Increased Productivity: The Missing Piece For Modern Construction & Mining

When reflecting on the state of today’s global economy, the benefits provided by advances in modern technology are often self-evident. The rise of cutting-edge tools like collaborative robots, artificial intelligence, and ubiquitous computing have allowed for countless industries to reap notable increases in productivity.

From retail to agriculture and manufacturing, nearly every economic sector has seen impressive near exponential jumps in productivity over the past fifty years. However, while technology has enabled higher productivity for most aspects of the global economy, there are some notable exceptions to this rule. In particular, the areas of construction and mining have seen little to no growth in this area.

At first glance, this trend seems unlikely. After all, with the construction and mining industries typically associated with mechanized processes, even a slight increase in productivity would be expected. Yet, this has not been the case, with both construction and mining experiencing flatline productivity growth in recent history.

It may be tempting to quickly diagnose the problems plaguing productivity in these critical industries, attempting to do so without fully understanding the root causes would be counterproductive. So, why hasn’t productivity in construction or mining budged in decades, and what can be done to help correct this trend moving forward?

Leading Causes Of Low Labor Productivity Growth

Before jumping into some of the most notable causes of this stagnated growth, it may be helpful to formally define what we mean when mentioning productivity. Economists and business analysts use terms like labor productivity when referring to the amount of real economic output produced per labor hour. In other words, in our case, productivity can be thought of as the amount of value created by a construction worker or miner during an hour of work.

Labor productivity for every industry seems like it should be able to increase with the rise of technology. A productivity-based Moore’s Law would make for fantastic returns for companies and investors alike, but increasing efficiency isn’t always as easy as simply adopting new technology.

This is especially true for the construction and mining sectors, where complex processes combine with strict regulations to limit the potential for growth in productive capacity. While it would be easy to pin this issue on a few key factors such as cyclical markets, occasional corruption, or widespread underinvestment in technology, such explanations would be overly simplistic.

Instead, it would be more appropriate to point out that construction and mining are two of the most complex business sectors in the world. More importantly, productivity performance throughout these sectors is not uniform, with potentially vast differences among varying geographical areas and specialties (e.g., globalized heavy construction firms vs. local subcontractors).

It may be difficult to provide a short and sweet summary of the issues generally plaguing productivity throughout the construction and mining (in fact, McKinsey & Company, a leading consulting firm, wrote an informative report on the topic recently). With this being said, most analysts agree that many of the barriers to higher productivity have been known for some time. In fact, many believe that surefire methods for overcoming these roadblocks are currently available as well.

Unfortunately, as is often the case with immensely complex problems, it appears that this industry gridlock may be due in large part to a lack of incentives. After all, if things seem to be going well, why would a firm risk reputation or capital to implement what could only be incremental improvements to productivity?

It may be challenging to change these trends on an industry-wide level, but there is no reason why committed individual players can’t make changes that will help to increase productivity. In fact, such efforts may be more accessible and affordable then you might think.

Methods For Increasing Productivity

We have spent plenty of time outlining the many reasons why productivity in construction and mining hasn’t seen a significant jump in decades. Now, it’s time to discuss a couple of straightforward methods that companies and individuals can leverage to increase their own productivity. Your team can reap productivity benefits by:

● Separating productive, standby, and nonproductive time: This is a simple trick that can help to optimize your team’s productivity throughout the workday.

● Costs and benefits associated with owning or renting equipment: Some equipment may be worth renting, especially if it isn’t used often.

● Practice proactive equipment maintenance and repair: Fixing small issues today can save hundreds of dollars in costly prepares tomorrow.

● Schedule employees and equipment efficiently: Nothing’s worse for productivity than arriving at a job site over- or under-booked.

● Monitor costs: It’s important to track both variable and fixed costs to develop a strong understanding of where a firm’s resources are being dedicated.

Clearly, these approaches are likely to be easier for small organizations to implement. Oftentimes, large organizations can be their own worst enemy, as it is typically difficult to implement agile productivity-boosting changes across multinational corporations. Despite this trend, we still encourage large teams to revisit their productivity metrics regularly, as informed business decisions can help to eke out small (yet noticeable) increases in efficiency for any organization.

BuildStream: Real-Time Heavy Equipment Optimization

As we have seen, figuring out how to reap the benefits associated with lasting productivity increases is an issue that continues to affect heavy industry. While agile management and other innovative business practices offer promising leads, a number of tech startups believe artificial intelligence may provide a novel solution.

BuildStream is a construction tech startup seeking to use artificial intelligence technology and IoT hardware to fill construction’s productivity gap.

BuildStream offers an innovative solution that allows any piece of heavy equipment to become connected and smart by communicating in real-time with site teams. With BuildStream in place, construction projects can proactively manage and schedule heavy equipment and logistics operations, diagnose and manage maintenance issues, and optimize operator and fleet performance across multiple large scale projects — all from one unified system providing real-time, reliable data to the site teams and head office.

Historically, the construction and mining industries, which are heavily reliant on earthmoving and material processing machinery have been unable to reap the productivity increases seen by agriculture and manufacturing. A major part reason is that major projects in almost all cases use mixed OEM equipment fleets, and that is why BuildStream has been built to be compatible with any OEM, meaning it is a scalable solution for major projects.

Thanks to BuildStream, we believe that this paradigm is about to change, which is precisely why we decided to invest in their brilliant team: Terry Clarke (CEO), David Polanski (COO), and Jim Jenkins (CTO).

Real Estate VC @ Second Century Ventures . Former VC @ Plug and Play Ventures, Partnerships @ Kash (acq.), Analyst @ Real Facilities (acq.), Founder StayTO.