Ch 8

Daily Labor Guide

Prepared and Presented By:

Engineer Naji Shelala
BCE – CCP – PMP – Arbitrator
Cost Control Expert

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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.
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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.

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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) Age, skill and experience of workforce

2) leadership and motivation of workforce
3) Job size and complexity.
4) Job site accessibility.
5) Labor availability.
6) Equipment utilization.
7) Contractual agreements.
8) Local climate.
9) Local cultural characteristics, particularly in foreign operations.

Positive Productivity Factors

1.25

1.25 1.2

1.2 1.15 1.15 1.15

1.15 1.1
Factor Index
1.1

1.05

1
Similar Good Labor TechnologyConstruction Clear Work
Works 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) Indirect labor required to maintain the progress of the project

2) Rework for correcting unsatisfactory work
3) Temporary work stoppage due to inclement weather or material shortage
4) Time off for union activities
5) Absentee time, including late start and early quits
6) Non-working holidays
7) Strikes

Each category of factors affects the productive labor available to a project as well
as the on-site labor efficiency.
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Negative Productivity Factors

0.9 0.9
0.85 0.85
1 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 Quality Safety
Availability Resourses Complexity accessibility Control 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.

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 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.

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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:

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(1) Security areas,

(2) Remote locations,
(3) Nuclear radiation areas,
(4) Degrees of inspection,
(5) 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%

90%

80%
Degree of Inspection

70%

60%

50%

40%

30%
Phase 1- Concrete Works Phase 2- Electro-Mechanical Phase 3- Finishing Works Phase 4- Closing and Handing
Rough in Works 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:

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 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.
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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

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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 non-
value-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.

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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.

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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.

0.95
Labor Index

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.
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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.

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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%
90%
85%
Productivity Rate

80% 80% 80%

70%

60% 60%

40%
-20 -10 0 10 20 30 40 50
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.

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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.

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 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%
85% 85% 85%
Efficiency

80% 80% 80% 80%

75%
75%

60%

40%
0 2 4 6 8 10 12 14

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.
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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%
85% 85% 85%
Efficiency

80% 80% 80%

75% 75% 75%
70%
65%
60%

40%
0 2 4 6 8 10 12 14

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.

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