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Ch 8
Daily Labor Guide
Prepared and Presented By: Engineer Naji Shelala BCE – CCP – PMP – Arbitrator Cost Control Expert
Daily Labor Guide 1/18
Ch 8
Labor Productivity Productivity in construction is often broadly defined as output per labor hour. Since labor constitutes a large part of the construction cost and the quantity of labor hours in performing a task in construction is more susceptible to the influence of management than are materials or capital, this productivity measure is often referred to as labor productivity. However, it is important to note that labor productivity is a measure of the overall effectiveness of an operating system in utilizing labor, equipment and capital to convert labor efforts into useful output, and is not a measure of the capabilities of labor alone. For example, by investing in a piece of new equipment to perform certain tasks in construction, output may be increased for the same number of labor hours, thus resulting in higher labor productivity. Construction output may be expressed in terms of functional units or constant dollars. In the former case, labor productivity is associated with units of product per labor hour, such as cubic yards of concrete placed per hour or miles of highway paved per hour. In the latter case, labor productivity is identified with value of construction (in constant dollars) per labor hour. The value of construction in this regard is not measured by the benefit of constructed facilities, but by construction cost. Labor productivity measured in this way requires considerable care in interpretation. While each contractor or owner is free to use its own system to measure labor productivity at a site, it is a good practice to set up a system which can be used to track productivity trends over time and in varied locations. Considerable efforts are required to collect information regionally or nationally over a number of years to produce such results. The productivity indices compiled from statistical data should include parameters such as the performance of major crafts, effects of project size, type and location, and other major project influences. In order to develop industry-wide standards of performance, there must be a general agreement on the measures to be useful for compiling data. Then, the job site productivity data collected by various contractors and owners can be correlated and analyzed to develop certain measures for each of the major segment of the construction industry. Because of the diversity of the construction industry, a single index for the entire industry is neither meaningful nor reliable. Productivity indices may be developed for major segments of the construction industry nationwide if reliable statistical data can be obtained for separate industrial segments. _________________________________________________________________
Daily Labor Guide 2/18
Ch 8
Labor Cost The labor cost per unit (USD / MS) is the average labor rate per hour (USD / Hr) divided by the production units per hours (MS / Hr). Labor costs for both residential and commercial include the basic wage, the employer's contribution to welfare, pension, vacation and apprentice funds and all tax and insurance charges based on wages. To find the units of work done per man in an 8-hour day, divide 8 by the manhours per unit. To find the units done by a crew in an 8-hour day, multiply the units per man per 8-hour day by the number of crew members. Manhours include all productive labor normally associated with installing the materials described. This will usually include tasks such as: 1. Unloading and storing construction materials, tools and equipment on site. 2. Moving tools and equipment from a storage area or truck on site at the beginning of the day. 3. Returning tools and equipment to a storage area or truck on site at the end of the day. 4. Normal time lost for work breaks. 5. Planning and discussing the work to be performed. 6. Normal handling, measuring, cutting and fitting. 7. Keeping a record of the time spent and work done. 8. Regular cleanup of construction debris. 9. Infrequent correction or repairs required because of faulty installation. Adjust the Labor Cost to the job you are figuring when your actual hourly labor cost is known or can be estimated. If the hourly wage rates listed are not accurate, divide your known or estimated cost per hour by the listed cost per hour. Labor estimates assume that materials are standard grade, appropriate tools are on hand, work done by other crafts is adequate, layout and installation are relatively uncomplicated, and working conditions don't slow progress. Working conditions at the job site have a major affect on labor cost. Estimating experience and careful analysis can help you predict the affect of most changes in working conditions. Obviously, no single adjustment will apply on all jobs. But the adjustments that follow should help you produce more accurate labor estimates. More than one condition may apply on a job.
Daily Labor Guide 3/18
Ch 8
Factors Affecting Job-Site Productivity Job-site productivity is influenced by many factors which can be characterized either as labor characteristics, project work conditions or as non-productive activities. The labor characteristics include: 1) 2) 3) 4) 5) 6) 7) 8) 9)
Age, skill and experience of workforce leadership and motivation of workforce Job size and complexity. Job site accessibility. Labor availability. Equipment utilization. Contractual agreements. Local climate. Local cultural characteristics, particularly in foreign operations.
Positive Productivity Factors 1.25
1.25
1.2
1.15
1.2
1.15
1.15
1.1
1.15
Factor Index 1.1
1.05
1 Similar Works
Good Labor TechnologyConstruction Clear Work Management Coordination Training Schedule
The non-productive activities associated with a project may or may not be paid by the owner, but they nevertheless take up potential labor resources which can otherwise be directed to the project. The non-productive activities include among other factors: 1) 2) 3) 4) 5) 6) 7)
Indirect labor required to maintain the progress of the project Rework for correcting unsatisfactory work Temporary work stoppage due to inclement weather or material shortage Time off for union activities Absentee time, including late start and early quits Non-working holidays Strikes
Each category of factors affects the productive labor available to a project as well as the on-site labor efficiency. Daily Labor Guide 4/18
Ch 8
Negative Productivity Factors
0.9 1
0.85
0.9
0.85
0.8
0.75
0.9 0.8 0.7 0.6
Factor Index 0.5 0.4 0.3 0.2 0.1 0 Cash Lack of Job Site Availability Resourses Complexity accessibility
Quality Control
Safety Regulation
Labor Characteristics Performance analysis is a common tool for assessing worker quality and contribution. Factors that might be evaluated include:
Quality of Work - caliber of work produced or accomplished.
Quantity of Work - volume of acceptable work
Job Knowledge - demonstrated knowledge of requirements, methods, techniques, and skills involved in doing the job and in applying these to increase productivity.
Related Work Knowledge - knowledge of effects of work upon other areas
Judgment - soundness of conclusions, decisions and actions.
Initiative - ability to take effective action without being told.
Resource Utilization - ability to delineate project needs and locate, plan and effectively use all resources available.
