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Typically, in this annual report, I highlight what has happened during the year, but during 2011, not much occurred within the construction industry. So I have decided to identify the obstacle to improvement.

The construction industry has had another tough year in the United States with 2011 annual volume hovering around the $800 billion mark all year. The employment numbers reveal the pain. Residential construction employment is down to about 560,000 workers from a peak of around 1,000,000 in 2006. This is a drop of 46 percent. The good news is that the 560,000 level has been stable since about mid 2010. Nonresidential construction is down from a peak of around 825,000 to 668,200, according to the latest Bureau of Labor Statistics report. This is a 19 percent drop since 2007. Unfortunately the news isn’t getting better as November 2011 saw another 12,000 industry jobs lost.

What makes this disturbing is that despite a huge backlog of infrastructure work, we can’t seem to get our act together. It has been suggested that we need an infrastructure bank, but we are bogged down in arguing over the shape of the table. Some want a national bank, others want state banks, and some don’t want any banks. The result: as a nation, we flounder. Actions such as shutting down the gas line project from Canada are disturbing.

In contrast, the Gulf Cooperative Council (GCC), consisting of Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman and Bahrain, are expected to have higher construction volumes in 2012 than the United States. In part, their investment in infrastructure has stimulated their economies. Most people seem to understand the limitations of the government, whether at the national, state or local level, to fund all the necessary infrastructure work. Considering the current economic situation, our government leaders should being doing everything possible to bring in private capital, but instead they have been acting like petty bureaucrats who can’t get out of their own way.

Worse, the government is crippling the industry. Only yesterday I was told a story about an OSHA inspection. After the examination, the inspector informed the contractor that he couldn’t really find anything wrong, but he had to write up something so it would appear he was doing his job. The contractor then had to negotiate a fine so the inspector looked good. This is insanity. The list of regulations that are crippling productivity with no benefit are staggering because they have been created by people who have no idea how things work.Professor and historian Walter Russell Mead wrote, “The more complex a society and the more rapidly it is changing, the more need it has need for multi-disciplinary, synthesizing (thinkers) who are focused on communicating serious ideas to a large audience.” Yet we have groups off behind closed doors writing rules and regulations that have no touch with reality.

Our nation is more polarized than ever because each group feels they have the unique answer. Dave Maney, publisher of Economaney.com, says that neither the right nor the left has the answer. What’s been missing is what Roger Martin, the dean of the Rotman School of Management at the University of Toronto, calls integrative thinking. This is defined as “the ability to constructively face the tensions of opposing models, and instead of choosing one at the expense of the other, generating a creative resolution of the tension in the form of a new model that contains elements of both models, but is superior to each.”

Applying this concept to construction, we get integrated project delivery, which produces some outstanding results. For example, the Department of Energy just completed its National Renewable Energy Laboratory in Golden, Colorado. It’s the most energy-efficient building in North America. Its cost is at the 25th percentile. All the technology in the building is at least 10 years old. When asked how this was possible, the answer was collaboration. In an NCS Radio interview with Philip Macey, I asked why they went with design-build. He responded because when they tried the design-bid-build approach, it came in over budget. The integrated approach saved the day.
We are desperately missing leadership in Washington. Sure, some are trying very hard, but they have little to show for it. No one asks a coach how hard he is trying to win games; if he doesn’t win, he gets fired. Well, if those in Washington can’t get the job done, they should be fired.

However, if they want to save their jobs, they need to embrace integrative thinking. Get the people who know what to do and create solutions in there instead hiding behind ideology whether on the right or left. The construction industry deserves better; the public deserves better; we all deserve better from our government.

In essence, lead, follow or get out of the way.