25 ways the labor market loses money on productivity in the construction industry
The construction industry, more than other industries, suffers more problems and money loss related to productivity and high levels of waste or non-value added activities. The numbers range from 12% of productive time wasted in manufacturing to a much larger 47% in construction.
Productivity is defined as the relative measure of labor efficiency, which can be good or bad, when compared to an established base or norm.
Potential labor productivity in the construction industry in the UK is lowered by:
– 3-6% because of accidents
– 10% because of material waste
– 30% because of re-work.
Overall, that makes for a striking 40-60% loss in terms of potential labor productivity. (1)
What can affect productivity in the construction industry?
For the sake of clarity, we grouped them under these 5 areas in management:
-Scheduling and planning
The relative impact of each factor on productivity can be summarized as follows:
Scheduling and planning
1. Overtime. Planning extended work days, with a schedule that goes over 8 hours a day and consequently longer work weeks causes lower productivity.
2. Concurrent operations. Introducing additional operations to a previous plan without controlled implementation can create delays.
3. Mobilize/demobilize. Moving resources on and off as a result of changes or delays can cause work disruptions affecting productivity by 25%.
4. Start/stop, shift changes and manpower reassignment. Unplanned stops over 15 minutes occurring in these circumstances can have about 30% negative impact on productivity.
5. Errors and omissions. Any increase of the error factor means delays. When processes are not followed or are incorrectly carried out, they can cause changes performed in crash mode, dilution of supervision and fatigue and lack of motivation in the workforce.
6. Ripple effect. About 10 to 20% of productivity can be negatively affected by the ripple effect generated from schedule changes from other trades. It affects scope of work, schedule, shifts and more.
7. Late crew built-up. Alteration in the planned manpower loading produces delays in crew build-up due to lack of availability, shortage of resources or competition for resources.
8. Crew size inefficiency. When changing the optimal crew size, the the original team effort is disrupted and consequently the rhythm and quality of the work are compromised.
9. Overmanning. When trying to make up for potential absenteeism or turnover, the risk is to overstaff. It may give a sense of higher productivity but in reality it’s just misleading.
10. Alternating, staggered or rotating work schedules. These types of work schedules are used to optimize craft hours, to attract labor to remote sites and to minimize fatigue, but they also create unusual shifts workers might not respond well to.
11. Safety checks. As important as they are, if general safety checks are not scheduled they can cause delays if carried out before, after or during certain operations.
12. Safety in hazardous site. Working in hazardous areas can create delays because of extra time needed to cool down or warm up the equipment, taking breaks or carrying out safety checks.
13. Logistics. If logistic controls and procedures are not fitting, a lot of troubles can arise in e.g. procurements and supplies delivery.
14. Tool and equipment shortage. If the amount of tools is not sufficient or their quality is faulty, this can have an impact as big as 50% on productivity
15. Attitude and morale. Fatigue and low motivation caused by overtime work, conflicts in the workplace, changes of workflow or poor site conditions can impact productivity by 12%.
16. Dilution and supervision. When supervision changes, or when emergencies or accidents occur, they alter supervision and production management.
17. Absenteeism, turnover and/or unpaid holidays. With a mere 8% absenteeism on the job, there is a 25% impact on productivity due to time and money used to find replacements, assign them tasks and allowing for them to learn.
18. Learning curve. New crew members need time and guidance to perform well in a new task, and that affects the production rate of the whole team at least in the first week.
19. Area practices. Local customs and culture can change the way workers behave and perform and the time they spend on breaks and their schedule in general.
20. Sticking of trades, joint and beneficial occupancy. A lot of operations taking place in a restricted space can cause congestion.
21. Confined space. More breaks and security checks are needed when carrying out operations in workplaces with no ventilation or sunlight.
22. Weather events, season changes, shorter daylight hours.
23. Rain factor. Rain doesn’t have to mean no work, but extreme weather conditions can lower productivity by 25%.
24. Site accessibility. Interferences in the access to the site, like blocked stairways, roads, walkways or insufficient man-lifts.
25. Proximity of work. When working in a remote area where access to resources and tools is not as easy, distance can take its toll on productivity.
These elements, if underestimated, can seriously delay the delivery or compromise the result of a construction project. Budgeting is one of the most important elements to keep in mind when managing a project and is part of what makes it succeed or not.
1. Adjusting Productivity Losses in Construction Contracts: http://www.arcom.ac.uk/-docs/proceedings/ar2006-0049-0058_Braimah_Ndekugri_and_Gameson.pdf
2. Factors Affecting Construction Labor Productivity: https://www.intergraph.com/assets/global/documents/SPC_LaborFactors_WhitePaper.pdf
3. Applying lean thinking in construction and performance improvement: http://www.sciencedirect.com/science/article/pii/S111001681300046X
4. Construction Productivity: A Practical Guide for Building and Electrical Contractors: http://tinyurl.com/jftzfep
5. Study of factors affecting labor productivity at a building construction project in the USA:
6. Labor-Productivity Declines in the Construction Industry: Causes and Remedies: http://www.aecbytes.com/viewpoint/2013/issue_67.html
7. Key factors affecting labor productivity in the construction industry: http://etd.fcla.edu/UF/UFE0021576/kuykendall_c.pdf
8. Impacts of Engineering, Planning and Communication on Construction Productivity: http://www.mbaforum.ir/download/mba/pm/6th/328.pdf
9. Handbook for Technical Auditors of the Construction Industry: http://tinyurl.com/hy2mknz
10. Hours Worked, Overtime, and Time Use in Construction and Other Industries: http://tinyurl.com/h35srym
11. Productivity in Construction: http://web.mit.edu/parmstr/Public/NRCan/nrcc37001.pdf
12. Mastering Construction Costs and Capabilities: Laying the Foundations for Success: http://www.strategyand.pwc.com/reports/mastering-construction-costs-capabilities
13. Applying Learning Curve Theory in Construction Labour Productivity: http://tinyurl.com/zu2fkku
14. Construction Workforce Management Strategies to Reduce Absenteeism: A Survey Study: http://sipb.sggw.pl/CRC2014/data/papers/9780784413517.085.pdf
15. Identifying the causes of trends in construction labour productivity: http://tinyurl.com/gwkvmpl
16. The Construction Productivity Imperative: http://tinyurl.com/htuvf2b