Measuring Productivity in the Construction Industry Canadian Construction Association 87th Annual Conference Cancun, Mexico March 7, 2005 Why Measure Productivity? What is Labour Productivity? Productivity = Output / Input (e.g. Earned hours / Worked hours) Or the reciprocal: Productivity = Input / Output (e.g. Manhours per unit produced) Hypothetical Tender Labour 40% Materials 40% General Conditions & Indirect Costs 10% Overhead 5% Profit 5% Total 100% •Largest cost component • Most volatile • Most critical to control Hypothetical Tender Labour 40% Materials 40% General Conditions & Indirect Costs 10% Overhead 5% Profit 5% Total 100% 45% A 12.5% overrun in the labour component Hypothetical Tender Labour 45% Materials 40% General Conditions & Indirect Costs 10% Overhead 5% Profit 0% Total 100% Wipes out all profit! Factors Affecting Productivity MCA - Labour Estimating Manual - 1986 Factors 1. Stacking of Trades 2. Morale and Attitude 3. Reassignment of Manpower 4. Crew Size Inefficiency 5. Concurrent Operations 6. Dilution of Supervision 7. Learning Curve 8. Errors and Omissions 9. Beneficial Occupancy 10. Joint Occupancy 11. Site Access 12. Logistics 13. Fatigue 14. Ripple 15. Overtime 16 Season and Weather Change Minor Average Severe 10% 5% 5% 10% 5% 10% 5% 1% 15% 5% 5% 10% 8% 10% 10% 10% 20% 15% 10% 20% 15% 15% 15% 3% 25% 12% 12% 25% 10% 15% 15% 20% 30% 30% 15% 30% 25% 25% 30% 6% 40% 20% 30% 50% 12% 20% 20% 30% Common Factors Impacting Labour Productivity Common Causes of Labour Overruns Internal: • • • • • • • Poor planning & management of work Rework & errors Bad estimate Lack of training Morale problems Staff turnover Material & equipment availability Common Causes of Labour Overruns External: • • • • • • Overtime Changes Crowding Trade Stacking Weather Site Access These factors seldom occur in isolation Quantifying Productivity Losses Crew Overmanning U.S Army Corps of Engineers, Modification Impact Evaluation Guide, 1979 % Total Crew Efficiency 100 80 60 40 20 0 0 20 40 60 80 % Crew Size Increase Above Optimum 100 Effect of Congestion (Crowding) on Labour Efficiency U.S. Army Corp of Engineers "Modification Impact Evaluation Guide" - July 1979 % Labour Loss to Inefficiency 20% 15% 10% 5% 0% 0% 5% 10% 15% 20% % Crowding 25% 30% 35% Effects of Overtime US Army Corps of Engineers - 1979 Summary of Overtime Curves Impact Due to Change Orders Effects of Change Orders on Productivity: Civil and Architectural Work 45% % LOSS OF PRODUCTIVITY 40% 35% 30% 25% 20% 15% 10% Reference: Impact of change orders on construction productivity, Moselhi, Leonard, and Fazio Canadian Journal of Civil Engineering, Volume 18, 1991 5% 0% 0% 10% 20% 30% 40% 50% 60% % CHANGE ORDERS CHANGES ONLY CHANGES PLUS ONE OTHER CAUSE CHANGES PLUS TWO OTHER CAUSES 70% PRODUCTIVITY IN % Productivity Effect of Temperature and Relative Humidity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5% RH 15% RH 25%RH 35% RH 45% RH 55% RH 65% RH 75%RH 85% RH 95% RH -20 -10 0 -20 °C 10 20 30 40 50 60 70 80 90 100 110 120 -10 °C 0 °C 10 °C 20 °C EFFECTIVE TEMPERATURE IN °F 30 °C 40 °C Information To Manage By Work Breakdown Structure Equipment Conduit Wire Fixtures Overall Exterior 0.0 2.0 2.0 1.0 5.0 Basement 30.0 10.0 10.0 1.0 51.0 Ground Floor 0.0 3.0 3.0 5.0 11.0 Second Floor 0.0 3.0 3.0 5.0 11.0 Penthouse 15.0 2.0 2.0 3.0 22.0 Overall 45.0 20.0 20.0 15.0 100.0 Output: Earned Manhours Equipment Conduit Wire Fixtures