5 Reasons Why Construction Efficiency Is Important

For construction company owners and managers, operational efficiency is a critical factor that can determine the success or failure of a project, or even the entire company.

Enhanced efficiency translates directly into cost savings and improved client satisfaction.

Additionally, it supports environmental sustainability, empowers companies to tackle labor shortages, and provides a competitive edge.

In this article, we’ll explore five key reasons why construction efficiency matters and provide practical examples to help your company thrive.

Leads to Cost Savings

Considering the variety and complexity of construction projects and all the variables that affect them from conception to completion, it’s clear that even defining the term “construction efficiency” has many nuances.

Broadly speaking, it refers to how efficiently and cost-effectively your company can complete projects on time, within budget, and to the required quality standards while:

• streamlining workflows,
• optimizing resource utilization, and
• minimizing material waste.

Therefore, construction efficiency gains and cost savings are intrinsically linked.

For instance, optimized resource utilization implies that materials, equipment, and labor are used effectively and efficiently, reducing waste and excess spending, and thereby contributing to cost savings.

Naturally, this link between efficiency and savings works across all stages of a project lifecycle and encompasses all company processes.

However, it’s generally recognized that project design and planning phases are where companies can achieve the largest cost savings.

To illustrate this concept, here’s an example.

By utilizing technology such as Building Information Modeling (BIM), companies can create detailed 3D models of projects.

This, in turn, enables better coordination among project stakeholders and early detection of potential design clashes.

This proactive approach to project planning reduces the likelihood of costly mistakes and rework, thus facilitating smooth project completion and saving costs from the outset.

Of course, BIM’s advantages continue to facilitate collaboration, better decision-making, and waste reduction throughout the project lifecycle.

One study of 32 BIM-assisted projects showed that construction companies leveraging BIM achieved significant savings in terms of both costs and time.

This example illustrates how utilizing different construction management tools (BIM, project management, material takeoff, asset and inventory tracking, etc.) enables better project planning, streamlines workflows, and reduces material wastage.

Ultimately, all those solutions contribute to lowering the overall expenses of construction projects.

As we’ll see next, this is only one aspect of how advanced software tools and effective management methods contribute to construction efficiency.

Improves Client Satisfaction

The next key reason why construction efficiency matters is that it improves client satisfaction.

More precisely, efficient construction practices help ensure that projects are delivered according to client specifications and timelines.

Ultimately, this results in clients benefitting from on-time, on-budget, and high-quality project completions.

This reliability fosters trust and satisfaction, builds your company’s reputation, and leads to repeat business and referrals to new clients.

For instance, a study conducted by Autodesk and FMI showed that construction companies with high client trust get most of their projects from repeat clients, driving gross margins 2 to 7% higher.

So, let’s take a look at what factors are most relevant for building strong client relationships and enhancing their satisfaction.

Expectedly, finishing a project on time, within budget, and with the desired quality of workmanship tops our list of factors affecting client satisfaction.

This is followed by clear communication, keeping the client in the loop, and ensuring your staff exhibits professionalism and reliability.

Of course, flexibility and efficient problem-solving, adherence to safety standards, and providing post-completion support are also crucial.

Again, due to the complexity of construction projects and many uncontrollable variables—like client-initiated project changes, unexpected site conditions, and bad weather—it’s hard to tick off all the above boxes.

In fact, a Procore and IDC survey of North American construction companies showed that only 23% of projects were completed on time and 25% were finished within the estimated budget.

The same survey also revealed that companies with better on-schedule and on-budget outcomes often embrace integrated construction management tools, making them more efficient and enabling them to achieve higher client satisfaction.

However, as the above percentages show, there’s still a lot of room for efficiency improvements in this area.

For instance, client satisfaction can be enhanced indirectly by utilizing cost estimation, budgeting, and scheduling tools to achieve greater accuracy of project budget and schedule.

Likewise, client satisfaction can be improved directly by utilizing project management software to provide the client with real-time updates on the project’s progress.

This includes regularly providing reports and, depending on the client, sharing timelines, milestones, and daily logs.

However, while technology can help increase client satisfaction in myriad ways, that’s only one part of a much greater puzzle of human interactions.

More precisely, no technology can replace the satisfaction clients derive from the professionalism, reliability, dedication, and competence demonstrated by a well-organized and efficient construction team.

Supports Environmental Sustainability

Another aspect of construction efficiency includes adopting sustainable practices such as recycling materials, reducing waste, and using energy-efficient methods and machinery.

This helps in minimizing the environmental footprint of construction activities and contributes to broader sustainability goals.

In light of climate change concerns and growing public awareness of the importance of environmental sustainability, this is nowadays either required or expected by many regulatory authorities, as well as clients.

Moreover, many construction companies are also committed to achieving environmental sustainability in their operations.

For example, Gilbane Building Company already in 2017 managed to reuse/recycle more than 90% of construction waste.

The company also completed more than 300 buildings with LEED (Leadership in Energy and Environmental Design) certification, which recognizes sustainable and environmentally responsible construction practices.

Here’s an example of one such building, a New York library that opened in 2022.

