Why Construction Productivity Is Declining (And What Contractors Can Do About It)

Construction productivity has declined in real terms over the past several decades, while many other industries have become significantly more productive.

Despite record demand, persistent headwinds continue to wreak havoc on production. That includes an ongoing skilled labor shortage, rising project complexity, poor scheduling and work sequencing, unmanaged equipment downtime, weak production tracking, and slow technology adoption at the field level.

At the contractor level, improving productivity means attacking the operational causes of lost production, including:

• Tighter planning and scheduling
• Better visibility into daily production
• Keeping critical equipment available
• Reducing workflow bottlenecks
• Creating clearer accountability for what gets accomplished each day

First, we’ll look at the data behind the decline, the specific causes driving it, and then show what contractors are doing differently to work against and reverse this trend.

The Data Behind Construction Productivity Decline

According to McKinsey, global construction labor productivity growth was just 10% from 2000 to 2022, or about 0.4% per year, compared to a 50% gain for the total economy and a 90% gain in manufacturing.

In other words, relative to the total economy, manufacturing has been substantially better at turning labor into output while construction has barely moved.

Source: Delivering on construction productivity is no longer optional, McKinsey

The picture is especially relevant for heavy civil contractors. U.S. Bureau of Labor Statistics (BLS) data shows labor productivity levels in highway, street, and bridge construction declined every year from 2021 through 2024.

In 2024 alone, output fell 3.7% while hours worked increased 2.1%. Contractors are putting in more labor hours while getting less output back.

Contractors Can’t Hire Their Way Out of the Productivity Problem

Construction employment continues to grow, but qualified workers remain difficult to find.

In August 2026, heavy and civil engineering construction employment was up 2.3% year over year, while construction wages were rising faster than wages across the broader private sector.

At the same time, AGC found workforce shortages remained the most commonly reported cause of project delays. That has continuously put more pressure on contractors to get more productive with the crews they already have.

Demand for Construction Output Continues to Grow

McKinsey projects global construction spending to rise from about $13 trillion in 2023 to $22 trillion by 2040.

Without a meaningful improvement in productivity, it estimates cumulative construction output could fall as much as $40 trillion short of demand over that period.

Source: Delivering on construction productivity is no longer optional, McKinsey

Measurement is Especially Difficult in Construction Productivity

Manufacturing, for example, offers a cleaner productivity benchmark because the same units are produced repeatedly under controlled conditions, on a largely static production line.

Construction is different. Every project varies by scope, location, labor mix, site conditions, weather conditions, and design. The production line has to be broken down after each job, mobilized, and re-assembled on the next.

That complexity makes productivity in construction much harder to standardize and compare across jobs, and therefore much harder to measure and improve at the contractor level.

Why Construction Productivity Is Declining: The Real Causes

1. Skilled Labor Shortage

The AGC/NCCER 2026 Workforce Survey found that 88% of construction firms report difficulty filling skilled field worker positions, while 42% say worker shortages have delayed at least one project.

Associated Builders and Contractors (ABC) estimates the industry needs roughly 349,000 net new workers in 2026, and a projected 456,000 in 2027, just to keep pace with demand.

The labor shortage means having fewer experienced workers, as well. The AGC Workforce Survey reported that 50% of firms claim available candidates lacked needed qualifications.

Less experienced construction workers generally require more training and supervision, pulling experienced foremen away from planning and managing production, which turns their time into another source of lost production.

2. Increasing Project Complexity

In construction, every project brings a different set of conditions, which makes it difficult to standardize how work is designed and built.

Because of that, the industry has adopted a working structure of rebuilding the production approach for each job, rather than taking lessons learned and adapting them to unique site conditions.

McKinsey points to that lack of standardization, as well as friction between design and construction as persistent sources of inefficiency. Contractors now rely on bespoke solutions, “which hinders the adoption of modular components and has resulted in slow industrialization in the sector since 2000.”

Two long-running shifts have compounded that complexity:

1. More work is happening within existing infrastructure.

U.S. public infrastructure spending has steadily moved toward maintaining and upgrading existing systems since the 1950s. Operations and maintenance rose from 44% of spending in the 1970s to nearly 57% in 2023.

