Group of engineers, planners and workers around a table with plans at construction site; labor allocation concept

The Hidden Costs of Inefficient Labor Allocation in Construction

Your workers are the foundation of your construction business. 

“The workers are considered to be the biggest asset for a project and they can give a competitive edge to the business and help the company in growing its bottom line,” comments the Medicine Hat Construction team. But only if you use their time and skills wisely.

How you allocate labor is one of the most important decisions you make for every construction project because poor labor allocation can make or break the profitability of projects and, ultimately, your business. 

When you put the wrong people on the wrong jobs, your projects are less likely to finish on time and on budget which chips away at profit margins. The quality of the work is also more likely to suffer which may hurt your business’ reputation and, therefore, your ability to get more work in the future.

While these are the most obvious consequences of poor labor decisions, the negative effects don’t end there. There are some less-obvious repercussions of inefficient labor allocation that can wreak havoc on project outcomes and your overall business. 

Construction workers carrying heavy object as a team; labor allocation concept

Other Impacts of Inefficient Labor Allocation

How you staff projects matters. You need to be very intentional about how many workers with which particular skills you assign to every project. When you automatically send a set number of people regardless of project needs and individual worker skills, you aren’t maximizing the potential of your labor assets.

As a result, you may face some unintended consequences beyond just productivity and profit losses. 

The Mental Health of Workers Suffers

Construction is an innately stressful business. 

“Annually, more construction workers die from suicide than every other workplace-related fatality combined,” explains Stu Kemppainen, director of risk and safety at Liberty Industrial Group.

It’s been well-documented that the physical aspect of the work combined with unrealistic deadlines, project delays, administrative demands, and a number of other challenges lead to high levels of stress, anxiety, and depression for construction workers. 

But another, lesser known psychological factor also plays a significant role in the mental health struggles of construction workers — feelings of inadequacy.

When workers’ talents aren’t being utilized to the fullest extent, their confidence in their skills plummets. Underutilization of skills ultimately leads to “a sense of dissatisfaction, feeling of nonfulfillment, lack of self-actualization, and stress among project staff,” explains Dr. Jiwat Ram, a professor in project management at the Excelia Business School.

This all has a negative effect on workers’ mental well-being.. 

Skills Gaps Become More Difficult to Close

The construction industry is in the middle of a labor crisis. “The industry is currently battling the highest level of unfilled job openings ever recorded,” report Lori Ann LaRocco and Natalie Rose Goldberg for CNBC.

That lack of workers is making it difficult for trades contractors to close skills gaps. Companies are being forced to do more with the workers they do have, which means you have to be very meticulous about labor allocation. You must be able to identify exactly where skills gaps exist and which of your current employees is most capable of stepping in to do that work.

When you don’t allocate that labor wisely, the project quality suffers while the skills gap remains. 

Centralized Data Helps Solve These Problems

These potential problems highlight the importance of making smart decisions when it comes to allocating labor on construction projects, but you can’t make those well-informed decisions without data. 

“Data intelligence allows contractors to make decisions by using real insights that maximize potential for growth and improvement,” says Matt Abeles, vice president of construction technology and innovation at Associated Builders and Contractors.

Construction project management software, like eSUB, enables trades contractors to centralize their data to gain analytical insights that help guide their labor allocation decisions. The software allows you to see where workers are spending their time and what they are doing on the job. With that information, you can decide if you are using their talents to the fullest extent or if you need to make some changes. 

The data will also help to identify skills gaps by showing you where work isn’t getting accomplished. Those insights will help you make better decisions about how you allocate your labor. 

Before DTA Electric started using eSUB, labor allocation was one of the electrical construction company’s biggest inefficiencies. “Before, on every job we’d send 10 guys [regardless],” says project manager Van Huynh. “Now, we mobilize the team on the manpower needed to do specialized tasks on the schedule.” This more efficient labor allocation not only saves the company money, but also reduces stress for everyone. 

To learn more about how software can help you allocate labor more effectively, schedule a demo of eSUB Cloud today.

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