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ARCOM Conferences

35th Annual Conference – Leeds, UK
2-4 September 2019

Track 2: Construction is a highly productive industry

Lead: Toong Khuan Chan, University of Melbourne (tchan@unimelb.edu.au); Shang Gao, University of Melbourne; Igor Martek, Deakin University

“Researchers have found that just knowing that there is a dissenting voice is enough to induce different cognitive processes that yield better judgments,” says Margaret Heffernan, entrepreneur, CEO, and writer.

Numerous studies have shown that productivity measures for construction or the construction industry have remained stubbornly low or exhibited signs of only marginal growth over the last two decades in many developed economies. In this track, we argue that productivity in construction increased rapidly in the second half of the twentieth century due to increased specialisation of construction firms, outsourcing, global purchasing practices, and modern project procurement strategies. Contrary to accepted wisdom, this high level of productivity has been maintained over the last 20 or 30 years in many developed countries as construction firms increasingly utilise digital tools to improve project and company performance. Despite decades of research on construction productivity at the activity, project, firm and industry levels, the solutions for increasing productivity seem to be just as elusive. A recent special issue in BEPAM (Volume 8, Issue 3, published in 2018) entitled ‘Rethinking Construction Productivity’ can be easily mistaken for an issue in 1980!

It is our contention that construction productivity growth only appears low when compared against the large improvements exhibited by other sectors, mainly in the services and manufacturing sectors. Baldwin’s (2006) ‘Third Unbundling’ described how the manufacturing industry has taken advantage of the aggregation of production in low-cost countries in Central America, Eastern Europe or Asia, while maintaining high value-added design and marketing tasks in high-income countries. This free movement of capital and ideas across national boundaries have brought increase productivity in many manufacturing sectors in both high-income and developing economies allow each group to focus on tasks that they sustain comparative advantages.

In this track, we welcome papers investigating the data and theories that examine the dissenting view that construction productivity has been optimally positive over the last 2 or 3 decades. Some researchers have utilised Transaction Cost Economics, Resource Based View or Resource Advantage Theory to argue that construction firms have strategically outsourced many activities, often maintaining a limited number of key tasks such as project management and procurement in-house, leading to very efficient project and firm productivities. Our position is that this prevailing market structure of outsourcing and specialisation (commonly referred to as sub-contracting in the construction industry) limits the possibility of large-scale improvements in productivity. Marginal improvements through the use of new digital technologies, innovative construction methods, improved training and skills may be achieved but these work only in eliminating inefficiencies – not initiating paradigm changes to disrupt the industry.

In this track, we also welcome explorations of the parallels to the manufacturing industry. Productivity improvement methods from the manufacturing sector are increasingly being deployed into the construction industry with varying levels of success. Are Lean, DfMA, concurrent engineering, and other agile methods of production able to transform the construction industry given that its final products are not transportable and have to be assembled in-situ? We would also to explore how the forces of globalisation affect the construction industry especially the ability for many design, project management, manufacturing tasks to be outsourced and spread across the world.

Or does the construction industry need to reinvent itself – look for new project and firm structures? Is the build-to-rent model more viable to achieve the economies of scale that are exemplified by the manufacturing industry? It may be an opportune moment to examine the cost-driven mentality of the construction project, and to consider the significance of other metrics of performance: safety, quality, sustainability, profitability, and return on investment.

Reference

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