of several regression analyses shows a statistically significant correlation between increased craft recruiting difficulty and lower project productivity and also higher schedule overruns in both project databases. The results are confirmed across both databases and serve as informative models that provide valuable insight for project management teams to perceive the risk that lack of skills poses on project productivity and time performance. Understanding the level of impact that craft shortages are having through robust statistical analyses is a first step in developing the motivation for industry leaders, communities and construction stakeholders to address this challenge.     

Total factor productivity growth accounting in the construction industry of Singapore

Total factor productivity (TFP) determines long‐term economic growth and is a comprehensive industry‐level productivity measure. This paper proposes Jorgenson's method as an appropriate TFP measurement for the construction industry. The method is less restrictive than the conventional Chau's approach, as it does not impose the Hick Neutral Technical Change assumption. Jorgenson's method is then applied to estimate TFP growth in the construction industry of Singapore over 1984–1998. TFP growth is found down by 1.53% per annum over this period, indicating that the performance of TFP in the construction industry lags behind the rest of economy. TFP growth is also found to be fluctuating over time and tends to move in tandem with the construction business cycle.

As a monitor of progress towards TFP achievement, factors influencing TFP growth in the construction industry of Singapore over 1984–1997 are identified. Seven factors are found to be significantly related to TFP growth. Among them, economies of scale, R&D by the industry, investment allowance granted and labour unions are leading contributors to TFP growth; while foreign worker, construction accidents and pre‐cast are major hampers.

The general methodology presented in this study can be applied to other countries. Future studies are required to find appropriate indicators for factors unquantified.     

An analysis of construction productivity in Malaysia

The construction industry is an industry of major strategic importance. Its level of productivity has a significant effect on national economic growth. Productivity indicators are examined. The indicators consist of labour productivity, capital productivity, labour competitiveness, capital intensity and added value content of data, which are obtained from the published census/biannual surveys of the construction industry between the years 1999 and 2011 from the Department of Statistics of Malaysia. The results indicated that there is an improvement in the labour productivity, but the value-added content is declining. The civil engineering and special trades subsectors are more productive than the residential and non-residential subsectors in terms of labour productivity because machine-for-labour substitution is a more important process in those subsectors. The capital-intensive characteristics of civil engineering and special trade works enable these subsectors to achieve higher added value per labour cost but not the capital productivity. The added value per labour cost is lower in larger organizations despite higher capital productivity. However, the capital intensity is lower and unit labour cost is higher in the larger organizations.     

The Singapore buildable design appraisal system: a preliminary review of the relationship between buildability,site productivity and cost.

This paper presents preliminary findings of a study to examine the relationship between site productivity, construction costs and the ‘buildable score’ of a buildable design appraisal system recently developed by the Singapore Construction Industry Development Board. The buildable score for a building is a numerical figure computed by taking into account the level of standardization, simplicity and extent of integrated elements used in the design of a building. The stated objective of the appraisal system is ‘to promote more buildable designs in the industry through assessing the contribution of design to site efficiency and produc6 tivity’. Empirical results from 37 completed building projects provide support for the appraisal system's proposition that ‘a design with a higher buildable score will result in more efficient labour usage in construction and therefore higher site labour productivity’. However, the relationship between construction costs and buildable score is less distinct.     

Benchmarking on-site productivity in France and the UK: a CALIBRE approach

Construction is an increasingly global industry, and benchmarking initiatives that are restricted to a single country run the risk of complacency, as national best practice falls out of line with international best practice. The aim of this article is to report the results of a detailed comparative analysis of the on-site performance of the UK and French divisions of a major UK construction corporation. It focuses on structural concrete because this is potentially a major element in the budget and programme of any construction project, and an area of known French strength. It deploys an innovative computerized productivity measurement tool based on activity sampling, ‘CALIBRE’, in order to provide detailed comparative data. The results show that the UK productivity performance is poorer than in France, and that the poor UK performance compared with the French is explained by elaborate divisions of labour, lack of investment in plant, and less effective work organization. However, as will be argued in the conclusions, these differences cannot be understood without reference to the overall contracting system and the constraints upon action that it imposes.     

The elasticity of capital-labour substitution in Singapore construction

A central issue in improving construction productivity is the flexibility in which capital and labour may be substituted. Empirical estimation using Singapore data suggests that the hypothesis of a unitary elasticity of substitution cannot be rejected, thereby providing justification for policy measures to alter the relative prices of factor inputs to encourage mechanisation in construction. The finding is consistent with an earlier study on the American construction industry as well as numerous production function studies conducted for other industries.     

