The hunt for efficiency in the construction industry : food for thought for real estate developers

Abstract

For decades, construction productivity has been lagging behind the sectors of manufacturing, agriculture and many more, causing many problems to society. Importantly, productivity stagnation can generate housing crises by limiting the supply of additional structures, and prevents public authorities from developing their needed infrastructure. In this thesis, I assess the causes for such stagnation and provide a strategy to foster innovation. My analysis finds that the causes of stagnation stem from a lack of competitiveness that arises from a scarcity of long-term relationships with clients, information asymmetry across stakeholders, poor owner and design specifications. Combined, these issues disincentive innovation, as tendering processes do not focus on suppliers' productivity from efficiency gains or ingenuity in processes. In addition, built product size, complexity and uniqueness, as well as building codes inconsistency, all prevent the industrialization of the industry. My strategy to improve productivity is multifold. The first prerequisite to improving the situation requires promotion of collaborative risk sharing delivery methods, adoption of digitized communication tools and supply chain management. A second prerequisite is a mindset switch towards built products configurability, upgradability and easy disassembly, which will minimize waste, unsustainability and brownfield project issues. Once those prerequisites are reached, then our short- and long-term goals for innovation could be realized. Over the short term, transparency and true cost tendering will promote the industry with competitiveness and subsequent consolidation/integration that are necessary for productivity improvements. Over the longterm, the creation of a production-driven system will allow the industrialization of the industry, with standardization and repetitive manufacturing fostering continuous improvement. With such a rise of disruptive and innovative technologies, there will be a flow of at first efficiency gains and, potentially, in the long-run, productivity gains that meet the standards of the ever changing built environment.