Analytical Ability - effectiveness in thinking through a problem and reaching sound conclusions.
Communicative Ability - effectiveness in using oral and written communications and in keeping subordinates, associates, superiors and others adequately informed. Daily Labor Guide
5/18
Ch 8
Interpersonal Skills - effectiveness in relating in an appropriate and productive manner to others.
Ability to Work Under Pressure - ability to meet tight deadlines and adapt to changes.
Safety Consciousness - has knowledge of good safety practices and demonstrates awareness of own personal safety and the safety of others.
Profit and Cost Sensitivity - ability to seek out, generate and implement profit-making ideas.
Planning Effectiveness - ability to anticipate needs, forecast conditions, set goals and standards, plan and schedule work and measure results.
Leadership - ability to develop in others the willingness and desire to work towards common objectives.
Delegating - effectiveness in delegating work appropriately.
Development People - ability to select, train, and appraise personnel, set standards of performance, and provide motivation to grow in their capacity.
Daily Labor Guide 6/18
Ch 8
Data Collection When estimating, cost data should be collected. Data may be collected from similar projects, data bases, and published reports. The basis of the cost data should be documented as part of the detailed backup for the estimate. The amount of data collected will depend on the time available to perform the estimate and the type of estimate, as well as the budget allocation for the estimate's preparation. When using the collected cost data, the estimator must be aware of the source of the data and make adjustments where necessary. Data from one project may not be consistent or comparable with data from a different project. For example, if historical costs data is used, the costs may not be applicable due to escalation, regulatory changes, or geographical differences. The data should be reviewed and adjustments (normalization) should be made before it is used in the estimate. A. How to Estimate Direct Costs In the initial stages of project development, estimates must be derived by using various relationships. As the project develops and more detail is available, the estimate also will be in more detail. Following are some general steps that may be used for developing the direct costs of a detailed estimate. B. Material Takeoff A material, labor, and equipment takeoff is developed from the drawing and specification review. The amount of detailed takeoff will vary with the amount of design detail. A planning estimate has minimal detail, while a Title II estimate has a great deal of detail. The takeoffs are divided into categories or accounts, and each account has sub accounts. Each project or program should have an established code of accounts. By listing the accounts, a checklist of potential items and activities that should be included in an estimate is formed. Each account should be considered, even when developing planning estimates, to help eliminate any omissions or oversights. B. Labor Several good publications provide an estimate of the labor hours required for a task that the estimator should use unless adequate experience has given the estimator a more accurate base for determining labor hours required. One important item that must be remembered when using general estimating publications is that these publications are based on a national average construction project for private industry. The situation at various sites may not be the same as an average construction site. Some examples of possible differences are: Daily Labor Guide 7/18
Ch 8
(1) (2) (3) (4) (5)
Security areas, Remote locations, Nuclear radiation areas, Degrees of inspection, Documentation, etc.
For reasons like these, local productivity studies should be conducted to monitor the productivity at the specific site versus the labor hours given in the general estimating publications. If an estimate is derived using the publications, the site productivity factor must be incorporated into the estimated labor-hours.
Degree of Inspection vs Phases of Work 100%
Degree of Inspection
90%
80%
70%
60%
50%
40%
30% Phase 1- Concrete Works
Phase 2- Electro-Mechanical Rough in Works
Phase 3- Finishing Works
Phase 4- Closing and Handing Over
Phases of Work
This should be done prior to multiplication of the labor-hours by the labor rate. When estimating labor costs, the worker's base rate plus all payroll indirect costs and payroll insurance, are multiplied by the estimated labor hours to generate the labor cost. Typically, this sum is handled as a direct labor cost. For ease of estimating, an average crew rate can be used and rounded to the nearest even dollar hourly rate.
C. Special Conditions Consideration must be given to all factors that affect construction. Some of these factors are: Daily Labor Guide 8/18
Ch 8
Availability of skilled and experienced manpower and their productivity; The need for overtime work; The anticipated weather conditions during the construction period; Work in congested areas or in radiation areas; Security requirements imposed on the work area; Use of respirators and special clothing.
Special conditions may be estimated by applying a factor; for example, 10 percent was applied to the labor hours for loss of productivity due to work in a congested area. Other items may be calculated by performing a detailed takeoff. Overtime would be required to complete the activity and the number of hours and rates could be calculated. _________________________________________________________________
Daily Labor Guide 9/18
Ch 8
The Management Team The use of a Management Team is to establish a Value Analysis problem-solving. Many problems can be quickly solved, greatly reducing delays encountered in the past similar projects. The Management Team can provide a natural guidance for building consensus. The Team discusses and analyzes design criteria on the basis of functions to be performed for each system and subsystem within the function of the whole project design, taking into consideration local and special requirements. The Team also separate needs from desires and identify over designed and high cost areas. It compare level of required performances to the level set by the design, and Identify high cost areas and generate alternatives that have better value. Challenge safety margins and contingencies; evaluate to see if they exceed needed requirements. Make sure that the design under study is below or at least within budget without sacrificing performance or quality. All of this depends on a case by case situation. The aim is to increase the value of the project or product by increasing the function or reducing the cost without undermining performance. Challenging economic conditions have construction owners and managers looking for ways to reduce cost. The cheapest solution, however, is not necessarily the most cost effective. Factors that cause construction process variability must be identified and constantly minimized. At the same time, the process must be brought to a higher level of productive performance. Any key events that can significantly interfere with the process must be identified, and action taken pro-actively to minimize their impact. From time to time, productivity of skilled construction workers has been studied by so- called ‘wrench time’ studies often, regrettably, used in faultfinding rather than problem solving. Nevertheless, systematically applied statistical analysis of workforce utilization as a tool enables managers to steadily lower the amount of labor required on labor-intensive projects by as much as one-third, or more.
