This essay by Barry B. LePatner, author of Broken Buildings, Busted Budgets: How to Fix America's Trillion-Dollar Construction Industry, is reprinted from the August 12 edition of the Boston Globe.
In April, a gasoline tanker overturned beneath a key stretch of highway in Oakland, Calif., erupting into flames that melted the steel of an overpass and brought a section of road crashing to the ground.
Repairs were projected to cost $5.2 million and snarl Bay Area traffic for months. The state solicited bids for the work, offering a set of bonuses for finishing early, and got a surprising offer: One company said it would take the job for $867,000.
The firm, C.C. Myers, set to work around the clock, working closely with suppliers and fabricators across the country. The repairs took just 18 days, earning the company a $5 million bonus, giving commuters a smooth drive home far sooner than anyone expected—and sending waves of surprise through the industry.
"I haven't encountered anything like this," one union official told the San Francisco Chronicle as he watched the project unfold.
American construction is the industry that time forgot. Over the last century, the nation's other great industries—oil, automobiles, even computers—have undergone waves of profound modernization, breeding competitive, innovative companies where on-time, under-budget projects are nothing unusual. But the construction industry, which at $1.2 trillion in annual revenues constitutes 5 percent of the nation's economic output, remains a bastion of waste and inefficiency.
Protected by a tradition of contracts that insulate them from the costs of their own mistakes, the nation's thousands of construction companies have resisted innovation and now survive as the last large mom-and-pop industry, where each project brings together a new assortment of subcontractors, and nobody—not the lead contractor, not the architect, not the person who is paying for it all—can say in advance how much a particular project will really cost.
This has always been deeply frustrating for anyone wrestling with the industry's unpredictable costs and timelines, but it is now becoming an urgent problem on a national scale. The deadly and dramatic collapse of the I-35W bridge in Minneapolis—and the growing tally of troubled roads and bridges—has brought home just how much building must be done to make our infrastructure safe. In Massachusetts alone, the repair tab could be more than $17 billion, according to a recent Pioneer Institute study. Another national study found that by 2030, America faces some $25 trillion in new construction just to build houses, schools, and offices for our growing population. If the construction industry is not reformed, this will lead to waste on an almost unimaginable scale.
Construction touches every part of the economy. It creates the buildings where we live and work, our hospitals and schools, and the roads we use to reach them. Done right, it transforms our cities and towns for the better—but more often, its inefficiency inflates home prices and bogs down corporate growth, fattens our tax bills and delays civic improvements.
Making construction faster, less expensive, and more reliable will free up time and energy for society's higher priorities. Saving even 5 percent on a school project would translate into millions of dollars to spend on books and teacher salaries, or simply return to the taxpayer. It would make home ownership more accessible and make companies more nimble and competitive. And even more broadly, a genuine transformation would give birth to a new American export, a construction industry that can lead the world.
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