Part
01
of one
Part
01
Quantify waste in US commercial construction: how much is wasted due to rework? material waste?
In the United States, it appears costs associated with rework average 2-6% and 3.15% of total construction cost among commercial industrial projects and residential building projects, respectively. Material waste, on the other hand, accounts for approximately 14% of construction spending. Actual construction costs in North America overshoot planned construction costs by around 23.6%, on average. This cost overrun is the best figure available to approximate the difference between the actual cost and the best-case cost.
METHODOLOGY
A search for the answer among pages and files published in the past two years revealed there are very few reliable references that can be used, so I expanded my search to include older articles and reports. I also looked for scholarly studies that are similar in nature to the 2005 Australia-focused study you provided.
After searching through government reports and databases, academic databases, industry reports, and articles published by trusted media sites, I was able to find only five references that are specific to the United States and that are from reputable sites. Below you will see the information I have gathered from these sources.
COST OF REWORK
Based on the study "Measuring the Impact of Rework on Construction Cost Performance" that was published online in 2009, the Construction Industry Institute (CII) at The University of Texas at Austin conducted some research on construction rework. One of the findings of CII's research is that "direct costs caused by rework average 5% of total construction costs."
In the 2009 study mentioned above, 359 construction projects were examined for the effect of rework on cost performance. The construction projects were a mix of different industry groups (buildings, light industrial projects, heavy industrial projects, and infrastructure) and of owner-reported and contractor-reported projects. The 'buildings' category includes residential buildings, among others.
The results of the study revealed the following:
1. Based on Table 3 of the study, the total field rework factor (TFRF), which is the total direct cost of field rework divided by the total construction phase cost, is 0.054 as far as industry groups of owner-reported construction projects are concerned. The TFRF of each industry group of owner-reported projects is as follows:
Buildings - 0.046
Heavy industrial - 0.044
Infrastructure - 0.057
Light industrial - 0.093
The impact of rework on heavy industrial construction projects and on light industrial construction projects is statistically significant at p<0.05.
2. Based on Table 7 of the study, the TFRF is 0.022 as far as industry groups of contractor-reported construction projects are concerned. The TFRF of each industry group of contractor-reported projects is as follows:
Buildings - 0.000
Heavy industrial - 0.024
Infrastructure - 0.016
Light industrial - 0.021
The impact of rework on buildings and on heavy industrial construction projects is statistically significant at p<0.05.
3. Based on Table 11 of the study, the three greatest sources of rework for each industry group of owner-reported projects and contractor-reported projects is as follows:
Owner-reported projects
---
Buildings - design error/omission; owner change; other
Heavy industrial - design error/omission; other; owner change
Infrastructure - owner change; constructor error/omission; design error/omission
Light industrial - design error/omission; owner change; other
Contractor-reported projects
---
Buildings - constructor error/omission; design error/omission; vendor error/omission
Heavy industrial - design error/omission; owner change; vendor error/omission
Infrastructure - other; design change; design error/omission
Light industrial - design change; owner change; design error/omission
Rework cost as a percentage of total project cost was also explored in XL Catlin's 2013 report "Root Causes & Consequential Cost of Rework." As can be seen in Figure 4.0 of the report, rework cost, on average, is 5% of the total construction project cost. By type, the percentage is as follows;
Commercial industrial - 2-6%
Residential building - 3.15%
Highway - 5%
Heavy industrial - 12.4%
Railway - 10%
MATERIAL WASTE
As for material waste, losses associated with building-related waste in the United States total to over $160 billion, around 14% of the country's $1.13-trillion construction spending. This is based on a Fortune article published in September 2016.
Moreover, according to Table 1 of the U.S. Environmental Protection Agency's report "Construction and Demolition Debris Generation in the United States, 2014," the percentage of material wasted during construction, by type of material, is as follows:
Concrete - 3%
Wood products - 5%
Drywall and plasters - 10%
Steel - 0%
Brick and clay tile - 4%
Asphalt shingles - 10%
Asphalt concrete - 0%
COST OVERRUN
Since the rework costs I found are expressed as a percentage of construction cost not of cost overrun, I looked for how much actual construction costs overshoot planned construction costs. According to the study "Controlling Cost Overrun Factors in Construction Projects in Malaysia," which was published in March 2013, cost escalation or overrun in North America averages 23.6%. Please note, however, that this percentage was based on a study of construction projects worth US$1.5 million to US$8.5 billion.
Unfortunately, I was unable any material indicating the percent difference between the actual construction cost and the best-case construction cost. The cost overrun may be the closest approximation of this, especially if we assume that the planned construction cost is the best-case construction cost.
CONCLUSION
Depending on the type of construction project, rework cost in the United States could be anywhere between 2% and 6% of the total construction cost. For commercial industrial projects, the range is 2%-6%, while, for residential building projects, the average is 3.15%. Losses associated with material waste, on the one hand, represent about 14% of construction spending. The difference between actual cost and best-case cost can be approximated by the cost overrun, which averages 23.6% in North America.