CHAPTER II

REVIEW OF RELATED LITERATURE

This chapter includes foreign literatures and foreign studies taken from the
internet, other unpublished thesis, and studies conducted by other research groups. This
chapter also includes local literatures, taken from local published books and materials,
and local studies, taken from research works and studies related to the subject matter.
Related foreign and local literature and studies that dealt with theories, principles,
concepts, approaches and techniques are reviewed which contributed a lot towards the
enrichment of knowledge, deeper understanding and insight of the researchers.
Foreign Literature
One of the more significant economic statistics to be released of late concerns
labor productivity. This is an interesting topic and widely non-understood concept -- very
few people understand either what it is or why it really matters.
imply stated, labor productivity measures the amount !or value" of output
generated per hour worked. #hy does it matter$ %reater labor productivity enables firms
to produce a given amount of goods or services with a smaller number of labor hours.
&nd, since payroll cost is related to the number of hours they use, this helps firms control
their costs, making their enterprises more profitable.
#ages are not the correct measure the cost of labor to a firm. 'n economics, it
doesn(t just focus on the costs of an activity, such as wages here. 't looks at both costs
and benefits and their relationship to each other. #hat are the benefits from hiring more
labor$ The output this labor input creates, in terms of labor productivity. o, the correct
measure of the cost of labor to firms is what economists refer to as unit labor costs
!)*+", or wages adjusted for productivity, the ratio of wages to productivity. 'f wages
are -low,. but productivity is also -low,. these can offset each other in terms of their
effects on )*+, potentially making labor -e/pensive. when wages are -low..
#ith regard to *abor Theory of 0alue, 12oth Ricardo and 3ar/ say that the value
of every commodity is !in perfect equilibrium and perfect competition" proportionally to
the quantity of labor contained in the commodity, provided this labor is in accordance
with the e/isting standard of efficiency of production. 2oth measure this quantity in
hours of work and use the same method in order to reduce different qualities of work to a
single standard.1
The calculation or estimation of labor productivity impacts is one of the most
contentious topics in the construction industry. 4isputes related to labor productivity
often lead to dispute resolution forums such as mediation, arbitration, and5or litigation
because labor productivity losses are often difficult to distinguish contemporaneously.
&dditionally, labor productivity rates and other related data are often not tracked on
construction projects with any degree of precision. &s a result, substantiating a cause-
and-effect relationship between project disruption issues and resulting labor productivity
losses and establishing entitlement to recovery for lost labor productivity often requires
analysis by a qualified construction labor productivity e/pert.
+onstruction labor productivity is typically measured as labor hours per quantity
of material installed. *abor productivity loss is e/perienced when a contractor, or a
particular crew, is not accomplishing the anticipated or planned production rates. 'n other
words, a loss of productivity is when it takes more labor and equipment to do the same
amount of work, thereby increasing project costs. There are many common causes for
labor productivity impacts on a construction project, stemming from owners, contractors,
and construction managers. +ommon causes include, but are not limited to,
mismanagement and maladministration, site access restrictions, differing site conditions,
defective plans and5or specifications, changes in the work6 labor availability, turnover,
rework, testing5inspections, overtime and5or shift work, interferences, changes in
construction means and methods, over crowding, out-of-sequence work, and inclement
weather.
Productivity at the Job Site
+ontractors and owners are often concerned with the labor activity at job sites.
7or this purpose, it is convenient to e/press labor productivity as functional units per
labor hour for each type of construction task. 8owever, even for such specific purposes,
different levels of measure may be used. *ower-level measures are more useful for
monitoring individual activities, while higher-level measures may be more convenient for
developing industry-wide standards of performance.
#hile 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. +onsiderable 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 si9e, type and location, and
other major project influences.
'n 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
analy9ed to develop certain measures for each of the major segment of the construction
industry. Thus, a contractor or owner can compare its performance with that of the
industry average.
Four levels of influence over a worker's productivity:
*:pe9-Ortega and aloma-0ela9que9, 8ershauer and Ruch considered it
impossible to measure the factors of human behavior and business management in a
quantitative manner to feed a simulator.
The *:pe9-Ortega and aloma-0ela9que9 model takes into account four levels of
influence over a worker;s productivity,
<. =ersonal 7actors>Responsibility, learning capacity, and satisfaction
?. #ork Team 7actors>*eadership, work team organi9ation
@. Technology 7actors>Training, working methods
A. Organi9ational 7actors>Bualitative incentives, quantitative incentives,
productivity indicators
Productivity Influences
Personal Factors. &mong the personal factors that influence a worker;s
productivity are responsibility>the worker;s commitment to the task at hand6 learning
capacity>the ability to learn, which is tied to the worker;s education level and the
willingness to learn6 and satisfaction>a comple/ factor that motivates the worker;s
display of responsibility and learning capacity.
Work Group Factors. *eadership is important. &ppropriate leadership helps create
a satisfying work environment conducive to high productivity. %ood relationships and
organi9ation within the work team provide a balance of effort>no one member shoulders
an unfair load>and motivates team members to e/cel.
Technoloy Factors! Cmployees must receive adequate training. They also must
work in an appropriate environment in terms of safety, comfort, and physical capabilities.
"rani#ational Factors. 'ncentives, both qualitative !nonmonetary, such as rewards and
honors" and quantitative !monetary compensation based on performance and
productivity", go a long way toward motivating workers to be more productive, and they
increase job satisfaction. 3easuring productivity and communicating with the employee
about his or her performance are critical elements in achieving optimal productivity.
&ccording to &ccel-Team.com, worker productivity will improve if employees
are properly motivated, coached, receive the right information at the right time, use
simple productivity improvement tools and techniques, and are rewarded in the
appropriate way.
