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Measuring Productivity in Construction: Improving Business Performance

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Macro data does not provide a clear or consistent picture of industry productivity ... Indoor Air Quality, Mold, Asbestos 1.6% Total 18.6% Source: Haskell, 2005. 17 ... – PowerPoint PPT presentation

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Title: Measuring Productivity in Construction: Improving Business Performance


1
Measuring Productivity in Construction Improving
Business Performance
  • Harvey M. Bernstein
  • Vice President, Industry Analytics Alliances
  • McGraw-Hill Construction

2
Productivity as Defined Today
…construction contract expenditures in constant
dollars (output) divided by man-hours worked
(input).
3
Problems Measuring Productivity
  • Macro data does not provide a clear or consistent
    picture of industry productivity
  • Best indicator of productivity is accomplished at
    the project level but it is difficult to
    aggregate all project information
  • Variation by contractor and delivery approach is
    significant
  • Delivery approach variances up to 17 (CURT)
  • Owners, AEC firms, and BPMs lack agreement on
    what metrics are most important to quantify
    measuring performance

4
U.S. Productivity Gap (1964-2003)
Non-Farm
Construction
Reference Paul Teicholz, Ph.D., Professor
(Research) Emeritus, Dept. of Civil and
Environmental Engineering, Stanford University
5
Canada Total Factor Productivity in the Business
and Construction Sectors, 1961-2001
6
Who needs to know how to measure productivity and
have access to an Industry Performance Rating
System?
  • The thousands of firms who must wisely evaluate
    and select GCs, Subs, AE firms, BPMs, Products,
    and Distributors.

7
Who will benefit from an Industry Performance
Rating System?
  • Owners to select the best AEC firms
  • GCs and Design firms to promote their rankings
  • Distributors -to represent the best BPMs and BPMs
    who want to partner with the best Distributors
  • Firms -to expand thru partnering or buying Firms
  • Lenders -to minimize risks of construction
    lending
  • Insurance firms -seeking an objective,
    third-party source of contractor and project
    ratings
  • Government Agencies -for cost estimating and
    project cost comparisons

8
What about labors influence?
  • Multiple studies show productive work (direct
    work) accounts for only about 1/3 of workers time
  • Work site communications are inadequate
  • Material handling time has to be reduced
  • Waiting time has to be reduced through better
    integration/scheduling with suppliers
  • Track/manage productivity at the project level to
    establish a benchmark for future improvements

9
Labor Rates
Reference Paul Teicholz, Ph.D., Professor
(Research) Emeritus, Dept. of Civil and
Environmental Engineering, Stanford University
10
Keys to Effectiveness
  • Effective use of subcontractor and labor
  • Level of craft training
  • Familiarity with means and methods
  • Effectiveness of supervision/project management
  • Influence of wages
  • Union vs Non-union
  • Common work culture (safety)

11
Safety as an example
  • First items on every agenda
  • Part of corporate culture
  • Recognizes that a safe work site is also an
    efficient work site

12
Higher Wage Rates Do They Drive Productivity?
Source Construction Labor Research Council,
March 2004.
13
Productivity Is Not Constant in a Complex Industry
14
Combining Multiple Factors in Measuring
Productivity
15
Unit Cost Comparison
  • Building Type Cost/s.f. Cost/s.f. 2003 Cost
    1965-2003
    1966 2003 Adjusted
    to Decrease
  • 1996
  • Warehouse 4.30 21.00 3.70 (14.0)
  • Retail 13.00 63.33 11.15 (14.3)
  • Office 18.50 91.00 16.02 (13.4)
  • Multifamily Residential 9.10 45.50
    8.09 (11.1)
  • Weighted Average (12.3)

Source Haskell, 2005
16
Quality and Content Enhancements
  • Category 40-year Cost Impact
  • Fire and Life Safety 3.1
  • Seismic and Windstorm Resistance 1.6
  • Life-cycle Cost Expectancy, Quality 3.3
  • Sustainability, Environmental Quality 2.7
  • Impact Fees, Offsite Improvements 1.2
  • Accessibility Compliance (ADA) 1.3
  • Enhanced Security Features 1.0
  • Improved Energy Efficiency 2.8
  • Indoor Air Quality, Mold, Asbestos 1.6
  • Total 18.6

Source Haskell, 2005
17
Summary - Output Approach
  • Unit Cost Decrease 12.3
  • Quality and Content Increase 18.6
  • Total Productivity Increase 33.2

Source Haskell, 2005
18
Summary - Input Approach
  • Labor Productivity Increase 15.3
  • Materials Cost Decrease 21.1
  • Capital Equipment Increase (4.0)
  • Aggregate Productivity Increase 32.4

Source Haskell, 2005
19
Haskell Conclusions
  • Output Approach 33.2
  • Input Approach 32.4
  • Rounded 33.0 0.78/year
  • All other U.S. Industry 1.75/year

Source Haskell, 2005
20
Impact of CAD Activities
  • CURT studies show 3D CAD provides 7 percent (and
    up) improvement in labor productivity

7
21
Change impact management
  • Any deviation from construction plan drives poor
    productivity

?
  • Disruption is the major impact

22
Industry Thoughts on Measuring Productivity
  • Get industry buy-in on the criteria used.
  • Find surrogates for data that will indicate
    performance and enable some form of comparison.
  • Measurement rankings drive performance (e.g., ENR
    rankings are used by clients when viewing
    potential contractors).
  • Safety drives productivity and is a fundamental
    indicator of quality and should be a factor in
    measuring performance.
  • A quality team is indispensable to good
    performance and should be considered.

23
Potential Areas for Productivity Increases
  • Information Technology
  • Project Delivery
  • Automation and Prefabrication
  • Workforce Development
  • Materials

24
Benefits of Developing a Measurement and
Performance Rating System for the Construction
Industry
  • new innovative products
  • improved efficiency
  • Improved performance
  • Improved competitiveness
  • higher profits
  • increased market share
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