This story was originally published in Builder.
- Did construction’s productivity problem kill the housing recovery in 2018?
- Can momentum—on a macro and firm-by firm-basis—reboot in 2019 without big productivity gains?
- Our new Building Forward platform will engage builders and their partners in an empowered pursuit of sensible solutions.
For businesses, productivity is an antidote to friction, which can kill businesses.
It serves as bellwether ratio that measures output versus input. Greater productivity invariably means more for less. More output, less money, time, human labor hours, materials, etc. Worse productivity means less for more. This holds true on a macro industry-sector basis, and at the micro firm level.
Construction emerged in late 2016 and early 2017 as a secular whipping-boy, thanks to widely cited McKinsey & Company analyses that mapped the business as “Exhibit A,” profoundly underperforming both the broader global economy and other manufacturing industry sectors on apples-to-apples measures of output per invested resource.
Productivity—or the lack thereof, which may tie up 20% to 35% of construction input costs in a never-ending vicious circle of expense versus profitable production—stood out as one of 2018’s villainous forces, creating a widening, and seemingly unbridgeable gap between what builders have to pay to produce structures and what the market can bear to pay for them.
Simply, with some rare exceptions and bright spots, there’s too much friction in much of the construction value stream. Too many building projects don’t pencil, which means their expenses are too high for the revenue the project can generate.
This lopsided relationship is a construction show-stopper. It can, and it has, transformed real demand into sidelined, pent-up demand, that may or may not ever activate. It can and it has shrunken what was once a huge and growing market into a shadow of its former self. Going into 2018, demand was vast and growing, particularly for lower-priced residential home and communities. Coming out of 2018, it's another story, a story of demand halted dead in its tracks, as household incomes—even as they make modest gains—fall farther and farther short of increasing monthly payment trends.
Which is why we are investing in Building Forward, an all-new, immersive content platform aimed at empowering both the macro business of building’s leaders as well as its micro enterprise players to navigate, to explore new operational models, and to map themselves to clear pathways to greater productivity.
The promise of Building Forward is this. Our data, analysis, journalistic firepower, and ability to connect people together to spark and spread solutions will create an exclusive, bright-line moment for those who engage with us in a fanatical pursuit of productivity breakthroughs in construction.
Ones that matter to you. Ones that meaningfully alter your ability to cross into the next decade as thriving, sustainably profitable firms. Ones that filter the noise of hype from the signal so critically important to real-world, lasting operational and strategic model evolution.
The program will take the form of a 12-month curriculum that will both challenge and empower you to apply best practices, insights, and evidence-based guidelines to a path to productivity suited to your firm, your market, and meeting your customers’ needs.
Participate with us in Building Forward over the next 12 months, and you will be empowered—with education and training, with exposure to what’s being tried and what’s working, with inspiration, and motivation—to shape your future with regards to productivity.
Thanks to a committed investment from our business partners at Jeld-Wen, we’re able to devote outsized time, energy, focus, research, investigation, and analysis into how, when, and why new approaches to productivity in the construction value stream will change all of our professional lives.
Here are a few of the pain-points our Building Forward will focus on, leading you to both tactical and profound business model adjustments that will remove friction from your ability to produce value for your customers at a level greater than your expense basis:
- Labor and talent
- Technology, automation, and robotics
- Process mapping to optimize the construction workstream
- Materials science and engineering
- Policy
Our platform will offer access, forums, community, and real-time intelligence across digital media formats, each component focused to empower you to pivot toward a future you envision and model for greater productivity. Productivity may go down as one of 2018’s greatest unsolved mysteries, given the baby-steps, the hesitancy, and, ultimately, the failure to drive new-found cost efficiencies into lower asking prices for consumers.
Let’s fix that in 2019 and beyond, with Building Forward, where you shape your future rather than have it shape you.
This story was originally published in Builder.
