Productivity Measurements (Archived)

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Overview

A need for an industry-wide construction productivity measurement baseline was recognized for a number of years leading up to this research effort. Construction productivity data for nationwide use was either not available or considered unreliable. The Business Roundtable Construction Industry Cost Effectiveness (CICE) Project Report A-1, "Measuring Productivity in Construction," included a recommendation to measure site-level productivity in selected private construction segments, and suggested a logical segment scheme based on construction volume. With consideration of the demographics of the Cll membership, a large percentage of which is heavily involved in the petrochemical industry, a typical petrochemical facility was chosen as the initial physical baseline facility or model plant.

The primary goal of the Model Plant Project was to develop a basic petrochemical model plant, simple and generic in nature, such that the construction industry could have a physical baseline against which to measure productivity. Data from a collection of direct labor estimates for a "typical" petrochemical processing facility was chosen as the foundation of the baseline, hence the name "Model Plant."

The RS2-1 publication defines a representative project that establishes a site-level construction productivity measurement baseline for the petrochemical industry, and a standardized method of collecting site productivity data from owners and contractors for analysis and reporting. A secondary objective was to provide a standard code of accounts to enable owners and contractors to compare the performance of their projects to a productivity measurement baseline.

The RS2-2 pubiclation represents the second report of the Cll Model Plant Project and this update presents comparative information on Baselines 1 and 2 of the project. Users will be able to interpret the information presented in this report according to how they prepare direct labor work hour estimates for their projects. If productivity judgments are applied at the detail level of the code of accounts, then the detailed productivity trends identified by the Model Plant will be useful in assessing the validity of the company's own experience with respect to productivity. If productivity judgments are assessed at the summary level, then the summary level experience of the Model Plant will be useful.

The RS2-3 pubiclation describes a productivity measurement approach that could be applied by contractors of all sizes as a practical management tool. The approach is simple and inexpensive to implement and maintain, timely in providing problem indicators, and independent of other business systems such as estimating and cost accounting. As such, a Cll task force was established to identify productivity measurement methods utilized in the construction industry, consider the potential for standardization, establish a basis for trending industry productivity over time, and develop a manual that would demonstrate how productivity measurement is performed. "The Manual of Construction Productivity Measurement and Performance Evaluation", SD-35, is a Cll source document that was specifically written for contractors who did not presently measure productivity. The information is easy to interpret and feedback is timely. Thus, the approach is particularly attractive for short-duration projects and activities. The manual provides detailed instructions written for both first-time and experienced users.

Productivity measurement is an elemental building block of the construction management process. Performance evaluation, final cost forecasting, and profitability forecasting are supported by the productivity measurement building block.

Key Findings and Implementation Tools

1 : Description of Model Plant Tool

The Model Plant is a tool for examining numerous aspects of the construction industry. By virtue of its size alone, the Model Plant offers such data that possible applications may be limited only by the imagination of the user. Aside from using the Model Plant to compare a baseline construction labor estimate from year to year, the Model Plant can be used in studies of constructability ideas or productivity trends industry-wide or among geographic regions. (RS2-1, p. 14)
Reference: (RS2-1)

2 : Baseline for Comparison

The Model Plant can be used to determine the effects of imposing certain cost and schedule controls or contract types on a constructor. Effects of regulations or even a climate of possible regulation and design changes can be explored under different contract types or in different locations. Companies can assess their performance against the competition and against a national average. (RS2-1, p. 14)
Reference: (RS2-1)

3 : Model Plant for the Petrochemical Industry

The Model Plant provides sufficient data points that are representative of the
Petrochemical industry. The basic idea underlying the approach (that the estimate data reflect the actual labor productivity of the participant’s work force) appears to be valid based
on experience to date. Minor variance between Baseline 1 and Baseline 2 data indicates no change in productivity in years 1985 and 1987. (RS2-2, p. 6)
Reference: (RS2-2)

4 : Aligning Financial and Productivity Systems

Reconciliation of financial accounting systems and productivity measurement systems is not necessary to support productivity management. By first separating productivity measurement from the financial accounting system, and then limiting productivity measurement to those labor-intensive activities that are controlling the project, the contractor avoids incurring significant increases in overhead support costs when the productivity management process is added. If the activities being monitored are critical to establishing the project duration, then the ability of the owner and contractor to meet project schedules is further improved.
(RS2-3, p. 4)
Reference: (RS2-3)

5 : Measuring Productivity

Productivity is a frequently discussed topic in the construction industry because productivity improvement translates directly to labor cost savings. A growing consensus among owners and contractors indicates that measuring and monitoring productivity are essential first steps to managing, that is improving, productivity. (RS2-3, p. 19)
Reference: (RS2-3)

6 : Productivity Measurement Tools

Numerous systems for monitoring and measuring productivity are commercially available; as are many proprietary systems, yet a large number of today's contractors do not apply these techniques. Key among the reasons for not doing so is an inability or unwillingness to grapple with the complexity and support costs associated with traditional cost-system approaches. Uncoupling productivity measurement from cost measurement can remove obstacles and enhance more universal use. (RS2-3, p. 19)
Reference: (RS2-3)
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Key Performance Indicators

Improved schedule, Improved engineering productivity

Research Publications

Productivity Measurement: An Introduction - RS2-3

Publication Date: 10/1990 Type: Research Summary Pages: 20 Status: Archived Supporting Product

The Effects of Scheduled Overtime and Shift Schedule on Construction Craft Productivity - SD-43

Publication Date: 12/1988 Type: Source Document Pages: 93 Status: Archived Reference

Construction Industry Institute Model Plant Update - RS2-2

Publication Date: 11/1988 Type: Research Summary Pages: 18 Status: Archived Supporting Product

The Manual of Construction Productivity Measurement and Performance Evaluation - SD-35

Publication Date: 05/1988 Type: Source Document Pages: 168 Status: Archived Reference

The CII Model Plant - SD-23

Publication Date: 12/1986 Type: Source Document Pages: 98 Status: Archived Reference

Construction Industry Institute Model Plant - RS2-1

Publication Date: 10/1986 Type: Research Summary Pages: 38 Status: Archived Supporting Product

An Analysis of the Methods for Measuring Construction Productivity - SD-13

Publication Date: 05/1986 Type: Source Document Pages: 53 Status: Archived Reference


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