Labor productivity is a vital component of any building project. Without it, projects are delayed, and budgets quickly become overwhelmed. That’s is why it’s important that you make certain all your contract workers are singing from the same hymn sheet in terms of your construction project vision including any deadlines.
Making sure that all your contract workers work in sync as part of a team can boost productivity and ensure your project comes in on time and on budget. Poor labor productivity is one of the main reasons for cost overruns and projects falling behind schedule.
What exactly do we mean by labor productivity?
Generally, labor productivity represents the measurement or unit of work that’s completed over a specific period of time. A contractor usually bids a scope of work centered around clear expectations regarding labor costs and labor productivity. A commensurable loss in terms of labor productivity occurs when a contractor expends more hours to finish a given unit of work than it would have used without the intervening factor.
To help you recognize and prevent poor productivity in your work force, we’re going to describe some of the most recognized factors affecting labor productivity in the construction industry.
Each factor has a different effect on productivity, some with direct effects, while others are more indirect. Some will affect a project immediately and others will take longer to have a measurable impact.
Keep in mind that many of the below listed factors are not exclusive to one category. Additionally, each factor will have different effects depending on the specific characteristics of the project.
Before proceeding, we should ask, why be concerned about labor productivity?
- About one-quarter of all construction cost is field labor.
- Labor is usually the largest non-material cost in a project
- Very little is understood about how to best measure field productivity or how to influence it.
- Construction labor shortages will become more and more common as the population ages.
Okay, what are the major factors affecting labor productivity in the construction industry?
Overtime. Time and again, studies over the years have consistently demonstrated that productivity predictably suffers as the amount of overtime work increases. The most frequently stated reasons for this result include fatigue, a rise in absenteeism, a decline in morale, a reduction in supervision effectiveness, inferior workmanship causing higher than normal rework, and an increase in onsite accidents, among other results.
One labor productivity observer has gone so far as to suggest that “ . . . on the average, no matter how many hours a week you work, you will only achieve fifty hours of results.” The thinking underlying this conviction is that at the outset, overtime work will result in increased output, but if it’s sustained for a prolonged period, the output may actually fall off for the reasons just stated.
The effect of continued overtime work on labor productivity is possibly one of the most scrutinized productivity loss factors in the construction industry.
Weather. Let’s face it, some bad weather is to be expected on almost every construction project. Even so, adverse weather is a significant cause of lost productivity on a construction project. The parties’ contract generally will address where the contractor is entitled to additional time frame for “unusually severe weather” and the type of proof that may be required for submitting a claim.
The lost productivity may include those days when the contractor experiences adverse weather, but also when delays caused by the owner push the project schedule into weather conditions that impact performance; for example, from fall weather into winter.
Absenteeism and turnover. There is an immense amount of time and money lost that is linked to high turnover and absenteeism on projects. Construction projects in certain areas in Allegheny and surrounding counties, where there is low manpower and an above average demand for labor, will generally be more impacted than other areas.
Once again, extreme weather conditions (such as extreme heat or cold) will also increase absenteeism and turnover. Witness the recent Polar Vortex that caused temperatures to dip below zero. Replacement workers are usually not acquainted with the work and usually require experienced workers to stop work and show them what to do.
The absenteeism and turnover factor just might lead to the missing man syndrome. When a crew hits it productive peak, the absence of any member of the crew may impact the crew’s production rate because the crew will typically be unable to accomplish the same production rate with fewer resources or, perhaps, a different mix of skill and experience levels.
Moreover. if a crew suffers from constant turnover, it’s highly unlikely that they will achieve a high level of productivity, simply because one or more crew members may be on the learning curve and, consequently, reduce overall productivity of the entire crew.
In fact, the learning curve is a factor in and of itself. At the beginning of any construction project, there is the usual learning curve when workers become acquainted with the project, its location, the required quality standards, and so forth.
This is to be anticipated and is typically included in as-bid costs. Then again, if the work on the project is shut down for any period of time and labor crews are laid off, when work resumes, the labor crews brought back to the project could possibly have to go through an additional learning curve.
If this happens more than once, then each time a work stoppage takes place, another learning curve productivity loss might follow.
Morale and attitude. The morale and attitude of your contract workers can seriously dent your productivity and result in any number of other serious issues if not handled promptly.
It’s been demonstrated that the confidence and discipline of a contract worker can be lowered due to a variety of issues, including conflicts, disputes, excessive health and safety hazards, overtime, poor site conditions, contract changes and an unkempt workspace, among others
Logistics. Inadequate or inefficient material handling, owner-furnished material, procurement practices, or an absence of controls can lead to procurement or delivery difficulties, as well as added concerns.