McKinsey found that brownfield projects grew from 13% to 22% of the global large-project pipeline between 2012 and 2022.

Working around existing real property, utilities, and live infrastructure introduces many more unknowns and constraints than a greenfield build, including:

• Access restrictions
• Traffic or service maintenance
• Additional layers of permitting and agency coordination

2. More projects are being delivered on compressed timelines that overlap design and construction.

Design-build has grown from a relatively small share of U.S. construction in the mid-1980s, to the most commonly used delivery method today. It’s projected to account for more than 47% of construction spending by 2028.

Fast-track delivery also pushes work into the field before design is fully resolved. Construction Industry Institute (CII) research from nearly two decades ago first documented projects beginning construction at only 10% design completion, a trend that continues today.

The result of this is more coordination and decision-making that happens while production is already underway. That increases the risk of a utility conflict, late RFI, design revision, permit issues, or incomplete predecessor activity, which forces crews to stop, resequence, or redo work.

3. Poor Scheduling and Work Sequencing

Poor scheduling often comes down to the inability to account for everything happening around the work.

Crews and equipment get deployed to the field before inspections are cleared, materials are available, or the right equipment is ready. And when new constraints arise, they’re left to sit and wait, instead of being assigned elsewhere.

Equipment-to-labor gaps are the most common productivity killers on a jobsite, and it remains largely invisible when labor and equipment time is being tracked manually on timesheets and spreadsheets.

CII research found that non-value-added activities can consume 50% to 75% of available time on a jobsite. That includes waiting, unnecessary movement, material handling, rework, and other activity that doesn’t directly advance installed production.

4. Equipment Downtime and Unavailability

A crew can be fully staffed and still lose production because a machine is down, it’s sitting on another jobsite, or was never dispatched. Those lost hours often get recorded as labor against the activity, making an equipment constraint look like a labor productivity problem.

Part of the problem is visibility: Contractors typically track labor hours closely, but track equipment availability more loosely, largely because of the difficulty of getting timely, detailed data on individual machines.

That makes it harder to see just how much equipment availability is contributing to productivity, or the lack thereof.

This is where connected equipment management can make an impact. Platforms like Tenna bring equipment location, utilization, maintenance, and dispatch into one system, so team members can see where equipment is, whether it’s available, and if/when it needs service. Maintenance can plan around upcoming service, while dispatch can assign equipment from real-time data.

By driving direct visibility for both the field and the shop, it leads to much less downtime. And if there is downtime, it’s much easier to see why.

5. Inadequate Production Tracking

Many contractors do not have a consistent way to track daily production quantities at the crew level. The data is split across timecards, tickets, equipment records, spreadsheets, and field notes. It usually doesn’t come together until days, even weeks later.

By that point, the “why” is much harder to track down and react to, and the project itself is likely significantly behind schedule.

A lot gets lost due to a lack of communication as well. Field teams don’t have a formal mechanism to surface live production information to the project team.

For example:

A foreman has a dozer go down on Tuesday at 1 p.m. Right then, the crew starts losing time. He doesn’t have time to call the PM, so he sends a text near the end of the day saying a replacement is needed.

The broader organization doesn’t react until the following morning, and at that point, half a day has turned into almost a full day. Teams are left to determine the maintenance need and timing, find a replacement, and resequence the work.

Connected systems for production tracking and maintenance shorten the loop.

Production management tools make it possible to see exactly where production is being lost on a daily basis. That’s done by connecting two different views of machine time: Operational status (as recorded by field personnel) and sensor or telematics status (the reading coming straight off the machine).

Operational status reflects what the machine was doing in the context of the work, whether it was working, on stand-by, down, or undeployed. Sensor status reflects whether the machine was key on, key off, idle or not idle, or on/off-site. Looking at both together gives contractors a more accurate picture of how time was actually spent during a shift, where production was lost, and what needs attention before the next shift begins.