Construction site safety in Hong Kong

The structural characteristics of the Hong Kong construction industry, most notably its elaborate system of subcontracting and the casual basis on which labour is employed, pose serious problems for safety managers. By international standards, Hong Kong's construction industry performs very badly in the area of safety. Recent work in the UK and Finland highlights the effectiveness of behavioural techniques to improve safety performance on construction sites. Work is currently under way to test these techniques in the Hong Kong construction setting. The structural properties of the Hong Kong construction industry have been taken into consideration and labour commitments to the group and to the organization have been identified for additional consideration in research. It is expected that these variables will intervene in the application of behavioural techniques to determine their effectiveness. This paper investigates the theoretical background to commitment at the group and organizational level and presents a site level research model which is illustrative of the possible effects that group and organization level commitment may be found to have on the use of behavioural techniques.     

Craft versus industry: the division of labour in European housing construction

Two distinct divisions and concepts of labour are apparent from an analysis of social housebuilding sites in the UK, Germany and the Netherlands: the craft form, based on controlling the output of labour; and the industry form, based on the quality of labour input. These are associated with different work processes, skills and training, and also different levels of mechanization and component prefabrication. In the UK, which is craft-based, low levels of mechanization and prefabrication were found compared with Germany and the Netherlands, and the range of activities for the separate trades in assembling superstructure elements was simpler. Labourers are distinct from craftsmen and remain a significant group. Skills are narrow and training provision low. A high proportion of the labour force remains self-employed, under labour-only subcontractors, working to price or output. In comparison, in Germany and the Netherlands labour is employed directly and work processes are more complex, with more specialisms at the interfaces. The division of labour is industry-wide, training provision is extensive, and skills are broad and integrated into the grading structure. Greater speed, higher productivity and lower levels of supervision are associated with industry-wide systems compared with traditional craft forms.     

The influence of buildability factors on rebar fixing labour productivity of beams

Buildability is one of the most important factors affecting construction labour productivity. Nonetheless, an extensive search of the literature revealed a dearth of research into its effects on in situ reinforced concrete construction, especially at the rebar fixing trade level. Buildability factors affecting rebar fixing labour productivity of major structural elements, such as foundations, columns, walls, beams and slabs, are yet to be investigated and quantified. In comparison with the other constituents of the reinforced concrete frame, rebar fixing in beams is one of the most labour‐intensive and time‐consuming activities, therefore, the objective of this research is to quantify the effects and relative influence of buildability factors on fixing labour productivity of beams. To achieve this objective, a large volume of productivity data was collected and analysed using the categorical interaction‐regression method. As a result, the effects of the variability of beam sizes, rebar diameter, stirrups diameter, reinforcement quantity, beam dimensions, and span geometry are determined. The findings show a significant influence of these factors on the labour efficiency of the fixing operation, which may be used to provide designers and construction managers with feedback on how well the designs of this activity consider the requirements of buildability, and the consequences of designers’ decisions on the labour productivity of the operation. In addition, a set of recommendations are presented, which upon implementation, can improve the buildability level of this activity, thus translate into higher labour productivity and more efficient utilization of resources.     

Effects of digital transformation on electricity sector growth and productivity: A study of thirteen industrialized economies

This study examines growth patterns and sources of labour productivity growth and catch-up in the electricity sector. The study uses decomposition analysis to examine 13 industrialized economies from 2000 to 2015, a period of high growth in the sector. The study finds that total factor productivity and digital assets are the most powerful drivers of labour productivity growth and catch-up, while non-ICT assets have only a minor effect. Furthermore, labour quality outpaces R&D as a determinant of productivity. This study has implications for labour and industrial policy in the context of technological transformation and institutional restructuring in the electricity sector.     

The impact of non‐financial incentives on bricklayers' productivity in Nigeria

High productivity is regarded as a goal that ensures long‐term survival of firms. In Nigeria's labour‐intensive construction industry, firms are currently applying various non‐financial incentive schemes aimed at improving operatives' productivity. A questionnaire survey involving the management and operatives of construction firms was conducted to determine the impact of these scheme on the productivity of bricklayers. The survey was complemented with on‐site observation and measurement of bricklayers' output on 40 construction projects in order to determine the impact of non‐financial incentive schemes on productivity. Comparative analysis of sites with and without incentives showed that non‐financial incentive schemes significantly improved bricklayers' productive time and these schemes accounted for 6% to 26% of the variations in output between the two sets of sites on block laying and concreting activities measured.     

