The construction industry——least improved

This is from Aug.2017 the economist.

The failed and notorious project, Berlin’s airport, reveals that the construction industry is in the worst situation than ever. According to some surveys, 90% of the world’s infrastructure projects are either late or over-budget. Even for smaller projects, having similar woes, 60% of them were late. In contrast of any industry, construction holds the shameful honor of having the lowest productivity gains. Especially in rich countries, trends are bad and pessimistic. As author writing below, more culpable are two broader structural trend. One is that the industry has become less capital-intensive, with workers replacing machinery. Since the labour costs are cheaper, most companies prefer to save and curb investment rather than bring high fixed costs, which are difficult to cut in downturns. The other problem is that the industry has, for the most part, failed to consolidate. Causing the difference in building codes, it is harder to reap the benefits of scale. What’s more, often projects are involved with a dozen subcontractors, who keen to maximise profit rather than collaborate to contain costs, resulting in a slow growth. Above all, the skeptical attitude toward new technology, which is slow to change, making the construction in dilemma.

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