Keeping a Close Eye on Productivity

Added: 08/06/16 Author: Mark Tomlin

The CIOB’s latest report, titled ‘Productivity in Construction: Creating a Framework for the Industry to Thrive’, mirrors a lot of my own thoughts.

This is partly thanks to its focus on productivity, which is a recurring theme throughout this blog. The report also calls for the need to introduce more effective ways of measuring the productivity of the industry, as without this we can’t see how far we’ve come, or how much more needs to be done.

The report seems to suggest that current data may be misleading – when the values of design, materials, components and much of the machinery used on site are not taken into account. Improvements in quality and safety are also not considered which really muddies the waters when identifying how productive the industry really is.

For example, the current measures may track off-site work (a method which I wholeheartedly endorse) as manufacturing rather than construction, so although we could be building more productively, to a higher quality, the stats will suggest this has not had a positive impact on productivity.

The CIOB also suggested productivity in the UK has fallen behind compared to many other countries, but to compensate, UK workers are working longer hours. However, SIG’s MD, Rob Barclay, recently spoke to Construction News about how we need to focus on working smarter, not harder. The Organisation for Economic Cooperation and Development (OECD)also mirrors our view, discovering an interesting correlation between working hours and productivity: working longer hours actually results in a reduction of labour output.

Relationship between hours worked and productivity

With that in mind, anything that can help to reduce the number of hours that we work, without affecting productivity, must be worth investing in.

The report also points out that improving productivity should mean that firms can pay higher wages.

Although we know there hasn’t been a huge increase in most sectors since the recession, the most recent Annual Survey of Hours & Earnings (ASHE) shows that wages in a number of sectors have increased far higher than inflation; plumbing, plastering and building finishing trades have increased by 5% in 2015 vs. 2014, scaffolding +7% and flooring and wall tiling by +10%. If wages are indeed a measure of productivity, it seems these sectors are steaming ahead, though skills shortages and output levels will certainly have an impact on earnings.

When we also look at recent productivity figures released by the ONS in May, in terms of GVA growth, construction has been outperforming a number of different sectors since 2013 – and showed almost 4% growth in 2014.

Contributions to GVA Growth

Taking all of this evidence into account, it’s clear that construction productivity is on the up, and has been for the past few years. However, if we’re going to keep pushing for more increases then we need to know where we stand and which methods we should pursue. As the CIOB report rightly points out, measurement is vital, especially considering the changing face of the industry, where the line between construction and manufacturing is less defined than ever before.