Efficiency Scale Efficiency = Value Produced / Value Invested In Labor-Hours OR
= Productively Used Labor-Hours / Total Labor-Hours
Daily Labor Guide 10/18
Ch 8
How can uncertainty be reduced? The answer is: through better information. Providing information about process performance reduces uncertainty and variability one of the techniques of control that makes the system more predictable. The level of productive utilization in the work process must be raised and variability reduced by means of cause-and-effect analysis and corrective action on below-average results. Under-utilized and wasted labor hours and the variability of the construction work process can be greatly reduced, and the average level of productivity brought up by taking prompt corrective action, e.g., by minimizing nonvalue-added, indirect work activity, such as excessive ‘walking’, or lost production time, such as ‘waiting’- activities for which the customer does not want to pay. SUMMARY Why should we care about measuring efficiency of the work process? Because reliable and accurate data to support construction project productivity measures are needed. Determining how to measure the efficiency of the construction process is the key to the productivity measurement problem. A fundamental construction productivity problem is that projects customarily apply project control, but little or no systematic attention is given to controlling the ‘production’ process. Project control focuses on project outcomes; process control complements project control by adding focus on efficiency and productivity of execution. Production management can be seen as integral to the labor-intensive construction process. The process lends itself to helpful statistical analysis. Reduction of variability and raising the level of performance are signs of an improving construction process. While planning, estimating and project preparation are indispensable, measuring and analyzing the execution work process provides continuous daily feedback to continuously maximize the efficiency of the construction process. New management insight can be obtained cost-effectively by objective statistical sampling of work activities in the field – and reduce labor-hour requirements by tracking costs back to work activities. ________________________________________________________________
Daily Labor Guide 11/18
Ch 8
Labor Index Factor A Base labor productivity may be defined for a set of work conditions specified by the owner or contractor who wishes to observe and measure the labor performance over a period of time under such conditions. A labor productivity index may then be defined as the ratio of the job-site labor productivity under a different set of work conditions to the base labor productivity, and is a measure of the relative labor efficiency of a project under this new set of work conditions. The effects of various factors related to work conditions on a new project can be estimated in advance, some more accurately than others. For example, for very large construction projects, the labor productivity index tends to decrease as the project size and/or complexity increase because of logistic problems and the "learning" that the work force must undergo before adjusting to the new environment. Job-site accessibility often may reduce the labor productivity index if the workers must perform their jobs in round about ways, such as avoiding traffic in repaving the highway surface or maintaining the operation of a plant during renovation. Labor availability in the local market is another factor. Shortage of local labor will force the contractor to bring in non-local labor or schedule overtime work or both. In either case, the labor efficiency will be reduced in addition to incurring additional expenses. The degree of equipment utilization and mechanization of a construction project clearly will have direct bearing on job-site labor productivity. The contractual agreements play an important role in the utilization of union or non-union labor, the use of subcontractors and the degree of field supervision, all of which will impact job-site labor productivity. Since on-site construction essentially involves outdoor activities, the local climate will influence the efficiency of workers directly. In foreign operations, the cultural characteristics of the host country should be observed in assessing the labor efficiency. Non-Productive Activities The non-productive activities associated with a project should also be examined in order to examine the productive labor yield, which is defined as the ratio of direct labor hours devoted to the completion of a project to the potential labor hours. The direct labor hours are estimated on the basis of the best possible conditions at a job site by excluding all factors which may reduce the productive labor yield. For example, in the repaving of highway surface, the flagmen required to divert traffic represent indirect labor which does not contribute to the labor efficiency of the paving crew if the highway is closed to the traffic. Daily Labor Guide 12/18
Ch 8
Similarly, for large projects in remote areas, indirect labor may be used to provide housing and infrastructure for the workers hired to supply the direct labor for a project. The labor hours spent on rework to correct unsatisfactory original work represent extra time taken away from potential labor hours. The labor hours related to such activities must be deducted from the potential labor hours in order to obtain the actual productive labor yield. Effects of job size on productivity A contractor has established that under a set of "standard" work conditions for building construction, a job requiring 500,000 labor hours is considered standard in determining the base labor productivity. All other factors being the same, the labor productivity index will increase to 1.1 or 110% for a job requiring only 400,000 labor-hours. Assuming that a linear relation exists for the range between jobs requiring 300,000 to 700,000 labor hours as shown, determine the labor productivity index for a new job requiring 650,000 labor hours under otherwise the same set of work conditions.
1
Labor Index
0.95
0.9
0.85
0.8
0.75 1
2
3
4
5
6
7
Job Size (100,000 Lab hr) Illustrative Relationship between Productivity Index and Job Size The labor productivity index I for the new job can be obtained by linear interpolation of the available data as follows: This implies that labor is 15% less productive on the large job than on the standard project. _________________________________________________________________
Daily Labor Guide 13/18
Ch 8
Loss of Efficiency and Productivity Due to Effects of Weather The weather everybody watches it, talks about it, but nobody does anything about it, or so it’s said. But in the construction industry, that’s not really the case. Most contractors take careful notice of local and regional weather patterns, the norms, and trends, and schedule their construction projects accordingly. As- planned construction schedules, prepared between the time of estimating and the project’s startup, are almost always “weather sensitive” and are prepared to take advantage of favorable seasonal, local, or regional weather patterns and avoid the unfavorable ones. Thus, when a project doesn’t start on time (as scheduled or promised by the owner at bid time) or is delayed after it starts, weather may become an all-important factor in reducing planned productivity and efficiency. It’s much more than the occasional abnormal or unusual weather conditions encountered on a construction project. Those things “happen,” and most construction contracts allow excusable delay time extensions but no money for them on a day-added- for-a-day-lost basis. What virtually no construction contract recognizes or addresses is the shifting of entire portions of a construction project’s work into weather conditions that are wholly unsuitable to that type of work. When the shift occurs, the contractor incurs enormous losses in the number of extra manhours spent, additional costs, and further delays of the project and work. The following types of weather disrupt, delay, and create efficiency and productivity losses: Low Temperatures and Wind Chill (Cold Weather) Worker efficiency and productivity drop as the temperature drops. The combination of low temperatures and high, sustained winds creates a combined effect known as “wind chill.” Workers who perform manual labor and move frequently from place to place are severely affected by this factor. Under extreme wind chill conditions, efficiency and productivity can drop 50% or greater. The best way to quantify efficiency losses due to wind chill is by comparing productivity from wind chill- affected work periods to that measured during normal work periods, thereby determining the difference. In the absence of productivity measurements from daily construction record reports, the second best method for quantifying wind chill efficiency losses is by applying tabular and formula data. Daily Labor Guide 14/18
Ch 8
Use of other methodologies only requires payroll (manhours) data and weather data sorted by date. The data for payroll, temperature, and wind are entered into a spreadsheet program by date, which then uses the methodologies to calculate the weather inefficiencies and their costs. The costs for protection from cold weather work are also considered a loss factor.