By combining each of these views across an 8-hour shift, the team can move beyond basic utilization and see where lost production is impacting the job. For example, they’ll be able to see where key on standby occurred throughout the day, how the rate is trending versus the bid rate, and how daily/weekly targets are trending. This allows the org to connect, react, and make decisions while it still matters.

Credit: For more information on the Machine Status Analysis, see page 185, Equipment Economics V2 by Mike Vorster

6. Rework and Quality Issues

Rework is one of the most direct hits to productivity in the construction industry as labor, equipment, and materials get spent twice. Anyone in construction knows you don’t get paid to move dirt more than once.

Industry research has historically estimated rework at 5% to 15% of construction costs, although the true figure varies widely by project and how rework is measured.

It usually starts with design conflicts caught in the field, missed QA/QC issues, or trade coordination gaps. A crew that tears out and reinstalls work is burning hours that were supposed to move the job forward.

7. Technology Adoption Gap

Technology adoption at the field level has been a persistent challenge in construction for a variety of reasons, including established work habits, resistance to change, uneven training, and inconsistent change management.

The industry has also historically underinvested in technology. McKinsey has estimated that the construction industry has historically spent less than 1% of revenue on IT, compared to roughly 3% to 5% across industries more broadly.

That said, investment in construction technology has begun to accelerate. McKinsey found that venture capital and private equity poured $50 billion into construction technology between 2020 and 2022, 85% more than the three years prior.

That increased spend has not produced a corresponding productivity gain, however.

Part of the disconnect is where the technology has been focused. McKinsey found that the technologies adopted at scale have largely emphasized control, reporting, design, safety, and monitoring. Those capabilities have value, but they have generally done less to fundamentally change how the majority of field work gets executed.

That leaves contractors with two challenges as related to productivity:

1. Field teams still have to overcome the cultural and operational barriers that make new technology difficult to adopt.
2. Much of the technology entering the market by way of VC/PE-backed tech companies still falls short of addressing the day-to-day production problems crews and project teams are trying to solve.

More technology alone won’t close the productivity gap. The industry needs stronger adoption at the field level, with tools that are designed around the realities of how work gets planned, performed, measured, and adjusted in the field.

What the Most Productive Contractors Are Doing Differently

The companies making progress tend to follow a handful of the same operating habits to ensure construction site productivity.

1. Track Production Daily, Not Weekly

Best-in-class contractors capture production quantities at the crew level every day and compare them against the rate the work was planned or bid around.

If a crew is tasked with installing 400 linear feet of pipe per day and by midweek only 570 linear feet has been installed, the problem is already known.

Verbal communication becomes the real-time queue (often with a hard hat thrown on the ground in frustration). The PM knows Wednesday morning to investigate labor, equipment, sequencing, or site conditions. They don’t wait for the weekly report to confirm a problem that has already compounded for multiple shifts.

By the time a formal report surfaces on Friday, the crew may have lost another 800 linear feet to the same root cause.

Introducing technology to this process can help eliminate the communication queue. For technology to be effective, however, it needs to be as close to real time as possible.

2. Manage Equipment Like an Investment

Top contractors know, assets are only assets when they are working, at all other times, they are a liability. Equipment utilization is a measure of the yield or waste from their investment.

They review utilization alongside production to understand what the machine actually produced and what the cost of that production was.

If a scraper logs 8 hours, the team has an idea of cycle time durations and expected production per cycle. If cycle times drift or daily quantities drop, there is a direct impact on cost per unit. Those are indicators of waste that merit root cause analysis.

From there, they can see how site conditions, operator behavior, or maintenance needs are impacting the plan.

Addressing the root cause might include:

• A change to the equipment maintenance schedule to prevent repeated down events
• Operator training to increase cycle times
• Better labor deployment to ensure all machines on site can meet expected targets

Tenna connects equipment data back to production and job cost. You can see where a machine was, whether it was working, idle or on stand-by, and then tie that activity to the quantity produced and the dollars hitting the production phase codes.

3. Look-Ahead Scheduling as a Constraint-Removal Tool

A two-week look-ahead is standard practice at most contractors. Construction teams communicate the needs while human resources and equipment groups scramble to find the resources to meet them.

