Thursday, May 29, 2008
Construction Industry Woes
It's been some time now since Barry LePatner published his "Broken Buildings, Busted Budgets" book on North America's construction industry woes. Interestingly enough, Barry has become somewhat of a celebrity - my marketing director reports seeing Barry deliver his presentation on "Fixing the U.S. Construction Industry" at the Construction Owner's Association of America (COAA) and the Construction Management Association of America's (CMAA) spring conferences. I also know Barry presented at FIATECH's conference earlier this year, and did a webinar with Pricewaterhouse Coopers. I mention these appearances because when I first spoke to Barry he had stirred quite a bit of controversy and upset a lot of people with his comments. From what I've heard from those people attending these conferences his message has been well received, possibly because he has started to spread responsibility amongst all stakeholders, and not just contractors as was initially perceived. Right or wrong, I think the debate he has generated is at the very least a step in the right direction. I'd appreciate any insights or opinions from those of you who have read the book. For those of you who haven't, this link will provide you with a summary article published by the Boston Globe last year.
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I think the two most salient points made in Broken Buildings... concern the industry's inefficiency and the asymmetric information condition that causes perpetual tension between owners and contractors.
In both cases, the solutions must involve industry-wide applications of new technologies and practices that can rise above the challenges posed by an industry comprised of many single-project entities. As much as Mr. LePatner would like to see the emergence of larger firms to drive reform, I doubt that a successful consolidation strategy exists that can "herd the cats" necessary to make the emergence of one or several mega firms a reality.
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