Produvtivity Rate Due to Effects of Weather 100%
100%100% 95%
95% 95%
Productivity Rate
90% 85% 80%
80%
80%
70% 60%
60%
40% -20
-10
0
10
20
30
40
Temp (C)
High Temperatures and Humidity (Hot Weather) Just as labor efficiency and productivity decline in cold weather, similar losses also occur when temperatures rise above 30 (C) to 40 and beyond. The inefficiencies are quantified and claimed by actual measurement of productivity (units produced divided by manhours expended) in hot weather (high temperatures) and comparing that measurement with normal weather (moderate temperatures) productivity and then claiming the difference. The combined effects of high temperatures and high humidity levels must also be considered. A hot work day with a 15% humidity level may have relatively little effect on efficiency.
Daily Labor Guide 15/18
50
Ch 8
Since most contractors plan projects for warmer weather in the temperate regions, they generally do not have cause or reason to claim hot weather efficiency losses. For such, contractors usually don’t employ manual labor on very hot days or during those daily hours when it’s the hottest and the inefficiencies are the greatest. However, when forced to work in those conditions as a result of delays, disruptions, or interferences, the consequential efficiency losses can be claimed. Hot weather protection and safety “extras” are also claimable. Wind-Only Effects In some areas, high winds, irrespective of normal temperatures and ranges, can cause unusually high efficiency losses. For instance, blowing dust and sand can cause severe labor efficiency losses and destroy sensitive equipment and machinery. High winds are also a severe cause of inefficiency on structural steel erection projects, particularly high-rise structures. Every ironworker knows the old saying (paraphrased): “One hand for me and one hand for the company until the wind blows then it’s both hands for me and forget the company!” In summary, the key to weather-related claims is entitlement whether the work shifted through the actions or behavior of others into inefficiency and productivity losses due to unsuitable weather conditions and, if so, how the losses can be quantified in terms of costs (damages). A clause in a construction contract that attempts to allocate the effects of all but “abnormal or unusual” weather conditions to the contractor does not excuse an owner, construction manager, or design professional from responsibility for damages caused by bad weather conditions encountered during time periods when the contractor hadn’t scheduled work to be done, but was forced into it by non contractor caused delays. Planning around bad weather is something most con- tractors do very well when they bid and schedule a project. But being pushed into bad weather is some- thing no contractor can accommodate without added cost. However, the consequential effects can be determined, and the costs are payable by the party that did the pushing.
____________________________________________________________
Daily Labor Guide 16/18
Ch 8
Lost Labor Efficiency Caused by Overtime Fatigue When most contractors are forced by delays, disruptions, or interferences to work their labor force on an overtime schedule, they usually see only the premium wages and burden paid as the “extra cost.” Only about one contractor in 10 is thoroughly familiar with the real added cost of working manual labor forces on an extended overtime schedule. What is worse, only about one owner or owner’s design professional in 100, maybe 50, recognizes and under- stands the problem. A manual laborer who works 50 hours per week can be anywhere from 5% to 35% less efficient and productive than a manual laborer who works a 40-hour week. Whether the inefficiency is 5% or 35%, or something in between, it is a direct result of the number of consecutive 50-hour weeks the manual laborer actually works. For a 60-hour week, the manual labor inefficiency rate and range rises to 10% to 50%, when compared to a 40-hour week. Produvtivity Rate - 2hr over time load 100%
100% 95%
95% 90% 90% 90%
Efficiency
85% 85% 85%
80%
80% 80%
80% 75% 75%
60%
40% 0
2
4
6
8
10
12
Days
The most important thing to remember is when a manual laborer works overtime on a scheduled, consecutive basis week after week, that worker’s efficiency steadily declines each successive week, beginning from week one and continuing through week 10 where it usually, but not always, reaches its lowest level and stays there in weeks 11, 12, and beyond. Daily Labor Guide 17/18
14
Ch 8
A 70- or 80- hour manual labor work week, when worked on a consecutive weeks basis, is an absolute productivity disaster! A second important thing to note about a manual la- borer working in an overtime mode for many consecutive weeks is the fact that all of the hours worked are affected by the overtime hours worked. Working 50 hours a week doesn’t just cause a manual laborer to work 10 inefficient hours per week. All 50 hours are anti productive. Thus, by the time the 50-hour week has been worked for four consecutive weeks, the increased production of 10 extra work hours performed per week is negated completely by the 20% in lost efficiency caused by overtime fatigue: 50 hours – 40 hours = 10 hours (gain) 50 hours x 20% = 10 hours (loss)
Productivity Rate - 4hr over time load
100%
100% 95% 90% 90%
Efficiency
85% 85% 85%
80%
80% 80% 75% 75% 75% 70% 65%
60%
40% 0
2
4
6
8
10
12
Days From a cost standpoint, the premium wages and burden paid on 10 hours of overtime worked per week in the fourth week is also an absolute loss. The bottom line is that consecutive weeks of overtime work for manual labor is a bad idea, especially beyond the third consecutive week worked.
