A Risk Factor
Our ongoing discussion of Risk has led us to take a look at labor productivity. One of the most important factors in accurate estimating, planning, and executing profitable contracts is forecasting a productive labor force that can produce the desired output. However, accurate estimates of needed labor require a consistent method for determining historic labor productivity and applying the resulting formulas to future projects. Because one project is not like the next when it comes to productivity, the industry has struggled to come up with a viable formula.
Put simply, productivity may be defined as output per hour. Labor productivity, therefore, is equal to O/L, where O is output, and L is hours worked. Likewise, it would seem simple for estimators and planners to develop a statistical data base for an individual construction concern and utilize the productivity data from past projects to project efficient labor utilization for future projects. However, from one job to the next, there are many variables that impact productivity. Therefore, good construction planning should consider and track labor factors (variables) in past projects to accurately project their potential impact on future labor productivity. For example, what labor factors (variable conditions) were present in historical jobs that might not be factors in the labor productivity of future jobs? And vice/versa. What factors could be present in future jobs that were not factors in the past?
Factors That Impact Productivity
Below a list of the variable factors that impact labor productivity:
- Morale – willingness-confidence-discipline in the workforce.
- Fatigue – Aggressive goals + efficient labor planning.
- Stacking of Trades – too many trades working in limited space.
- Absenteeism and Turnover-related to morale, pay scale, and labor shortage.
- Change orders – unplanned and rushed – alter workflow.
- Start/Stop – sudden or prolonged work stoppage.
- Reassignment of manpower – inefficient personnel planning.
- Late Crew Build-up – shortage of skilled labor.
- Crew size inefficiency. Too big – too small.
- Site Access – interferences to the convenient or planned access to work areas.
- Logistics – inefficient or poor material handling.
- Security Check – excessive time spent inspecting workers.
- Learning Curve – due to a skilled labor shortage.
- Ripple effect – one trade inefficiency affects another
- Confined Space – limited egress and ventilation.
- Hazardous Work Area – requires special safety equipment and clothing.
- Dilution of Supervision – Too much work in expanding market.
- Shorter Daylight Hours – time of year must be considered in labor productivity estimates
- Weather and season changes.
- Rain – always a factor.
- Shift Work – 2nd and 3rd shifts are less efficient.
- Working in Operating Area – ongoing operations interfere with construction and vice versa.
- Over-manning – hampers productivity rather than enhancing it.
- Tool Shortage – amazing how often this happens.
- Area Practices – unique customs and practices affect workflow.
- Proximity of Work – Jobs taken outside normal geography are dramatically less productive.
No Easy Answer
Subsequently, the list above is by no means exhaustive. Any estimator or planner could add another twenty variables they have encountered. So, how can planners reduce the labor productivity risk in future projects? The Pre-contract planning techniques covered in the research here on the Simplar website are a good beginning. In addition, identifying labor productivity factors that were present on historic projects and assigning a weighted value to each factor that will be present on the project you are estimating or planning is a start. In future blogs we will discuss the use of “deflators” to arrive at more accurate output value and the impact of new technologies as they are introduced.