Key findings of the study include:
- $30 billion to $40 billion is lost annually due to poor productivity.
- 79% of contractors could improve labor productivity by 6% or more with better management.
- According to 60% of respondents, 11% or more of field labor costs are wasted.
- 3 of the top 4 internal factors influencing productivity are related to planning, communication and collaboration.
- Regarding external challenges, participants cited low-quality design and construction documents, outdated and unrealistic schedules, lack of coordination with general contractors, and change order inefficiencies as their biggest areas of concern.
Many of the top internal challenges are within contractors' control and while the external challenges can feel daunting, better communication with partners can also help.
"Labor productivity is the economic engine of labor-intensive, self-performing contractors," said Tyler Paré, head of FMI Consulting's performance and operations practice. "Labor is also the largest, riskiest, yet most controllable variable cost. Managed well, labor productivity can significantly improve bottom-line margins. Managed poorly, labor overruns, or exceeding labor budgets, can wipe out contractor profitability."
Download the full 2023 FMI Labor Productivity Study here.
About FMI
FMI is a leading provider of consulting and investment banking services to the built environment. We provide services in the areas of strategy, leadership and organizational development, operational performance, mergers and acquisitions, financial advisory and private equity financing.
Contact: Katie DeRee
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SOURCE FMI Corporation
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