The problem is, any increase in price (or hourly rate), increases the cost of your product or service. The users of this must absorb this increase (and reduce their profits) or pass it on. The result is inflation. What you could buy for $100 yesterday costs you more today with inflation. Central banks don’t like inflation.

Inflation is corrosive to an economy. While I’m talking about increasing personal earnings, over the long run NZ wages haven’t kept up with costs. We are all becoming worse off as a result. Central banks curb inflation by slowing the economy through increasing interest rates. That hurts too, as we have all experienced in the post Covid boom years.

If you create more value for the same or lower cost, there is room to increase your pay without inflation. If the boss can make more from your input, they can pay you more and it won’t hurt them. If your business can produce more for the same inputs, you are making more profit.

What I am talking about is productivity. If we want to be wealthier, the only way is to get more productive.

Being productive isn’t working harder. We are already doing that by global standards. We’ve had to. As our earning power has dropped, we’ve worked more to keep up our lifestyles. Most of the developed world is doing the opposite.

Construction is a big part of the NZ economy, about 10%. Our performance impacts NZ Inc. And we are not good. To be fair, it is not just NZ. Construction around the world is a poor performer in the productivity stakes.

But how do we do better?

I’m reminded of my first job as a sales engineer. My sales manager gave me the car keys, spent half a day showing me how to make calls then said, “get out and sell more”. I quickly realised that you can’t sell more. You can make more calls. You can perform better in the calls. You better target your customers. If you do these things, you end up selling more. It is about process.

There aren’t any silver bullets for construction productivity. Factory housing isn’t going to fix it. Robots won’t save us. 3D printing won’t change our world. It can seem hopeless.

I am encouraged though. In a recent episode of Beyond the Guesstimate, I talked with economist Shamubeel Eaqub. EP28 Can NZ Build Better. The company he is involved with, Simplicity Housing, have shown us that it is possible. Using the same materials and supply chain as the rest of us, they are 30% better by building smarter. While we can’t all build like Simplicity, we can learn from that they have done.

We need to focus on people, education, and collaboration. Adding systems and technology is a winning formula.

Staff turnover in construction is high. It takes a significant investment in bringing new team members up to speed. Organisation knowledge takes even longer to develop. If staff are turning over too often, it costs us in productivity.

If staff are stay long enough, we can invest more in further developing them. Rework and mistakes are shown to be major productivity drain.

The biggest gains come from systemising and improving coordination between parties removing redundancy and waste. Consistent relationships and people who know their jobs underpin this. Applying technology over the top allow us to increase the cadence. The result is we are doing more for less.

Productivity improved!