Barry B. LePatner is author of Broken Buildings, Busted Budgets (2007). A member of the New York City, New York State, and American Bar Associations, he holds a B.A. degree from Brooklyn College and a J.D. degree from Brooklyn Law School. His critique of the construction industry chronicles its dysfunctions as only a veteran attorney can.
Here is an excerpt from an interview in Building Design & Construction
Here is an excerpt from an interview in Building Design & Construction
"A meta-survey by the University of Pennsylvania showed that 49.2% of all labor costs on construction projects are wasted due to inefficiencies: laborers waiting for deliveries, going up and down hoists, waiting for other trades to move out of the way.
According to the Bureau of Labor Statistics, from 1964 to 2003, for all nonfarm industries, productivity per worker went up 125%. For the construction industry, the output went down over 20% per worker over that period. If we just achieved a 10% increase in efficiency, we could add $120 billion a year to the economy."
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The Construction industry will never possess the efficiencies of other "national" enterprises. Assembly line products like automobiles are more efficient due to repetition of systematic processes. So unless every new structure is exactly like the one before, the current trend is unlikely to change.
Even when building projects are exactly alike - such as those of franchise operators like McDonalds - the conditions for construction are never the same. Variables that affect final output include: naturally occurring site conditions, variations in local building codes, availability and efficiency of local contract labor, weather conditions throughout construction, availability and cost of materials, labor union requirements, OSHA requirements, and so on.
Like the uncertainty of the price of a gallon of gas, the price of many building materials is also volatile and in constant flux.
Moreover, contractors are fundamentally not in the business of passing the fruit of their efficiencies on to customers. We are a capitalist nation and therefore those economic windfalls become contractor profit. Truth be known, there is no motive to actually save the client money. There is only motivation to obtain the contract.
It is the same in the Healthcare industry - another national bastion of economic waste. Group Purchasing Organizations (known as GPO's) offer products and supplies to hospitals at what is perceived to be lower costs. Buy in bulk, they say, and your costs will go down.
But the dirty little secret is that GPO's make their money from a percentage of sales. If the price of healthcare products is reduced to the hospital, the GPO looses money. Therefore, the GPO has a fundamental interest in keeping prices as high as possible.
And just suppose they did, in fact, lower prices for a day. Hospitals would reap the reward of lower costs. But do you really believe the savings would be passed on to the patient?
Of course not.
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