This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

July 3, 2019

Reinventing Construction

One of the largest sectors in the world economy is Construction. Globally, this sector represents about $10 trillion USD spent on construction-related goods and services every year. However, for decades, this industry's productivity has lagged the output of other sectors; there is a $1.6 trillion USD opportunity to close the gap. This Herman Trend Alert was informed by the recent McKinsey study about the construction industry.

The trailing construction industry
Worldwide, construction sector labor-productivity growth averaged only 1 percent a year over the past two decades. Compare that with the over 2.8 percent growth for the total world economy and 3.6 percent for the manufacturing sector. That increase would meet about half of the world's annual infrastructure needs or increase global GDP by 2 percent. In the United States, since 1945, productivity in manufacturing, retail, and agriculture has grown by as much as 1,500 percent, but the growth in construction has barely increased at all.

The "why" behind this poor performance
The construction industry is extensively regulated, dependent on public-sector funding, and highly cyclical. The highly fragmented construction market is often distorted by informality and corruption. Frequently, inexperienced owners and buyers have a difficult time working together. This difficulty results in poor project management and execution, insufficient skills, and inadequate design processes. The industry also suffers from underinvestment in skills development, R&D, and innovation.

Acting in seven areas simultaneously could boost productivity by a lot
When we look at the role models of some innovative firms and regions, we see that suggest that acting in seven areas simultaneously could boost productivity by an impressive 50 to 60 percent. These areas are: 1. Reshape regulation; 2. Shift the industry dynamics by changing the contractual framework; 3. Rethink design and engineering processes; 4. Improve procurement and supply-chain management; 5. Improve on-site execution with better project management; 6. Expand the use of digital technology, new materials, and advanced automation; and 7. Reskill the workforce. The report suggests that some processes would benefit from a move toward a manufacturing-inspired mass-production system that could boost productivity up to ten times.

What's been missing and what's changing
Though ways of overcoming the many barriers to higher productivity have been known for some time, the industry has not improved. What's been missing was the incentives and scale to change the system. However, it appears there are forces lowering these barriers, including increasing demand for higher volume, lower cost, and better quality; larger-scale players and more transparent markets, and disruptive newcomers; more readily available new technologies, materials, and processes; and the increasing cost of labor with partial restrictions on migrant workers. Construction-sector participants must rethink the way they approach operations, if they want to stay ahead of the curve.

Special thanks to McKinsey and Company for their white paper on this important topic.

© Copyright 1998- by The Herman Group, Inc. -- reproduction for publication is encouraged, with the following attribution: From "The Herman Trend Alert," by Joyce Gioia, Strategic Business Futurist. 336-210-3548 or To sign up, visit The Herman Trend Alert is a trademark of The Herman Group, Inc."

Our author Joyce gets quoted in TIME Magazine and other national media on a regular basis. You can, too! Sign up for You will be found by the news media and in Google search: 1. Through your personal search-engine-optimized press room by 39 topics you choose; 2. By news releases pushed out 10 ways including Google News; 3. Be found in the 2020 printed Yearbook of Experts, Authorities & Spokespersons. Save 15% when you register by October 31st @

The Association of Professional Futurists proudly presents its annual online learning experiences on Full Spectrum Futures. Network with leading futurists from all over the world. And best of all, it's free to attend, though contributions are encouraged to help defray costs. For more information, visit here.

Excellent translation services from English, French, or German into Spanish. Especially well-versed in medicine/pharma and automobile industries. 5-year Bachelor Degree in Translation. Also editing and proofreading of all kinds of Spanish language documents. Flexible rates, depending on number of words, degree of difficulty/technicality, and turnaround. For an instant quote email Mariana Campora Lesti at or contact her on SKYPE at marianacampora.

To read this Herman Trend Alert on the web:

Herman Trend Alerts are produced by the Herman Group, strategic business futurists, Certified Management Consultants, authors, and professional speakers.

New subscribers are always welcome. There is no charge for this public service. The Herman Trend Alert is read by over 30,000 people in 90 countries, including other websites and printed periodicals. Click here to sign up for the Herman Trend Alert.

Do you enjoy receiving this weekly e-mail update? Contact us about our co-branded Herman Trend Alert service.

Subscribe or Unsubscribe to weekly Herman Trend Alert
View this week's Herman Trend Alert
Archived Weekly Herman Trend Alerts


[ Home About Products Resources Media ]


7112 Viridian Lane
Austin, TX 78739
Voice: 336-210-3548
Toll Free in US & Canada: 800-227-3566

  © The Herman Group. All rights reserved.

Web site design by WebEditor Design Services, Inc.