In recent years there has been an increased focus on the skills shortage in the construction industry.
It is true that such a focus will enable more projects to progress, but the cost will prove too heavy for struggling contractors, especially given years of declining productivity. A more mature approach must focus on sustainable, systematic productivity improvement. The post-pandemic recovery should put productivity front and centre.
The Australian manufacturing sector provides a good case study for us learn from. In the early-to-mid-2000s, cost pressure from imports and a high Australian dollar impacted exports. The industry had to improve productivity or perish.
Beyond the first horizon
Manufacturing lobbyists secured grants to train their workforce on globally accepted best practice. Through the Cert IV in Competitive Manufacturing and Advanced Manufacturing grants, numerous businesses were pulled from the brink and went on to become highly profitable, with expanded product offerings.
Hand in hand with training goes investment in systems and technology. In construction, the productivity gains from the introduction of apps that collect field data, to sophisticated planning systems that schedule interlinked tasks in real-time, have been significant and rapid. But these developments don’t happen overnight.
Businesses can prosper with a long-term focus, looking at horizons beyond an existing portfolio of projects, at new methods of enabling teams, and utilising technology at construction sites, as well as harnessing trickle-down technologies that are ready for use.
Investment in equipment, systems, technology and people are the pillars of productivity. Typically, return on investment cannot be justified on single projects, nor the benefit realised on the initial project. But over time, benefits compound creating an edge, making a business better suited to the new environment, and giving the industry a more productive workforce.
Process makes perfect
A process-based approach enables the entire business to understand core processes and how they fit together. This connects every department in the structure to the customer, thus enabling employees at all levels to understand their contribution to meeting customers’ requirements, instead of being blinded by departmental silos, which are sadly still too common.
Yet it is not process for process sake. Rather, it is what the approach enables that is most important. In a recent case I worked on, significant gains were realised when a complex transactional process step, requiring specialised skills, was standardised and simplified.
Not having enough skilled employees created a bottleneck for the business. So, not only was the bottleneck removed, but it led to another minor tweak in an upstream process, having the effect of doubling the throughput of field resources for a critical path activity. Another simple process change detected defects much earlier, substantially reducing rework – a big contributor to poor productivity in construction.
Contractors need to look right across their value chain, from tendering to delivery, to extract improvements.
Since skilled resources were not in abundance, manufacturing depended on building and maintaining a skilled and motivated workforce. Those that advanced through the 2000s focused on growing leaders internally, developing, challenging and continuously supporting their employees and partners.
I recall a project where an employee, whose task had finished, could have been released by the business, as might normally be the case. This business retained the employee and retasked them to introducing technology. This stemmed brain drain and achieved productivity savings from the technology.
While the sub-contractor model isn’t as common in manufacturing, there is dependency on suppliers, who are equivalent to subbies. Successful manufacturers consider the supplier as an extension of their business. They invest in strong, trust-based relationships that promote transparency, communication and accountability, and they actively help suppliers solve their problems and be profitable. The support is mutual.
I have witnessed contractors helping small sub-contractors set-up business that go on to become major players. The initial investment by the contractor added capacity to the industry. I also recall examples of suppliers helping contractors with root cause analysis of a quality issue, sending in process experts and using their own budgets.
To improve productivity, contractors need to build strong teams of employees and sub-contractors and invest continually in relationship management as a core activity, no different from investing in operational activities.
A process approach may not achieve all that is required, but it is possibly the smartest place to start if we are to meet the challenges of the skills shortage and redefine and rejuvenate a major sector of the Australian economy.
By Shivendra Kumar
Shivendra Kumar is a master of business theory. But more than that, he is a master of practical implementation, having earned his stripes developing and managing business improvement programs with some of Australia’s leading engineering firms, including Downer and Siemens.
His track record is one of solid, measurable productivity improvements, process innovation and revenue gain.
Shivendra has also coached many executives and project teams, in real-world application of best-practice methods, ensuring his insights and know-how are passed on to others.
Underpinning his extensive industry experience are qualifications in engineering, and a PhD focused on rapid product cost improvement techniques.
He is the author of two books on business improvement techniques, The Competitive Contractor, and From Paper to Profit.