This prevents, prolongs or upsets the typical workflow to a work area, warehouse or laydown yard. This can also result from the swap of materials owing to contract modifications, defects or delays at the work site.
The Mechanical Contractors of America (MCAA) Table of labor Productivity factors find that logistics has the biggest potential impact on productivity, as much as 50 percent or more. https://www.mcaa.org/news/new-resource-clarifies-process-selecting-labor-factors/
Crowding and stacking of trades. A contractor may be literally “jammed” with numerous trade contractors working in an area that was not otherwise anticipated. It often results in congestion of personnel, inability to use or locate tools conveniently, increased loss of tools, additional safety hazards and prevention of optimum crew size.
Consequently, this crowding and stacking of trades can have a huge impact on labor productivity. Even the courts have agreed that a loss of efficiency suffered by a subcontractor when the general contractor accelerated the work, causing overcrowding on the project, boosted man-hours and unavailability of materials.
Competition for skilled labor. Let’s say a nearby project begins at the same time a project that was already estimated and planned to use a stated level of labor skill and availability, and, as a result, a competition for that labor takes place.
Financial incentives, work rule changes and other issues may result in labor leaving one site for the other, resulting in lower productivity and increased costs for the first contractor. Further, the replacement labor may be more costly and even less skilled.
Shift work. This is usually when work is done at any time other than the first shift or the morning shift of a conventional work day. Work on second and third shifts have proven to be less efficient. Plus, the reduction in available daylight hours and difficulties of trying to pick up where the last shift left off normally results in less productivity.
Over-manning. This occurs when planners hire too many workers for the estimated work scope and project length. At times, when labor in specific areas is in short supply, planners may overreact for potential absenteeism and turnover, resulting in over-staffing. Another reason is the false assumption that additional in manpower will always lead to increased worker productivity.
Fatigue. Workers who are tired tend to slow down, make more mistakes than normal and suffer more accidents and injuries, reducing productivity for the entire crew.
Changes, ripple impact, cumulative impact of multiple changes and rework. It pretty much goes without saying, all projects encounter some change during construction. According to the Independent Project Analysis Group, an average of over 35 percent of all construction projects will have a major change. This is simply to be expected. Some construction observers believe that a 5-10 percent cost growth due to changes is the expected norm.
However, major changes (changes well beyond the norm), change outside the expected scope of work, multiple changes, or the cumulative impact of changes may all affect productivity. As an example, the need to rip out work already in place, the delays attendant to changes, the need to plan and re-sequence work may all cause productivity to suffer.
So, you say, we’ve described any number of factors that have an effect on labor productivity. But, how can you be sure there really is a need to improve upon productivity levels. What do construction industry professionals and observers have to say?
- According to the Bureau of Labor Statistics, there is a 21.4 percent industry wide turnover rate in the construction market, making it one of the highest rates of all industries.
- The McKinsey Global Institute reports that $1.63 trillion worldwide could be saved annually from infrastructure productivity changes.
- MCAA reports there is a 50 percent or more impact on productivity as a result of issues with construction logistics.
- Whirlwind Steel sees a 10 percent impact on productivity as a result of late crew build-up.
- Emerson report that up to 30 percent of initial data created during design and construction phases is lost by project closeout.
- KPMG finds that 82 percent of owners feel they need more collaboration with their contractors.
- A recent quality-based survey found that up to 70 percent of total rework experienced in construction and engineering projects are a result of designed-induced rework.
- Navigant Construction Forum finds that 9 percent of total project cost is closer to the actual cost of rework, considering both direct and indirect factors combined.
- JB Knowledge reports that nearly 60 percent of construction companies are not investigating any new technologies. They add that 40 percent of construction firms say new technology has not been implemented due to lack of support, followed closely by budget concerns at 37 percent and employee hesitance at 32 percent.
- PlanGrid+FMI states that 35 percent of construction professionals time is spent on non-productive activities including looking for project information, conflict resolution and dealing with mistakes and rework.
And the statistics go on.
Labor productivity is the linchpin of a profitable construction company. By knowing and coming to understand the factors that have an effect on workers, you can begin to avoid many of the cost overruns that have pushed others out of business.
Need help in determining how to improve labor productivity on your current or next project, contact PDDM Solutions at https://pddmsolutions.com/contact/ for some worthwhile insights or call us today at 724-788-4040.