The Cost of Inefficiency

A $300 million hospital doesn't build itself. It will take, on average, hundreds of workers the best of two years to complete it. Labor alone will probably end up representing almost half the cost of the project. So, using that labor efficiently should be a primary concern to everyone on the project team.

Here is a quick rule of thumb to evaluate labor costs: Each minute of a skilled craftsman is worth about a dollar. Let's say that a foreman is using an old tool that would cost $200 to replace. Because the tool is old, he is wasting 5 minutes per hour. The lost work represents an equivalent cost of $5. Compound that over a day of work and we are talking a full $40 wasted. If the foreman is planning to use that tool for more than 5 days, it definitely makes sense to replace it.

It sounds like simple math, but it's a calculation that we often have a hard time doing. We don't know exactly if we are wasting 5 minutes or an hour everyday because of the way we work, and it's human to think that we are doing a good job.

But here is where it gets worse. As a craftsman, no one else fundamentally depends on your work. You only waste your time by working inefficiently. As a superintendent or a field engineer it's different, people depend on you. Let's say you are swamped and forgot to give detailed instructions to a team of 5 workers. The foreman walks to the trailer, asks for directions and goes back to the site. Altogether, it took 15 minutes. Not that bad right? Well let's see:

(1 super + 5 workers) x 15 minutes x $1/minute = $90

While even a $100 may not seem like much on a $300m project, if you multiply it by the 20 subs on the project and the 600 days of work, you realize that it will cost you $1.2m over the course of the project. That $1.2m is not even the result of mistakes. It's just the cost of small inefficiencies (people having to walk back to the trailer, waiting for info on site, manually exporting photos for an RFI etc.).

So if you can find a construction app that is good enough to eliminate those inefficiencies and costs less than $1.2m. I don't think it should be free — I think you should buy it.

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