Daily Labor Guide 18/18
14
Daily Labor Guide
Prepared and Presented By: Engineer Naji Shelala BCE – CCP – PMP – Arbitrator Cost Control Expert
Daily Labor Guide 1/18
Ch 8
Labor Productivity Productivity in construction is often broadly defined as output per labor hour. Since labor constitutes a large part of the construction cost and the quantity of labor hours in performing a task in construction is more susceptible to the influence of management than are materials or capital, this productivity measure is often referred to as labor productivity. However, it is important to note that labor productivity is a measure of the overall effectiveness of an operating system in utilizing labor, equipment and capital to convert labor efforts into useful output, and is not a measure of the capabilities of labor alone. For example, by investing in a piece of new equipment to perform certain tasks in construction, output may be increased for the same number of labor hours, thus resulting in higher labor productivity. Construction output may be expressed in terms of functional units or constant dollars. In the former case, labor productivity is associated with units of product per labor hour, such as cubic yards of concrete placed per hour or miles of highway paved per hour. In the latter case, labor productivity is identified with value of construction (in constant dollars) per labor hour. The value of construction in this regard is not measured by the benefit of constructed facilities, but by construction cost. Labor productivity measured in this way requires considerable care in interpretation. While each contractor or owner is free to use its own system to measure labor productivity at a site, it is a good practice to set up a system which can be used to track productivity trends over time and in varied locations. Considerable efforts are required to collect information regionally or nationally over a number of years to produce such results. The productivity indices compiled from statistical data should include parameters such as the performance of major crafts, effects of project size, type and location, and other major project influences. In order to develop industry-wide standards of performance, there must be a general agreement on the measures to be useful for compiling data. Then, the job site productivity data collected by various contractors and owners can be correlated and analyzed to develop certain measures for each of the major segment of the construction industry. Because of the diversity of the construction industry, a single index for the entire industry is neither meaningful nor reliable. Productivity indices may be developed for major segments of the construction industry nationwide if reliable statistical data can be obtained for separate industrial segments. _________________________________________________________________
Daily Labor Guide 2/18
Ch 8
Labor Cost The labor cost per unit (USD / MS) is the average labor rate per hour (USD / Hr) divided by the production units per hours (MS / Hr). Labor costs for both residential and commercial include the basic wage, the employer's contribution to welfare, pension, vacation and apprentice funds and all tax and insurance charges based on wages. To find the units of work done per man in an 8-hour day, divide 8 by the manhours per unit. To find the units done by a crew in an 8-hour day, multiply the units per man per 8-hour day by the number of crew members. Manhours include all productive labor normally associated with installing the materials described. This will usually include tasks such as: 1. Unloading and storing construction materials, tools and equipment on site. 2. Moving tools and equipment from a storage area or truck on site at the beginning of the day. 3. Returning tools and equipment to a storage area or truck on site at the end of the day. 4. Normal time lost for work breaks. 5. Planning and discussing the work to be performed. 6. Normal handling, measuring, cutting and fitting. 7. Keeping a record of the time spent and work done. 8. Regular cleanup of construction debris. 9. Infrequent correction or repairs required because of faulty installation. Adjust the Labor Cost to the job you are figuring when your actual hourly labor cost is known or can be estimated. If the hourly wage rates listed are not accurate, divide your known or estimated cost per hour by the listed cost per hour. Labor estimates assume that materials are standard grade, appropriate tools are on hand, work done by other crafts is adequate, layout and installation are relatively uncomplicated, and working conditions don't slow progress. Working conditions at the job site have a major affect on labor cost. Estimating experience and careful analysis can help you predict the affect of most changes in working conditions. Obviously, no single adjustment will apply on all jobs. But the adjustments that follow should help you produce more accurate labor estimates. More than one condition may apply on a job.
Daily Labor Guide 3/18
Ch 8
Factors Affecting Job-Site Productivity Job-site productivity is influenced by many factors which can be characterized either as labor characteristics, project work conditions or as non-productive activities. The labor characteristics include: 1) 2) 3) 4) 5) 6) 7) 8) 9)
Age, skill and experience of workforce leadership and motivation of workforce Job size and complexity. Job site accessibility. Labor availability. Equipment utilization. Contractual agreements. Local climate. Local cultural characteristics, particularly in foreign operations.
Positive Productivity Factors 1.25
1.25
1.2
1.15
1.2
1.15
1.15
1.1
1.15
Factor Index 1.1
1.05
1 Similar Works
Good Labor TechnologyConstruction Clear Work Management Coordination Training Schedule
The non-productive activities associated with a project may or may not be paid by the owner, but they nevertheless take up potential labor resources which can otherwise be directed to the project. The non-productive activities include among other factors: 1) 2) 3) 4) 5) 6) 7)
Indirect labor required to maintain the progress of the project Rework for correcting unsatisfactory work Temporary work stoppage due to inclement weather or material shortage Time off for union activities Absentee time, including late start and early quits Non-working holidays Strikes
Each category of factors affects the productive labor available to a project as well as the on-site labor efficiency. Daily Labor Guide 4/18
Ch 8
Negative Productivity Factors
0.9 1
0.85
0.9
0.85
0.8
0.75
0.9 0.8 0.7 0.6
Factor Index 0.5 0.4 0.3 0.2 0.1 0 Cash Lack of Job Site Availability Resourses Complexity accessibility
Quality Control
Safety Regulation
Labor Characteristics Performance analysis is a common tool for assessing worker quality and contribution. Factors that might be evaluated include:
Quality of Work - caliber of work produced or accomplished.
Quantity of Work - volume of acceptable work
Job Knowledge - demonstrated knowledge of requirements, methods, techniques, and skills involved in doing the job and in applying these to increase productivity.
Related Work Knowledge - knowledge of effects of work upon other areas
Judgment - soundness of conclusions, decisions and actions.
Initiative - ability to take effective action without being told.
Resource Utilization - ability to delineate project needs and locate, plan and effectively use all resources available.
