Day 1 at FIATECH, and I thought the most interesting session was by Barry LePatner, who focused on “How to fix America’s broken construction industry.” As you can tell, LePatner argues that Construction is uniquely broken among U.S. industries, and is essentially continuing to do business the same way and with the same technology as 100 years ago. Here are some “factoids” from LePatner that caught my ear:
- In 2007, $1.7T in new construction was contracted, representing 5% of GDP and 10M workers.
- 92% of those workers are in firms smaller than 20 people.
- The U.S. will need to go from 400B sq ft to 827B sq ft of buildings by 2030.
- In that same period, the rest of the world will build 23 completely new cities with over 10M people each – and the U.S. will be competing in the same world market for material and skilled labor.
- A recent meta-study found that 50% of all construction labor in the U.S. is wasted – mostly due to scheduling inefficiencies. This amounts to $120B in waste per year.
- All other industries in the U.S. have increased productivity by an average of 250% since 1964 – Construction has decreased productivity by 25%.
- Across industries, investment in IT returns 3-5 times the increase in productivity as does investment in machinery alone.
LePatner is arguing that this state of affairs cannot continue, and that a combination of new contracting methods and new technology will be required to consolidate and transform construction firms into an efficient and profitable national-scale industry. Some of that technology will be on the design side (like BIM), but improved collaboration has the potential to dramatically improve productivity at the job site.
If you want to read more, LePatner has written a number of articles and a new book on this subject: “Broken Buildings, Busted Budgets.”