The construction labour market skills crisis: the perspective of small–medium‐sized firms

Reports abound of the detrimental effect of the construction skills crisis on the performance and future development of the UK construction industry. The industry's continued growth in output, coupled with its unpopularity as a career choice, has led to extreme pressure on its labour market capacity. There remains, however, a paucity of empirical research into the nature of its highly complex labour market. In particular, very little attention has been paid to the impacts being felt by the smaller firms who account for the vast majority of the industry's economic output and employment. This paper reports on research that has explored the perspectives of smaller employers with respect to the skills crisis. Using an inductive methodology, this research canvassed the opinions of representatives of small‐ and medium‐sized (SME) firms in order to establish the impact of skills shortages on the operational efficiency of the industry. The paper reveals the complex interplay of factors which have combined to shape the industry's skills crisis in recent years and uncovers the practical implications for firms attempting to operate in increasingly tight labour market conditions.     

Improved productivity using a modified table formwork system for high-rise building in Korea

Recently, construction of high-rise buildings in Korea has increased. However, the traditional formwork has disadvantages, such as low productivity, labour intensiveness, and long cycle times. Formwork is one of the largest cost components of a concrete building's structure, and is a factor with significant impact on construction duration. This paper proposes a modified table formwork system (MTFS) that can improve construction productivity, reduce labour requirements, accelerate construction schedules, and significantly reduce construction costs. A case study was performed to verify the validity of the MTFS by comparing schedules and costs of the MTFS with those of the traditional formwork system (TFS).     

Automated task-level activity analysis through fusion of real time location sensors and worker's thoracic posture data

Knowledge of workforce productivity and activity is crucial for determining whether a construction project can be accomplished on time and within budget. Significant work has been done on improving and assessing productivity and activity at task, project, or industry levels. Task level productivity and activity analysis are used extensively within the construction industry for various purposes, including cost estimating, claim evaluation, and day-to-day project management. The assessment is mostly performed through visual observations and after-the-fact analyses even though previous studies show automatic translation of operations data into productivity information and provide spatial information of resources for specific construction operations. An original approach is presented that automatically assesses labor activity. Using data fusion of spatio-temporal and workers' thoracic posture data, a framework was developed for identifying and understanding the worker's activity type over time. This information is used to perform automatic work sampling that is expected to facilitate real-time productivity assessment.     

The construction productivity debate and the measurement of service qualities

Since the 1960s, researchers have provided short-term and long-term explanations for low productivity growth in the construction industry. In retrospect, the main challenge appears to be the measurement of changes in heterogeneous input and output qualities. The aim here is to review earlier construction productivity research and to compare it with more recent approaches to quality measurement used when analysing services productivity, ultimately intending to provide guidance for using performance data from construction projects. Relying on the EU KLEMS database, industries with similar patterns of productivity growth are identified, primarily the business services industry. In services productivity analyses, the attempts to introduce output quality measures reflecting customer satisfaction are particularly interesting, as this creates a link to productivity effects on clients. A conclusion is that it should be possible to use the increasing volume of performance indicator data collected for construction project benchmarking for extending the range of output quality variables. However, resource constraints imply that it is infeasible to base industry productivity statistics on project level data reflecting customer satisfaction and customer productivity effects.     

A Meta-frontier method of decomposing long-term construction productivity components and technological gaps at the firm level: evidence from Malaysia

There is a need for a better approach to measure construction productivity rigorously, multilaterally, longitudinally and decomposed into its components. In response, this paper offers a robust approach to analysing construction productivity at the firm level that has been lacking in the industry to date, by measuring the Total Factor Productivity (TFP) of 37 public-listed Malaysian construction firms over 14 years (2003–2016), based on the Färe-Primont index. In comparing different groups of building, civil and specialist construction firms, this is the first application of a meta-frontier framework to capture the technological gaps involved. Based on the construction firms’ financial data, it is found that TFP improvement generally occurs due to Technical Efficiency (TE) and Scale-Mix Efficiency (SME) (largely scope economies), and significant technological gaps exist among different groups. Moreover, the industry suffered a decline in technologically related production environment over the period – prompting the conclusion that long-term policy engagement should focus on technological improvements. The paper provides a robust approach to analysing construction productivity at the firm level that also can be used for accessing productivity components and technological gaps in construction and other industries.