Analytical Ability - effectiveness in thinking through a problem and reaching sound conclusions.
Communicative Ability - effectiveness in using oral and written communications and in keeping subordinates, associates, superiors and others adequately informed. Daily Labor Guide
5/18
Ch 8
Interpersonal Skills - effectiveness in relating in an appropriate and productive manner to others.
Ability to Work Under Pressure - ability to meet tight deadlines and adapt to changes.
Safety Consciousness - has knowledge of good safety practices and demonstrates awareness of own personal safety and the safety of others.
Profit and Cost Sensitivity - ability to seek out, generate and implement profit-making ideas.
Planning Effectiveness - ability to anticipate needs, forecast conditions, set goals and standards, plan and schedule work and measure results.
Leadership - ability to develop in others the willingness and desire to work towards common objectives.
Delegating - effectiveness in delegating work appropriately.
Development People - ability to select, train, and appraise personnel, set standards of performance, and provide motivation to grow in their capacity.
Daily Labor Guide 6/18
Ch 8
Data Collection When estimating, cost data should be collected. Data may be collected from similar projects, data bases, and published reports. The basis of the cost data should be documented as part of the detailed backup for the estimate. The amount of data collected will depend on the time available to perform the estimate and the type of estimate, as well as the budget allocation for the estimate's preparation. When using the collected cost data, the estimator must be aware of the source of the data and make adjustments where necessary. Data from one project may not be consistent or comparable with data from a different project. For example, if historical costs data is used, the costs may not be applicable due to escalation, regulatory changes, or geographical differences. The data should be reviewed and adjustments (normalization) should be made before it is used in the estimate. A. How to Estimate Direct Costs In the initial stages of project development, estimates must be derived by using various relationships. As the project develops and more detail is available, the estimate also will be in more detail. Following are some general steps that may be used for developing the direct costs of a detailed estimate. B. Material Takeoff A material, labor, and equipment takeoff is developed from the drawing and specification review. The amount of detailed takeoff will vary with the amount of design detail. A planning estimate has minimal detail, while a Title II estimate has a great deal of detail. The takeoffs are divided into categories or accounts, and each account has sub accounts. Each project or program should have an established code of accounts. By listing the accounts, a checklist of potential items and activities that should be included in an estimate is formed. Each account should be considered, even when developing planning estimates, to help eliminate any omissions or oversights. B. Labor Several good publications provide an estimate of the labor hours required for a task that the estimator should use unless adequate experience has given the estimator a more accurate base for determining labor hours required. One important item that must be remembered when using general estimating publications is that these publications are based on a national average construction project for private industry. The situation at various sites may not be the same as an average construction site. Some examples of possible differences are: Daily Labor Guide 7/18
Ch 8
(1) (2) (3) (4) (5)
Security areas, Remote locations, Nuclear radiation areas, Degrees of inspection, Documentation, etc.
For reasons like these, local productivity studies should be conducted to monitor the productivity at the specific site versus the labor hours given in the general estimating publications. If an estimate is derived using the publications, the site productivity factor must be incorporated into the estimated labor-hours.
Degree of Inspection vs Phases of Work 100%
Degree of Inspection
90%
80%
70%
60%
50%
40%
30% Phase 1- Concrete Works
Phase 2- Electro-Mechanical Rough in Works
Phase 3- Finishing Works
Phase 4- Closing and Handing Over
Phases of Work
This should be done prior to multiplication of the labor-hours by the labor rate. When estimating labor costs, the worker's base rate plus all payroll indirect costs and payroll insurance, are multiplied by the estimated labor hours to generate the labor cost. Typically, this sum is handled as a direct labor cost. For ease of estimating, an average crew rate can be used and rounded to the nearest even dollar hourly rate.
C. Special Conditions Consideration must be given to all factors that affect construction. Some of these factors are: Daily Labor Guide 8/18
Ch 8
Availability of skilled and experienced manpower and their productivity; The need for overtime work; The anticipated weather conditions during the construction period; Work in congested areas or in radiation areas; Security requirements imposed on the work area; Use of respirators and special clothing.
Special conditions may be estimated by applying a factor; for example, 10 percent was applied to the labor hours for loss of productivity due to work in a congested area. Other items may be calculated by performing a detailed takeoff. Overtime would be required to complete the activity and the number of hours and rates could be calculated. _________________________________________________________________
Daily Labor Guide 9/18
Ch 8
The Management Team The use of a Management Team is to establish a Value Analysis problem-solving. Many problems can be quickly solved, greatly reducing delays encountered in the past similar projects. The Management Team can provide a natural guidance for building consensus. The Team discusses and analyzes design criteria on the basis of functions to be performed for each system and subsystem within the function of the whole project design, taking into consideration local and special requirements. The Team also separate needs from desires and identify over designed and high cost areas. It compare level of required performances to the level set by the design, and Identify high cost areas and generate alternatives that have better value. Challenge safety margins and contingencies; evaluate to see if they exceed needed requirements. Make sure that the design under study is below or at least within budget without sacrificing performance or quality. All of this depends on a case by case situation. The aim is to increase the value of the project or product by increasing the function or reducing the cost without undermining performance. Challenging economic conditions have construction owners and managers looking for ways to reduce cost. The cheapest solution, however, is not necessarily the most cost effective. Factors that cause construction process variability must be identified and constantly minimized. At the same time, the process must be brought to a higher level of productive performance. Any key events that can significantly interfere with the process must be identified, and action taken pro-actively to minimize their impact. From time to time, productivity of skilled construction workers has been studied by so- called ‘wrench time’ studies often, regrettably, used in faultfinding rather than problem solving. Nevertheless, systematically applied statistical analysis of workforce utilization as a tool enables managers to steadily lower the amount of labor required on labor-intensive projects by as much as one-third, or more.