Overall Estimate % Complete Earned MH% Estimate % Complete Earned MH% Estimate % Complete Earned MH% Estimate % Complete Earned MH% Estimate Earned MH% Exterior 0.0 0.0 0.0 2.0 50.0 1.0 2.0 50.0 1.0 1.0 50.0 0.5 5.0 2.5 Basement 30.0 20.0 6.0 10.0 50.0 5.0 10.0 50.0 5.0 1.0 50.0 0.5 51.0 16.5 Ground Floor 0.0 0.0 0.0 3.0 10.0 0.3 3.0 10.0 0.3 5.0 0.0 0.0 11.0 0.6 Second Floor 0.0 0.0 0.0 3.0 5.0 0.15 3.0 5.0 0.15 5.0 0.0 0.0 11.0 0.3 Penthouse 15.0 0.0 0.0 2.0 0.0 0.0 2.0 0.0 0.0 3.0 0.0 0.0 22.0 0.0 Overall 45.0 6.0% 20.0 6.5% 20.0 6.5% 15.0 1.0% 100.0 19.9% Input: Worked Manhours This Period Period 3 Name Category Hours J.Smith Foreman 35 A.Jones Journeyman 35 B.Harris Journeyman 30 S.Webb Apprentice 35 … … … … … … Total 900 Input vs. Output Progress Total Previous Period Total To Date This Period Equipment 4.00 6.00 2.00 Conduit 2.00 6.45 4.45 Wire 2.00 6.45 4.45 Fixtures 0.00 1.00 1.00 Overall Progress 8.00 19.90 11.90 WBS Category Overall Manhours Worked this Period 900 Manhours per 1% job progress 75.6 Bid Manhours Per 1% Progress 100 Performance Index 1.32 Job Tracking Period 1 2 3 4 5 6 7 8 9 10 Planned Progress This Period 5.0 10.0 10.0 10.0 15.0 15.0 10.0 10.0 10.0 5.0 Planned Cumulative Progress 5.0 15.0 25.0 35.0 50.0 65.0 75.0 85.0 95.0 100.0 Planned MH This Period 500 1000 1000 1000 1500 1500 1000 1000 1000 500 Planned Cumulative MH 500 1500 2500 3500 5000 6500 7500 8500 9500 10000 Actual Progress This Period 2.0 6.0 11.9 20.1 20.0 10.0 5.0 5.0 10.0 10.0 Actual Cumulative Progress 2.0 8.0 19.9 40.0 60.0 70.0 75.0 80.0 90.0 100.0 Actual Manhours This Period 400 800 900 1200 1500 1600 1500 1000 1500 1000 Actual Cumulative Manhours 400 1200 2100 3300 4800 6400 7900 8900 10400 11400 Actual MH Per 1% Progress This Period 200.00 133.33 75.63 59.70 75.00 160.00 300.00 200.00 150.00 100.00 Cumulative MH Per 1% Progress 200.00 150.00 105.53 82.50 80.00 91.43 105.33 111.25 115.56 114.00 Performance Index This Period 0.50 0.75 1.32 1.68 1.33 0.63 0.33 0.50 0.67 1.00 Cumulative Performance Index 0.50 0.67 0.95 1.21 1.25 1.09 0.95 0.90 0.87 0.88 Planned Performance Index 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Performance Index 1.40 1.20 Performance Index 1.00 0.80 0.60 0.40 Cumulative Performance Index Planned Performance Index 0.20 0.00 1 2 3 4 5 Period 6 7 8 9 10 Recovering Productivity Losses Through Claims Three Basic Approaches 1. Total Cost Claim 2. Industry Charts 3. Measured Mile Differential Productivity Calculation AFFECTED PERIOD Productivity 2.18 NORMAL PERIOD AFFECTED PERIOD Productivity 2.86 Productivity 2.59 2.44 2.22 2.27 2.01 2.84 2.93 2.57 2.58 2.62 2.08 SQ.FT./HR. PRODUCTIVITY 2.81 JUNE JULY LOSS OF PRODUCTIVITY 23.6% AUG SEPT OCT MAY JUNE JULY AUG Overtime 4.45% (no o/t) Manpower Level 203 FW/Cond. Ratio 0.040 (est. 0.038) Boxes 0.010 (est. 0.009) Quantity over 23% of total (200 opt.) Productivity 2.86 sq.ft./hr SEPT OCT LOSS OF PRODUCTIVITY 9.4% Calculation of Loss of Productivity Total Actual Manhours 419,201 MH’s Would-Have-Been Manhours (857,262 sq. ft./2.85 sq.ft./MH) 300,793 MH’s Loss of Productivity 118,408 MH’s or 28.25% Why Measure Productivity? • You can’t correct a problem if you don’t know it exists • By the time the job is over, you’ve lost the money • You will have current information to manage and control your project • You should correct losses arising from internal problems • You may be able to recover losses arising from external causes