The effectiveness of the look ahead process depends on the medium of communication. Emails, texts, phone calls, and spreadsheets are transient datapoints that go stale the minute they are sent.

Best in class contractors leverage resource management and dispatch and scheduling software to ensure that everyone is reading the same playbook and reacting to the same information.

Project supervisors know when they are completing one scope of work and transitioning to the next. Before the paving crews mobilize two weeks out, there is a midweek check to ensure fine grading is complete or on pace.

Once the project gives the ‘go’ signal, Santa’s helpers get to work inspecting the paving equipment, to identify deficiencies and prevent an unplanned down event from impacting production. Often times, something is found, like material seizing the conveyor or augers.

This is exactly where effective communication combined with the two-week look-ahead pays off. It takes time to address the fix and mobilize replacement equipment. But with better foresight and proactive communication, those time and availability constraints can be minimized.

4. Build Accountability at the Foreman Level

High-performing contractors require foremen to report what the crew actually accomplished against the day’s target (e.g. linear feet of pipe installed, square feet paved, tonnage hauled, or cubic yards moved).

Those numbers get reviewed the next morning by operations leaders. Good foremen know that a miss requires an immediate decision. That could mean a change in crew mix, shift of equipment, or sequence adjustments, because at some point in the next 24 hours, the VP of Operations will be pulling on site.

Here is the catch: Foremen are working against weather, material deliveries, resolving personnel issues, keeping crews on task, and reporting on machine health.

Those are long, hard days. Manual reporting at the end of a 10-hour shift is where reliability gets lost. Reporting has to be simple and easy, otherwise the data will arrive late, incomplete, or not at all.

5. Workforce Training Alongside Technology

Software does not fix a productivity problem by itself.

A dashboard showing haul cycles down 18% only matters if project supervision knows the inputs driving the unsatisfactory output. Only then is a reporting tool useful.

The strongest contractors pick technology partners that 1) understand the industry, 2) understand their business goals, and 3) have the ability to support workforce development.

This is where private equity and venture capital firm-backed technology often misses the mark.

The value is not in the dashboard itself, but in its ability to understand and drive short and long-term field decisions.

How Technology Is Closing the Productivity Gap

Technology does not remove the underlying causes of low productivity on its own, but it can accelerate productivity gains by shortening the time between cause, effect, and resolution.

A 2025 Dodge Construction Network study found that contractors with more advanced technology see better cost control, schedule performance, and productivity.

Where the biggest gains show up:

• Daily production reporting: Field productivity software replaces paper tickets and delayed reconciliation with faster, more consistent crew-level reporting
• Equipment availability: Real-time location and utilization data helps teams see what is actually available, while predictive and preventive maintenance helps reduce avoidable breakdowns
• Connected job visibility: Platforms that bring equipment, production, and cost data together give project teams one view of what was spent, what was produced, and where performance is drifting

The benefit of construction productivity software is that it reduces the number of handoffs, spreadsheets, and delayed reports between the field and the people making decisions.

What to Look For in Construction Productivity Tracking Tools

When evaluating a productivity or asset management platform, look for a few basics:

• Real-time, high-fidelity data
• Mixed-fleet connectivity powered by reliable hardware
• Field usability, supported with intuitive training materials
• Robust features that connect departments and break data silos

Turning Productivity Into an Operating Discipline

Construction’s productivity problem has been around for decades, but change is certainly present.

Thankfully, the biggest losses come from identifiable issues (labor constraints, poor sequencing, equipment downtime, rework, and weak visibility into daily production).

The contractors making progress are tightening those operating habits. They track production daily, clear constraints before they reach the field, manage equipment availability more deliberately, and give foremen a faster way to surface what is happening on the job.

The first step in the right direction is knowing where your own production is being lost. Once that’s visible, your teams can come together and focus on the specific constraint that’s holding any one job back, whether that’s labor, equipment, maintenance, or anything else.

Tenna connects equipment location, utilization, maintenance, and dispatch with production and job cost data. By tying machine activity to quantities and cost codes, teams can see where downtime, stand-by time, poor deployment, or missed targets are affecting the job, and make adjustments while there’s still time to recover.