Efficiency Scale Efficiency = Value Produced / Value Invested In Labor-Hours OR
= Productively Used Labor-Hours / Total Labor-Hours
Daily Labor Guide 10/18
Ch 8
How can uncertainty be reduced? The answer is: through better information. Providing information about process performance reduces uncertainty and variability one of the techniques of control that makes the system more predictable. The level of productive utilization in the work process must be raised and variability reduced by means of cause-and-effect analysis and corrective action on below-average results. Under-utilized and wasted labor hours and the variability of the construction work process can be greatly reduced, and the average level of productivity brought up by taking prompt corrective action, e.g., by minimizing nonvalue-added, indirect work activity, such as excessive ‘walking’, or lost production time, such as ‘waiting’- activities for which the customer does not want to pay. SUMMARY Why should we care about measuring efficiency of the work process? Because reliable and accurate data to support construction project productivity measures are needed. Determining how to measure the efficiency of the construction process is the key to the productivity measurement problem. A fundamental construction productivity problem is that projects customarily apply project control, but little or no systematic attention is given to controlling the ‘production’ process. Project control focuses on project outcomes; process control complements project control by adding focus on efficiency and productivity of execution. Production management can be seen as integral to the labor-intensive construction process. The process lends itself to helpful statistical analysis. Reduction of variability and raising the level of performance are signs of an improving construction process. While planning, estimating and project preparation are indispensable, measuring and analyzing the execution work process provides continuous daily feedback to continuously maximize the efficiency of the construction process. New management insight can be obtained cost-effectively by objective statistical sampling of work activities in the field – and reduce labor-hour requirements by tracking costs back to work activities. ________________________________________________________________
Daily Labor Guide 11/18
Ch 8
Labor Index Factor A Base labor productivity may be defined for a set of work conditions specified by the owner or contractor who wishes to observe and measure the labor performance over a period of time under such conditions. A labor productivity index may then be defined as the ratio of the job-site labor productivity under a different set of work conditions to the base labor productivity, and is a measure of the relative labor efficiency of a project under this new set of work conditions. The effects of various factors related to work conditions on a new project can be estimated in advance, some more accurately than others. For example, for very large construction projects, the labor productivity index tends to decrease as the project size and/or complexity increase because of logistic problems and the "learning" that the work force must undergo before adjusting to the new environment. Job-site accessibility often may reduce the labor productivity index if the workers must perform their jobs in round about ways, such as avoiding traffic in repaving the highway surface or maintaining the operation of a plant during renovation. Labor availability in the local market is another factor. Shortage of local labor will force the contractor to bring in non-local labor or schedule overtime work or both. In either case, the labor efficiency will be reduced in addition to incurring additional expenses. The degree of equipment utilization and mechanization of a construction project clearly will have direct bearing on job-site labor productivity. The contractual agreements play an important role in the utilization of union or non-union labor, the use of subcontractors and the degree of field supervision, all of which will impact job-site labor productivity. Since on-site construction essentially involves outdoor activities, the local climate will influence the efficiency of workers directly. In foreign operations, the cultural characteristics of the host country should be observed in assessing the labor efficiency. Non-Productive Activities The non-productive activities associated with a project should also be examined in order to examine the productive labor yield, which is defined as the ratio of direct labor hours devoted to the completion of a project to the potential labor hours. The direct labor hours are estimated on the basis of the best possible conditions at a job site by excluding all factors which may reduce the productive labor yield. For example, in the repaving of highway surface, the flagmen required to divert traffic represent indirect labor which does not contribute to the labor efficiency of the paving crew if the highway is closed to the traffic. Daily Labor Guide 12/18
Ch 8
Similarly, for large projects in remote areas, indirect labor may be used to provide housing and infrastructure for the workers hired to supply the direct labor for a project. The labor hours spent on rework to correct unsatisfactory original work represent extra time taken away from potential labor hours. The labor hours related to such activities must be deducted from the potential labor hours in order to obtain the actual productive labor yield. Effects of job size on productivity A contractor has established that under a set of "standard" work conditions for building construction, a job requiring 500,000 labor hours is considered standard in determining the base labor productivity. All other factors being the same, the labor productivity index will increase to 1.1 or 110% for a job requiring only 400,000 labor-hours. Assuming that a linear relation exists for the range between jobs requiring 300,000 to 700,000 labor hours as shown, determine the labor productivity index for a new job requiring 650,000 labor hours under otherwise the same set of work conditions.
1
Labor Index
0.95
0.9
0.85
0.8
0.75 1
2
3
4
5
6
7
Job Size (100,000 Lab hr) Illustrative Relationship between Productivity Index and Job Size The labor productivity index I for the new job can be obtained by linear interpolation of the available data as follows: This implies that labor is 15% less productive on the large job than on the standard project. _________________________________________________________________
Daily Labor Guide 13/18
Ch 8
Loss of Efficiency and Productivity Due to Effects of Weather The weather everybody watches it, talks about it, but nobody does anything about it, or so it’s said. But in the construction industry, that’s not really the case. Most contractors take careful notice of local and regional weather patterns, the norms, and trends, and schedule their construction projects accordingly. As- planned construction schedules, prepared between the time of estimating and the project’s startup, are almost always “weather sensitive” and are prepared to take advantage of favorable seasonal, local, or regional weather patterns and avoid the unfavorable ones. Thus, when a project doesn’t start on time (as scheduled or promised by the owner at bid time) or is delayed after it starts, weather may become an all-important factor in reducing planned productivity and efficiency. It’s much more than the occasional abnormal or unusual weather conditions encountered on a construction project. Those things “happen,” and most construction contracts allow excusable delay time extensions but no money for them on a day-added- for-a-day-lost basis. What virtually no construction contract recognizes or addresses is the shifting of entire portions of a construction project’s work into weather conditions that are wholly unsuitable to that type of work. When the shift occurs, the contractor incurs enormous losses in the number of extra manhours spent, additional costs, and further delays of the project and work. The following types of weather disrupt, delay, and create efficiency and productivity losses: Low Temperatures and Wind Chill (Cold Weather) Worker efficiency and productivity drop as the temperature drops. The combination of low temperatures and high, sustained winds creates a combined effect known as “wind chill.” Workers who perform manual labor and move frequently from place to place are severely affected by this factor. Under extreme wind chill conditions, efficiency and productivity can drop 50% or greater. The best way to quantify efficiency losses due to wind chill is by comparing productivity from wind chill- affected work periods to that measured during normal work periods, thereby determining the difference. In the absence of productivity measurements from daily construction record reports, the second best method for quantifying wind chill efficiency losses is by applying tabular and formula data. Daily Labor Guide 14/18
Ch 8
Use of other methodologies only requires payroll (manhours) data and weather data sorted by date. The data for payroll, temperature, and wind are entered into a spreadsheet program by date, which then uses the methodologies to calculate the weather inefficiencies and their costs. The costs for protection from cold weather work are also considered a loss factor.
