How One Company Is Reversing Construction's 52-Year Labor Productivity Downturn

It’s easy to blame everything on the recession, but labor productivity in the construction industry has been sinking since as early as 1964 at 0.32% each year—even as price indexes for construction costs have steadily increased. Unreliable timelines and poor communication between stakeholders, project owners and workers have been creating inefficiency in projects for years. A Stanford University study dating from 1998 determined the real value added per employee has increased in every other non-farming American industry within the same time frame.

Successfully challenging and overturning construction inefficiency is a hefty responsibility. So where does the solution lie?

Enter Flip The Curve, an initiative set up by Pankow Builders with a focus on building a nimble culture that embraces change. Pankow’s approach: filling the lack of construction-specific industry research through the Charles Pankow Foundation, and employing more advanced building design techniques to begin closing the labor value gap in construction.

Their endgame is to reverse this trend, working to continuously improve and break the cycle of waste and inefficiency, Flip The Curve, and change the construction industry forever. By leveraging the use of virtual design and construction and engaging the client in every part of the project life cycle, teams can achieve higher levels of certainty throughout the design and construction phases. Rapidly developing technologies such as 3D laser scanning, Building Information Modeling (BIM), virtual reality applications and robotic automation will allow for design development, validation and coordination to flow seamlessly into construction with real-time updates from the construction site.

These advancements will allow for the elimination of inherently wasteful processes, such as shop drawings, submittals and RFIs, enabling the collective team to focus its efforts on the value-add processes that ultimately benefit the client. Increasing the labor input-to-output ratio is key to reversing the downward trend of the last 52 years.

Flip The Curve further depends on employees operating as one cohesive team. To streamline project delivery, Pankow's construction teams both in and out of the office subscribe to a sense of shared risk and reward—of equal stake in the unified goal of delivering a meaningful project to the client. For construction firms, creating a sense of completing meaningful work can make the difference between just another development on the agenda and wholehearted investment in a project valued by each party involved.

“Flip The Curve’s mission is focused on overcoming the current state reality where waste and inefficiency dominate our industry," says Pankow Builders senior VP and Northern California regional manager Scott Anderson. "With this vision comes diligent practices in our company culture that reflect this commitment, as well as a lot of time on revolutionizing how we approach project delivery."

Take, for instance, the Sutter Health Van Ness Medical Office Building, a 510k SF building with an underground parking garage. The project team utilized the use of Last Planner System in design to manage the design schedule, CBAs and A3 Thinking for decision-making and problem-solving. Target Value Design was used to drive the estimate below the Target Cost for Construction. The project team succeeded in driving the estimate below the Target Cost. To further drive team innovation in finding the best value, lowest cost and best solutions for the project, Pankow is now utilizing the Last Planner System on all of its major projects.

To learn more about Bisnow partner Pankow and Flip The Curve, click here.