Goldman Sachs published a twenty-page economics report on construction productivity. Fifty-four years of data. Cross-country comparisons across the entire G10.

The diagnosis is correct: U.S. construction labor productivity has declined 30 percent since 1970. The same period in which the rest of the economy more than doubled its productivity. Construction did not stagnate. It went backward.

But the prescription misses the point. And that gap matters if you are the one building.

What Goldman gets right

The data is difficult to dispute.

Regulation is the single largest drag on construction productivity, a 40 percent share of the gap, according to Goldman’s decomposition. Approval delays alone impose nearly a full percentage point of annual productivity loss for every one percent increase in land-use regulation intensity. The U.S. has tightened regulations more than any other G10 country since the 1960s. Australia loosened them and saw construction productivity rise 40 percent since 1991. Same industry. Same physics. Radically different regulatory environments.

Goldman also surfaces the prefabrication collapse. Prefab peaked at 33 percent of U.S. housing starts in the 1960s. Today it sits at 5 percent. Not because the method does not work. It does. Regulatory and incentive structures eliminated it.

And the 40 percent waste figure they validate aligns with what our own research surfaced independently: roughly 40 cents of every capital dollar on a construction project is non-value-add. It evaporates in inefficiencies, coordination failures, and rework.

Where the analysis breaks down

Goldman’s innovation analysis measures hardware. Patents. Physical machines. Supply chain distance between industries.

Their timeline of construction innovation reads like a museum exhibit: bulldozers in the 1920s, cranes in the 1940s, excavators in the 1950s, GPS and drones more recently, and then a single line describing AI as “analyzing data to provide insights for project management and predict maintenance.”

That is among the most generic characterizations of AI’s potential to appear in a serious research document.

AI is not another row on the innovation timeline, equivalent to a laser scanner. It is a categorically different kind of intervention.

The part Goldman’s instruments cannot see

The actual productivity constraint in construction is not the absence of better machines. It is information fragmentation across a project-based, multi-stakeholder delivery model.

A single building project connects hundreds of specialized firms (programmers, designers, engineers, contractors, subcontractors, manufacturers, inspectors) each operating in their own silo, protecting proprietary data, passing incomplete information to the next participant in the chain. Goldman measures patents and supply chain distance. Neither captures this.

Our research found that the most consistent root cause of waste, across every stakeholder group (owners, designers, builders, manufacturers) is ineffective cross-team communication. “All problems in design and construction are social,” one owner told us. Not technical. Not regulatory. Social.

The 40 percent of the productivity gap Goldman attributes to regulation is not separate from the information problem. It is a symptom of it. Approval delays occur because owners cannot read plans, designers do not understand constructability, and permitting authorities treat every building as a completely bespoke product. Coordination friction institutionalized into law.

What this means for you

You are not going to fix regulation on your next project. You are not going to reverse fifty years of prefab decline or alter the supply chain distance between construction and semiconductors.

What you can change is how information moves on your project.

The owners who achieve the best outcomes are not the ones with the most sophisticated contracts or the most experienced GCs. They are the ones who maintain the clearest picture of what is actually happening, early enough to act on it.

Goldman diagnosed the industry accurately. The prescription is a multi-decade policy conversation. Your project starts next quarter.

Start there.