Produvtivity Rate Due to Effects of Weather 100%
100%100% 95%
95% 95%
Productivity Rate
90% 85% 80%
80%
80%
70% 60%
60%
40% -20
-10
0
10
20
30
40
Temp (C)
High Temperatures and Humidity (Hot Weather) Just as labor efficiency and productivity decline in cold weather, similar losses also occur when temperatures rise above 30 (C) to 40 and beyond. The inefficiencies are quantified and claimed by actual measurement of productivity (units produced divided by manhours expended) in hot weather (high temperatures) and comparing that measurement with normal weather (moderate temperatures) productivity and then claiming the difference. The combined effects of high temperatures and high humidity levels must also be considered. A hot work day with a 15% humidity level may have relatively little effect on efficiency.
Daily Labor Guide 15/18
50
Ch 8
Since most contractors plan projects for warmer weather in the temperate regions, they generally do not have cause or reason to claim hot weather efficiency losses. For such, contractors usually don’t employ manual labor on very hot days or during those daily hours when it’s the hottest and the inefficiencies are the greatest. However, when forced to work in those conditions as a result of delays, disruptions, or interferences, the consequential efficiency losses can be claimed. Hot weather protection and safety “extras” are also claimable. Wind-Only Effects In some areas, high winds, irrespective of normal temperatures and ranges, can cause unusually high efficiency losses. For instance, blowing dust and sand can cause severe labor efficiency losses and destroy sensitive equipment and machinery. High winds are also a severe cause of inefficiency on structural steel erection projects, particularly high-rise structures. Every ironworker knows the old saying (paraphrased): “One hand for me and one hand for the company until the wind blows then it’s both hands for me and forget the company!” In summary, the key to weather-related claims is entitlement whether the work shifted through the actions or behavior of others into inefficiency and productivity losses due to unsuitable weather conditions and, if so, how the losses can be quantified in terms of costs (damages). A clause in a construction contract that attempts to allocate the effects of all but “abnormal or unusual” weather conditions to the contractor does not excuse an owner, construction manager, or design professional from responsibility for damages caused by bad weather conditions encountered during time periods when the contractor hadn’t scheduled work to be done, but was forced into it by non contractor caused delays. Planning around bad weather is something most con- tractors do very well when they bid and schedule a project. But being pushed into bad weather is some- thing no contractor can accommodate without added cost. However, the consequential effects can be determined, and the costs are payable by the party that did the pushing.
____________________________________________________________
Daily Labor Guide 16/18
Ch 8
Lost Labor Efficiency Caused by Overtime Fatigue When most contractors are forced by delays, disruptions, or interferences to work their labor force on an overtime schedule, they usually see only the premium wages and burden paid as the “extra cost.” Only about one contractor in 10 is thoroughly familiar with the real added cost of working manual labor forces on an extended overtime schedule. What is worse, only about one owner or owner’s design professional in 100, maybe 50, recognizes and under- stands the problem. A manual laborer who works 50 hours per week can be anywhere from 5% to 35% less efficient and productive than a manual laborer who works a 40-hour week. Whether the inefficiency is 5% or 35%, or something in between, it is a direct result of the number of consecutive 50-hour weeks the manual laborer actually works. For a 60-hour week, the manual labor inefficiency rate and range rises to 10% to 50%, when compared to a 40-hour week. Produvtivity Rate - 2hr over time load 100%
100% 95%
95% 90% 90% 90%
Efficiency
85% 85% 85%
80%
80% 80%
80% 75% 75%
60%
40% 0
2
4
6
8
10
12
Days
The most important thing to remember is when a manual laborer works overtime on a scheduled, consecutive basis week after week, that worker’s efficiency steadily declines each successive week, beginning from week one and continuing through week 10 where it usually, but not always, reaches its lowest level and stays there in weeks 11, 12, and beyond. Daily Labor Guide 17/18
14
Ch 8
A 70- or 80- hour manual labor work week, when worked on a consecutive weeks basis, is an absolute productivity disaster! A second important thing to note about a manual la- borer working in an overtime mode for many consecutive weeks is the fact that all of the hours worked are affected by the overtime hours worked. Working 50 hours a week doesn’t just cause a manual laborer to work 10 inefficient hours per week. All 50 hours are anti productive. Thus, by the time the 50-hour week has been worked for four consecutive weeks, the increased production of 10 extra work hours performed per week is negated completely by the 20% in lost efficiency caused by overtime fatigue: 50 hours – 40 hours = 10 hours (gain) 50 hours x 20% = 10 hours (loss)
Productivity Rate - 4hr over time load
100%
100% 95% 90% 90%
Efficiency
85% 85% 85%
80%
80% 80% 75% 75% 75% 70% 65%
60%
40% 0
2
4
6
8
10
12
Days From a cost standpoint, the premium wages and burden paid on 10 hours of overtime worked per week in the fourth week is also an absolute loss. The bottom line is that consecutive weeks of overtime work for manual labor is a bad idea, especially beyond the third consecutive week worked.
Daily Labor Guide 18/18
14