2oth productivity models focus on the same factors, motivation, training,
communication, tools, techniques, and rewards. &ssuming the employee is a fit for the
job, much of the responsibility for worker productivity rests with the employer.
Organi9ations must look closely at the workplace culture for ways to incentivi9e and help
workers, and ultimately the company, achieve optimal productivity.
Factors $ffectin Job%Site Productivity
Dob-site productivity is influenced by many factors which can be characteri9ed either
as labor characteristics, project work conditions or as non-productive activities. The labor
characteristics include,
age, skill and e/perience of workforce
leadership and motivation of workforce
The project work conditions include among other factors,
Dob si9e and comple/ity.
Dob site accessibility.
*abor availability.
Cquipment utili9ation.
+ontractual agreements.
*ocal climate.
*ocal cultural characteristics, particularly in foreign operations.
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,
'ndirect 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
&bsentee time, including late start and early quits
Eon-working holidays
trikes
Cach category of factors affects the productive labor available to a project as well as the
on-site labor efficiency.
Local Literature
&epart'ent of (abor and )'ploy'ent
One of the main agencies responsible for ensuring the welfare of the 7ilipino
worker is the 4O*C !4epartment of *abor and Cmployment". 4O*C(s responsibilities
include setting the minimum wage, ensuring safe working conditions, and creating
occupational safety and health ! O8" standards. 't also has a -=roductivity 'mprovement
=rogram. to increase workers( productivity in select manufacturing industries through
improved working and living conditions. The department is in constant dialogue with
workers, employers, and their organi9ations with regard to social and economic concerns,
including environmental issues. 4O*C and its close links with the well-established E%O
!Eon-%overnmental Organi9ations" network promote greater bilateral participation in
enhancing safety and health in the workplace while both entrepreneurs and workers are
encouraged to implement low cost improvements in work conditions which can
eventually lead to improvement in productivity and the general well-being of the
workers.
#orkers have been urged to increase productivity rather than demand for higher wages in
this time of economic difficulty.
18igher wages are unsustainable unless you increase productivity. 'f factory
raises wages and productivity remained low, it will close its shop in the country and move
to other countries where wages could be smaller,1 ocioeconomic =lanning ecretary
Romulo Eeri said.
8e said it is difficult to demand for wage adjustment without increasing
productivity in view of the current global economic slowdown.
Foreign Studies
&ccording to the study of =reston 8. 8askell !?FFA", two independent
methodologies demonstrate that total construction productivity has increased during the
past @G years, on the order of @@ percent, or F.GHI per year. #e are receiving more
building for less money than we did @G years ago, and moreover, the product is
qualitatively superior. These improvements are the result of increased productivity made
possible by mechani9ation, automation, prefabrication, less costly and easier-touse
materials, and lower level of real wages !which, unlike the other drivers, is not a good
thing". 3oreover, productivity gains in construction can and must continue. 'n the his
view, the potential for further productivity enhancements falls into five categories which
are information technology, project delivery, workforce development, materials, and
automation and prefabrication.
&lso, on Dune ?FFG, a study concerning the building projectsa in the %a9a trip in
palestine done by &dnan Cnshassi found out that productivity is considered the main
value-addingfunction within the construction sector. & total of AJ factors were identified
in this study, with identification of factors influencing construction productivity being
based on a careful review of literature and suggestions from local e/perts in building
construction. 7urthermore, this factors considered in the study were divided into <F
groups, which were ranked according to their importance inde/, 3aterials5tools factors
group, upervision factors group, *eadership factors group, Buality factors group, Time
factors group, 3anpower factors group, =roject factors group, C/ternal factors group,
3otivation factors group and afety factors group.
'n addition, a study done on )nited Kingdom !<LLF" concerning the =rofitability
of )K construction contractors showed that there is the e/istence of a positive correlation
between the si9e and percentage of turnover profitability of the construction companies in
the sample. Cvidence was also found to suggest that larger contractors were more
consistent in their profitability levels. 'nvestigation of the possible reasons for differences
in profitability between companies showed the degree and type of diversification into
different activities, particularly housebuilding, to be major factors associated with
enhanced profitability. The apparent stability of profitability at about @I of turnover per
annum found in this, and other similar studies, suggests the presence of some underlying
homeostatic mechanism of which diversification may be a part.
Local Studies
On <LL<, Dosephine Tuble of the )niversity of anto Tomas %raduate chool
made a study that concerns the productivity and job satisfaction of workers in
construction company in 3etro 3anila. These results to productivity level that was rated
on the whole as -good. due to the following dimensions, quantity of work, quality of
work, supervision required, attendance, and conservation. &lso, the respondents of this
study were neither satisfied nor dissatisfied because of low ratings made on promotion
and pay aspects. 'n connection with this, the level of productivity is correlated with job
satisfaction with regards to the nature of work, supervision, co-workers relationship and
pay aspects.
3oreover, sponsored by the &merican tudies &ssociation of the =hils. - 2aguio
+ordillera +hapter, &ntonia +orinthia Ea9 accomplished a study regarding the factors
that influences the labor =roductivity of miners in 2enguet. #ith this, it has been found
that the the productivity level vary according to mining methods and was significantly
affected by technical factors followed by economic factors and personal factors. 3ajor
problems on labor productivity are, the need for more involvement in decision-making6
thorough discussion on miners( concerns6 that the company adopts a variety of training
methods6 the need to be informed of the policies6 the desire of workers for management
to be more sensitive and responsive to workers( concerns and the necessity for more and
better quality of tools and equipment for underground work.