Productivity Research and Program Development

Leo Sveikauskas recognized for construction industry productivity measurement

The Engineering News-Record recognized Leo Sveikauskas as one of its 2018 Top Newsmakers for leading improvements in measurement of construction industry productivity.

Previous measures have generally showed stagnant or negative productivity growth in U.S. construction industries, but they could not measure productivity with appropriately quality-adjusted measures of output. Using more accurate output price deflators, Leo and his co-authors found that productivity growth is positive and relatively strong in several sub-industries: single-family residential construction; multifamily residential construction; and industrial construction. They also measured the highways and associated construction industry where productivity declined.

A general measurement problem in these areas is that construction projects vary more than mass-manufactured goods. Each single family home, office building, road, and so forth is different from previous ones and is located in a different place, with a different topography. The use of just a few output prices to deflate output throughout the entire construction sector proved inadequate. Several studies of the time spent on specific construction tasks, such as installation of a door, had found positive productivity growth, but no better way of measuring industry productivity growth was available.

A team in the BLS Office of Productivity and Technology examined available information on the output price deflators available for different types of construction output.  This process was easier because the BLS Producer Price Index (PPI) office has recently prepared output price indexes for additional forms of construction.

The new study applied these updated output price deflators to different portions of the construction sector to measure changes in what contractors charge for items, ranging from the number of bathrooms in single-family homes to the cost of maintenance and repairs for highways. They excluded industries for which the new deflators were not a very good match. They applied a measure of government regulation to estimate its effect on construction output and productivity.

 

Sources

     BLS web site. Labor Productivity and Costs: Labor Productivity for Construction

     Leo Sveikauskas, Samuel Rowe, James D. Mildenberger, Jennifer Price, Arthur Young. 2016. Productivity Growth in Construction. Journal of Construction Engineering and Management. DOI: 10.1061/(ASCE)CO.1943-7862.0001138.

     Leo Sveikauskas, Samuel Rowe, James D. Mildenberger, Jennifer Price, Arthur Young. Measuring productivity growth in constructionMonthly Labor Review, January 2018.

     Alisa Zevin, economics editor. Leo Sveikauskas: Federal Economist Leads Design of a More Reliable Construction Productivity MeasureEngineering News-Record, Jan 11, 2019