Chapter Excerpts from
Broken Buildings, Busted Budgets
Introduction
Chapter 1: Overbudget & Overdue
Chapter 2: The Economic Context of Construction
Chapter 3: False Starts and Frustrated Beginnings: A History of the Industry
Chapter 4: Asymmetric Information: The Big Barrier to Change
Chapter 5: Minor Blemishes: Unions, Workers, and Government
Chapter 6: Fixing the Construction Industry: Consolidation, Intermediaries, and Innovation
Chapter 7: Practical Advice to Owners: Getting Started Now Charts and Figures
Chapter 2: The Economic Context of Construction
By January 2007, construction was a $1.23 trillion a year industry in the United States. A one-time improvement in construction productivity of 10 percent would boost America's GDP by $123 billion. That sum, compounded annually at 3 percent for thirty years, would mean a real per capita income over $273 billion higher in 2037 than if the construction industry remains unreformed. Put another way, reform of the construction industry could generate enough economic growth to save Social Security as it is currently constituted. (Not that we'd necessarily use the economic resources freed up in that way.)
Ominously, productivity in the U.S. construction industry has been stalled for a long time, and by several accounts the rate of productivity growth has never been very impressive especially when compared to most other economic sectors...
Industry Fragmentation and Small Firms
The U.S. construction industry has long been characterized by small firms. By 1966, only 188 construction firms employed more than five hundred persons and only slightly more than 3,000 employed more than ninety-nine. By 2002, only a dozen or so firms employed more than 1,000 people and not even 900 companies employed more than 250; this in an industry that in total employed over 4 million souls. After the construction boom of the past decade, the industry employs nearly 7 million today, 92% of whom work in firms that employ fewer than twenty people! |