During construction, this LEED Gold-certified building was continuously tested to ensure that it will meet net-zero building and carbon-neutral requirements.

Another example of how construction efficiency supports environmental sustainability involves an office floor fit-out where the client set a goal of recycling at least 50% of construction debris.

Gilbane managed to surpass the client’s goal and reused or recycled around 90%, or more than 126 tons of waste materials.

These examples also indicate that applying efficient sustainable practices in construction has much broader effects.

More precisely, such practices can lead to:

• enhanced company reputation that helps attract environmentally conscious clients and employees,
• cost savings generated through reduced material waste, energy consumption, and operational expenses, and
• improved compliance with environmental regulations and standards.

As for what companies can do to increase their efficiency in environmental matters, we already mentioned BIM, which can help reduce material waste and energy consumption during construction.

Other solutions utilize sustainable building materials such as recycled steel, reclaimed wood, and low-impact concrete to lower environmental impacts and carbon emissions associated with manufacturing traditional construction materials.

Similarly, implementing efficient waste management practices, such as on-site sorting and recycling of construction debris, helps minimize landfill waste and reduce environmental pollution associated with construction activities.

Given all the above, it’s clear that both the environment and your company can benefit from adopting efficient sustainable practices in construction.

Helps Deal with Labor Shortages

By maximizing the productivity of the available workforce, efficient construction practices can help your company mitigate the impact of labor shortages.

More precisely, various efficiency-boosting measures can compensate for a smaller labor pool and ensure that projects are still completed on time and to a high standard.

And such measures are sorely needed, considering that labor shortages have been plaguing the construction industry for a long time.

For example, the 2021 survey of contractors by the U.S. Chamber of Commerce showed that 91% of them experience moderate to high levels of difficulty in finding skilled construction labor.

Even more concerningly, 62% of contractors reported facing extreme difficulties in finding skilled workers, and 45% had to turn work down because of that.

To address these challenges, construction companies can, instead of new workers, employ different measures that will make their existing workforce more efficient.

Such measures include:

• providing worker training and enhancing collaboration,
• automating time-consuming administrative and operational tasks,
• focusing on improving project planning and workforce scheduling, and
• using advanced technologies.

For instance, by labeling equipment and tools with QR code labels, you can minimize the time workers spend searching for what they need.

This will give them more time to perform other, more productive tasks.

Since these labels allow you to establish a single database of all your equipment, tools, and other inventory items, workers can access this central register via any internet-connected device and quickly find their location.

Such QR code tags are the basis for our all-in-one asset-tracking app, GoCodes.

Simply put, QR code tags, once attached to your tools and equipment, act as digital gateways for storing important asset data available to all workers at any time.

They can either log into the app or scan a tagged asset to access the database and view individual asset info, as well as the central list of tracked assets.

The efficiencies generated by leveraging this simple and affordable tracking system include:

• minimized time needed to find and locate assets,
• a fast and simple way to check assets in and out of the toolroom or storage yard,
• improved asset maintenance and safety,
• streamlined equipment management, and
• enhanced planning and scheduling.

This example illustrates how automating time-consuming, manual tasks enables your employees to work more efficiently, allowing your company to do more with the same number of personnel.

The same could be said for using advanced technologies like drones, remote-controlled equipment, or construction management software solutions.

Coupled with employee training and retention measures, these technologies can help you improve efficiency without adding new employees, while also attracting younger, more tech-savvy hires, thereby helping you deal with labor shortages.

Gives You a Competitive Edge

In the construction industry, achieving high efficiency can be a powerful differentiator.

More precisely, construction companies that prioritize and demonstrate efficiency can generally offer better pricing, faster project completion, and superior quality compared to their competitors.

This competitive edge can be crucial in securing new contracts.

As illustrated throughout this article, the largest efficiency gains that allow companies to outperform their competitors can be generated through the adoption of new technology.

This is confirmed by a survey of construction companies on their level of digital transformation.

96% of construction firms said that previous digitization efforts improved their operational efficiency, and about 50% reported benefits as high or very high.

Here are some other effects of technology adoption cited by respondents, all of which contribute to their competitive advantage.

While the advantages of new technologies and processes are evident, the human side of the equation remains crucial for their successful implementation and competitiveness-increasing effects.

That’s why introducing new tech requires:

• management buy-in and appropriate funding,
• proper staff training and resources, and
• structured change management.

Naturally, all efficiency-boosting measures should be approached holistically, considering both technological advancements and human factors.

This ensures that such initiatives will be accepted and actually implemented.

Finally, then these efficiency gains can be translated into more competitive project bids, high-quality work, and fast project delivery, building the company’s reputation and further increasing its competitive advantage.

Conclusion

From enabling cost savings and improving client satisfaction to supporting environmental sustainability, addressing labor shortages, and gaining a competitive edge, construction efficiency empowers companies to drive long-term success.

While implementing advanced technologies often has a crucial role in achieving construction efficiency, other aspects like proper employee training and strong management support are equally important.

Together, these factors ensure that efficiency improvements are sustainable, leading to enhanced performance and improved profitability for construction companies.