McKinsey Study Shows the Construction Industry Is In a Productivity Rut—Here’s How Vsimple Can Help

According to a recent McKinsey & Company study, the construction industry, a foundational pillar of economic and societal development, finds itself in a productivity rut that it must overcome to meet the demands of the future.

With projected global construction spending set to grow from $13 trillion in 2023 to an astounding $22 trillion by 2040, there’s no question that the industry is poised for substantial expansion.

This growth is especially critical as the world shifts toward sustainability, where construction will play a crucial role in developing renewable energy projects, improving building insulation, and supporting low-carbon activities.

However, despite the opportunities ahead, the construction industry continues to struggle with stagnating productivity. Over the past two decades, McKinsey states that productivity in construction has barely improved, growing only 0.4 percent annually from 2000 to 2024, compared to 2 percent in the total economy and 3 percent in the manufacturing sector.

The industry's inability to scale improvements and innovate fast enough has left it behind, and the consequences are severe. Failing to improve productivity could result in a shortfall in construction output, leading to bottlenecks in critical infrastructure projects and delaying the global pursuit of net-zero targets.

To make a long story short - such setbacks could mean bad news for every industry, not just construction.

So, how can construction companies improve their productivity? It's important to first look at the main challenge these organizations are facing - labor shortages.

The Labor Challenge: A Workforce Under Pressure

One of the most significant hurdles for the construction industry is the shortage of skilled labor. In advanced economies, including the United States and Europe, construction workforces are shrinking due to an aging population and the looming retirement of experienced workers.

By 2040, many advanced economies may face negative workforce growth, exacerbating an already critical issue. If the industry is unable to recruit and retain skilled workers, meeting the growing demand for construction projects will become increasingly difficult.

The problem is not just about finding more workers; it's about improving productivity so that companies can do more with fewer people. However, the construction industry has been slow to adopt technological innovations that could streamline operations and enhance efficiency.

While individual companies have made strides in improving productivity through digital tools and automation, the industry as a whole has yet to fully embrace these innovations at scale.

The Vsimple Solution: Unlocking Productivity Through Process Automation

Fortunately, solutions like Vsimple can help transform the construction industry's productivity challenge. Vsimple’s fully customizable process automation platform is designed to streamline and automate complex workflows, especially in sectors like material handling and construction, where project complexity, supply chain management, and workforce coordination are critical.

By introducing Vsimple into construction operations, companies can modernize their processes, eliminate inefficiencies, and empower their teams to focus on value-adding activities.

Vsimple provides solutions that directly address the core issues plaguing construction productivity:

1. Automation of Repetitive Tasks: One of the major barriers to productivity in construction is the significant time spent on repetitive and administrative tasks. Vsimple automates these processes, from document management to supplier coordination, freeing up valuable time and resources for project managers and on-site workers. This automation allows workers to focus on more critical tasks, enhancing efficiency across the board.
2. Enhanced Project Visibility: Vsimple’s platform provides real-time insights into project progress, resource allocation, and potential bottlenecks. This level of visibility enables construction companies to optimize their workflows, improve project timelines, and reduce delays. By harnessing these insights, companies can make data-driven decisions that improve overall project management and deliver projects on time and within budget.
3. Collaboration and Standardization: One of the industry’s challenges has been the lack of standardization in processes and the difficulty in scaling best practices across multiple projects. Vsimple’s platform facilitates collaboration among project teams, subcontractors, and suppliers, ensuring that everyone is working from the same playbook. This streamlining reduces errors, improves communication, and makes it easier to implement best practices across all projects.
4. Scalability of Productivity Initiatives: Many construction companies struggle to scale productivity improvements across their entire portfolio due to the individualized nature of each project. With Vsimple, companies can create standardized processes that are easily replicable, allowing productivity gains to be achieved consistently across different projects. This enables companies to scale up their productivity initiatives and deliver more projects with the same or fewer resources.

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Addressing the Complexity of Construction with Technology

In recent years, the construction industry has faced increasingly complex projects, particularly with the rise of brownfield developments and infrastructure projects that require specialized expertise.

‍Traditional project management methods are often ill-suited to handle this complexity, resulting in cost overruns and missed deadlines. Vsimple’s technology addresses this complexity by providing tools that optimize workflows, streamline communication between teams, and manage risks more effectively.

Unlocking Future Growth with Vsimple

As the construction industry faces mounting pressure to meet demand, increase productivity, and deliver on global sustainability goals, the role of process automation cannot be overstated.

By implementing Vsimple’s customizable automation platform, construction companies can unlock new levels of productivity, scale their operations more efficiently, and deliver projects that meet the evolving needs of the market.

A prime example of the power of Vsimple lies in the success of our customer, Hern Construction, who was able to reduce their 25-30 steps down to 10-15. Hern's Lead Estimator, Mike Duncan, states:

"The Vsimple team is right there with us, willing to help and always thinking about how we can make this more profitable.We take 25-30 steps, and now they're 10-15 steps. You take that one job and times it by however many jobs you do per year, and that time becomes valuable. That time becomes profitable."

In the coming years, Vsimple can play a key role in helping the construction industry climb out of its productivity rut and meet the challenges of tomorrow’s world. By doing so, Vsimple will not only transform individual companies but also contribute to a more efficient, sustainable, and resilient construction industry—one that’s equipped to build the future.

Looking for ways to automate tasks and increase productivity for your construction company? Talk with one of our automation experts today.