The productivity problem: How to make things better

Canada's lagging productivity has sparked widespread discussion across various sectors, highlighting a crucial need for transformative approaches. The construction and real estate industry, pivotal to the nation's economy, stands at the forefront of this challenge. A recent post by R-Labs on Linkedin identified five critical areas where the Construction and Real Estate industry needs to address the growing productivity challenge:  

• Leadership & Institutions 

• ️Affordability & Supply 

• Climate Resiliency & Low Carbon 

• ️Optimization 

• Capital, labour & supporting infrastructure 

There has never been a greater need for industry and government to work together to change the downward productivity trajectory. Let’s explore each of these areas and what can be done.  

Leadership & Institutions 

A critical step needed to improve productivity within Canada's construction and real estate sectors involves untangling the regulatory web that stifles innovation and efficiency. Leadership must not only embody vision and adaptability but also advocate for regulatory reforms. LandLogic was formed after a decade of research aimed at streamlining the development process, including initiatives like One Ontario. LandLogic was driven by a recurring theme encountered in our research discussions with developers: “When we start a project, we don’t even have clarity on who has regulatory authority over the land we want to develop.” 

The complexity of Ontario’s regulatory environment results in project delays, increased costs, and uncertainty among investors and developers. To counter this, industry and government must work together to streamline processes, eliminate redundant policies, and introduce clear, concise regulations that support sustainable development and innovation. There are plenty of international examples, including Estonia, the UK, the UAE, Singapore, and others, that have set global benchmarks for regulatory clarity and digital governance in development; their streamlined processes have led to the creation of regulatory environments that foster growth, encourage investments, and facilitate the smooth execution of projects – true productivity enablers! 

Technologies like LandLogic can play a part as well. The data LandLogic provides could help inform policy decisions and the creation of incentives for developing affordable housing. By presenting clear, data-backed insights into housing supply gaps, land availability, and potential development impacts, data tools like LandLogic could help policymakers craft regulations and incentives that encourage the construction of affordable homes. This includes identifying zones where density bonuses or reduced fees could stimulate development, as well as areas where strategic infrastructure investments could unlock new opportunities for affordable housing. 

Affordability & Supply

Addressing the affordability crisis is not just a matter of social equity; it’s also a key driver of economic productivity. By innovating in the design and construction of affordable housing solutions, the industry can stimulate market dynamics, increase supply, and ensure a more stable economic environment. There are many innovative opportunities including modular construction, public-private partnerships, and incentivizing the development of underused land that can help alleviate supply constraints. In this context, data solutions like LandLogic could also be used providing analytics to identify underutilized properties and optimize land use, thereby enhancing efforts to boost affordability and supply in the housing market. 

Climate Resiliency & Low Carbon

Investing in climate-resilient infrastructure and low-carbon technologies is not only a response to environmental imperatives but also a means to future-proof the industry against climate-related risks and impending regulatory changes. With governments worldwide tightening environmental regulations, the development industry's adoption of green building standards, retrofitting for energy efficiency, leveraging renewable energy sources, and integrating Building Information Modeling (BIM) becomes essential. BIM is pivotal for staying ahead of regulatory shifts, enabling precise modeling of energy performance and the integration of sustainable design principles from a project's outset. Failure to adopt tools like BIM in anticipation of these changes will not only impact compliance but also significantly hinder productivity, as the industry will struggle to quickly adapt to new standards that demand more sustainable and resilient construction practices.  

If you are interested in learning more about implementing BIM within your organization it would be worthwhile to contact claudia.cozzitorto@aecoinnovationlab.com, a BIM expert and President of buildingSMART Canada, the non-profit organization responsible for BIM standards and implementation in Canada.  

Optimization

The path to higher productivity is paved with the optimization of resources and processes. Implementing lean construction methodologies, employing advanced software for project management, incorporating BIM, and automating routine tasks can minimize inefficiencies and optimize labor and material use. BIM offers a dynamic, collaborative framework allowing precise planning and management of buildings and infrastructure throughout their lifecycle. Coupled with data-driven insights about land, using tools like LandLogic, these strategies enable stakeholders to make informed decisions, streamline workflows, and preempt challenges, leading to quicker project turnovers, higher quality outcomes, and reduced costs. A comprehensive approach to optimization marks a significant advancement in achieving industry-wide efficiency and productivity. 

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There are plenty of international examples, including Estonia, the UK, the UAE, Singapore, and others, that have set global benchmarks for regulatory clarity and digital governance in development; their streamlined processes have led to the creation of regulatory environments that foster growth, encourage investments, and facilitate the smooth execution of projects – true productivity enablers! 

Capital, Labour & Supporting Infrastructure

Securing adequate capital and nurturing a skilled labor force are fundamental to driving productivity within the construction and real estate sectors. Innovative financing models, such as green bonds and infrastructure funds, are key to unlocking the capital necessary for embarking on sustainable projects.  

The Canada Infrastructure Bank, while ambitious in its goals, has faced challenges in setting a high benchmark for productivity. Nevertheless, collaboration between the government and industry on funding mechanisms is key to unlocking overall the infrastructure needed to keep the wheels of Canada’s economy spinning. Institutions like Canada's Infrastructure Bank, and Ontario's recently established infrastructure bank, the Building Ontario Fund, hold significant potential to bolster these collaborative efforts. With a goal of bringing public and private investment together for infrastructure projects, these entities are vital for Canada’s advancement. Their role in blending public objectives with private sector efficiency should empower infrastructure development in Canada. 

Immigration policy focused on bringing in skilled labour is also necessary. Simultaneously, industry must invest in workforce development through training programs. By working together to focus on building a competent, motivated workforce, industry and government can ensure Canada has the skilled professionals necessary to meet the demands of a rapidly evolving construction landscape, bolstered by strategic government support and innovative funding approaches. 

We can’t remain idle

A recent Bloomberg article pointed out that in 2013, Canada was 13th among 170 nations in meeting basic citizen needs, per the Social Progress Imperative. By 2023, it fell to 39th, significantly due to the housing affordability crisis and reduced productivity, paralleled by a decline in well-being.  

It's a challenging time for industry with high interest rates, labour shortages, and increasingly complex regulations suffocating productivity, but we can’t sit on our hands. The construction and real estate sectors drive Canada's economy and should be leaders in tackling the country’s productivity challenges. By embracing leadership that prioritizes innovation, addressing affordability to stimulate supply, committing to climate resilience, optimizing through technology, and ensuring robust capital and labor support, the Construction and Real Estate industry can lead by example. The journey towards enhanced productivity is complex, but with a concerted government and industry effort, we can and must do our part to contribute to a productive, and prosperous Canada.